Starmer's deal with Trump spells disaster for farmers, leaked memo warns
British farmers are facing disaster because of Sir Keir Starmer's trade deal with Donald Trump, a leaked memo has claimed.
Last month's agreement will slash tariffs on US exports of ethanol, a grain-based chemical used to make green fuel.
Industry leaders fear this will lead to the collapse of a key domestic market, and risk pushing profitable farms into making a loss.
Under the deal struck by Sir Keir, which has not yet come into force, the US will be able to supply Britain with some 1.4 billion litres of duty-free ethanol.
Vivergo Fuels runs the UK's largest bioethanol plant at Saltend in East Yorkshire, but is warning that the site will have to close unless the Government intervenes.
A closure would represent a fresh blow to thousands of farmers who supply grain to the site.
It follows a tax raid on the industry in last year's Budget. Reforms to inheritance tax that will come into force next April are expected to cause family businesses to slash investment and jobs, leading to a broader slowdown in the economy.
Rachel Reeves, the Chancellor, also slashed the funding for a scheme to support farmers in this week's spending review.
In an internal document on Sir Keir's deal, seen by The Telegraph, Vivergo said: 'The recent UK-US trade agreement has eliminated tariffs on 1.4 billion litres of US ethanol – equivalent to total UK demand.
'This has rendered domestic production economically unviable, placing the UK bioethanol plants at immediate risk of closure.
'The knock-on effects for UK farming, especially arable farmers supplying feed wheat, are severe and systemic.'
Vivergo has bought wheat for bioethanol production from more than 12,000 farms, with a particular focus on those across Hull and Yorkshire.
The memo warned that losing this domestic market would remove a 'critical pillar' of rural economies at the expense of employment and investment confidence.
'Without intervention, farmers will face a 'double hit' of reduced prices and lost access to value-added supply chains (e.g. animal feed by-products and CO2 sales).'
Vivergo added that the closure of its Saltend plant, which produces up to 420 million litres of bioethanol a year, was inevitable without 'immediate' support from the Government.
It continued: 'This [would be] particularly damaging for wheat not suitable for milling, which has few domestic buyers beyond bioethanol plants.
'This is likely to depress the price of wheat nationally, and would force growers to export surplus wheat into oversupplied global markets at reduced prices. Farms may go from a profit to loss position as a direct result.'
Supply crisis
It is estimated that investment from Vivergo supports about 1,220 farming jobs across the north east of England.
The UK currently imports just under half (around 45 per cent) of its CO2. Without a domestic bioethanol industry, sources fear a supply crisis if foreign sources were to be disrupted.
The memo concluded: 'The bioethanol sector is not only a key customer for UK feed wheat, but also a critical component of national energy security, food resilience, and rural economic stability.
'Without rapid intervention, the closure of Vivergo would damage farm incomes, increase import dependency, and undermine the government's strategic goals across multiple departments.'
Last month, the National Farmers' Union (NFU) said the 'significant' amount of bioethanol included in Sir Keir's deal with the White House was a cause for concern among its members.
There is currently domestic demand for up to 2 million tonnes of biofuel per year, and the NFU warned that the British agricultural sector must not be expected to 'shoulder the heavy burden' of tariffs being removed elsewhere.
A Government spokesman said: 'We signed a deal with the US in the national interest to secure thousands of jobs across key sectors.
'The Business and Transport Secretaries met with representatives from the bioethanol industry this week and we continue to work closely with them to understand the impacts of the UK-US trade deal.'
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