Levy payers face increase in rates as AHDB looks to offset rising costs
14th June 2023
Discussions have begun around increasing levy rates from April 2024 as AHDB claims the board’s spending power has been significantly reduced by inflation and rising costs, limiting its ability to deliver valuable services to the agriculture sector.
Over the coming months, sector councils representing Beef & Lamb, Cereals & Oilseeds, Dairy and Pork producers and processors will be consulting key industry stakeholders and levy payers about the best way to address shortcomings in levy funding.
AHDB’s services have been integral to supporting farmers through unprecedented pressures, such as rising input costs, soaring inflation and waning BPS payments.
However, with no changes to the levy rate in the Beef & Lamb and Cereals & Oilseeds sectors for over a decade and more than 20 years for Dairy and Pork, the spending budget of the organisation has been reduced by up to 40% in the last 10 years. This has been brought on primarily by inflation and changes to AHDB’s tax status, which means it can no longer reclaim VAT.
Each year, the levy is invested in tackling opportunities and challenges that will not be addressed by commercial organisations, individuals or governments. This includes independent research, the Strategic Farm networks, activity to identify new export markets and domestic marketing.
In a move to deliver better value services to the industry, AHDB consulted levy payers on how the levy should be spent as part of the Shape the Future process, which took place during Spring 2022. The results of this consultation are reflected in the Sector Plans, published in November 2022.
Although the organisation has made significant cost savings in recent months, including exceeding a two-year target of £7.8m by £700,000, rising costs are continuing to add pressure on sector budgets.
AHDB’s divisional director of Engagement Will Jackson said: “There is never a right time to be recommending a levy increase, but we believe the current economic climate makes the case more urgent with clear, tangible benefits.
“There have been no increases for over a decade, inflation has eroded the value of the levy by around 40% in this time and there needs to be a significant step taken to close this gap.”
Mr Jackson highlighted that in order for AHDB to carry out actions set out in the Sector Plans, the organisation has had to adapt its work according to budget constraints caused by inflation and changes to its VAT status.
“Without a levy increase, we will lose the expertise and impact that the four sectors need,” he stressed.
Levy payers and stakeholders will have the opportunity to share their views on the proposals by attending AHDB meetings, talking to sector council representatives and by contacting the organisation directly. Sector Councils will then incorporate that feedback when deciding on a recommendation to share with Defra, which has the final say in changing levy rates.
NSA shows support for levy increase proposal
Following AHDB’s levy announcement today (14th June), the National Sheep Association (NSA) has acknowledged the necessity of increasing levy rates for the sheep sector, but stressed the board must go above and beyond in its efforts to deliver maximum value for farmers.
NSA chief executive Phil Stocker commented: “No one welcomes costs increasing, but if we want a body to promote red meat products, to open new export markets, and to work to protect the reputation and ability of our industry then we must accept that it needs funding.
“What is crucial now, following on from the recent strategy review and levy payer consultation, is that AHDB must buckle down and do the work levy payers need done.”
Mr Stocker said priority must be given to promoting British lamb on both domestic and international markets and unlocking new global opportunities for sheep farmers to sell their produce. Collecting evidence and protecting the sector’s reputation are also important considerations, he added.
“There must be clear value and communication of the value to levy payers on the areas of development and research that any potential increase would be used for. NSA is looking forward to analysing the proposals and is encouraged to see investment in opportunities for the sheep meat sector.”
Mr. Stocker concluded that AHDB represents an invaluable asset to the sheep sector, as it tackles opportunities and challenges that neither the private sector nor the government can address.
He went on to reiterate the importance of supporting the organisation’s work, particularly in navigating and identifying trading partnerships for the sector. Mr. Stocker believes that this support is especially valuable in the current global market, where ensuring demand for high-quality produce is vital.
