All farm unions, including NFU Scotland and the National Sheep Association (NSA), have been lobbying HMRC to have the product excluded from the plastic packaging tax.
They claim this would only increase the price of silage packaging which had already risen dramatically due to rising energy and raw material costs.
In an apparent change to what had previously been discussed, HMRC issued guidance on the matter at the end of December 2021, stating that silage packaging would now be covered by the plastic packaging tax.
This was contrary to the advice of Defra which, during the 2021 consultations, had classified silage packaging as a “product” and not as “packaging” because it was not used to transport goods or products from the producer/manufacturer to the final seller/retailer. NFU Scotland said it had raised the issue directly with the Treasury, pointing out that the packaging was currently exempt under other government regulations – as it was not a form of packaging but part of the production process.
He also pointed out that there was no alternative currently available to make the huge amounts of grass and other silage that sustained the country’s livestock through winter and reduced the need for imported feed such than soy – and added that much of the product was recycled.
“The timing of this unexpected announcement, without prior consultation with industry, does not give the agricultural or plastics industries much time to adapt, and comes at a time when on-farm input costs are skyrocketing,” said Sarah Cowie of NFU Scotland.
Calling on HMRC to reverse its decision, she said that while farmers had pledged to grow in the most environmentally friendly way, silage packaging that used enough recycled material to evade the tax had not yet been developed.
The NSA said that at a time of rising costs across the board, an additional tax would contribute to a further reduction in the already low margins of agricultural businesses and could have unintended consequences.
“The potential additional cost of PPT on silage packaging for UK farmers is estimated at 10% additional cost.
“That in itself is bad enough at a time when most input costs are rising, but it’s made worse by new trade deals with countries that aren’t subject to the same costs,” the chief executive said. of the NSA, Phil Stocker.
He added that the competitive advantage offered to farmers in other countries would prevent UK farmers from passing on the extra costs to the consumer.
However, during a parliamentary debate last week in Westminster on the tax, despite being accused of ‘covering up’ guidelines on adding silage packaging, the Treasury Minister, MP Helen Whately, has resisted calls for her exclusion from the tax.