AHDB has announced it will begin discussions with levy payers and industry stakeholders about increasing levy rates across its four remaining sectors.
Sector Councils representing Pork, Beef & Lamb, Cereals & Oilseeds and Dairy have begun holding discussions about increasing the rates to address the impact of rising costs on AHDB’s spending power. Conversations will continue over the coming months, with new rates implemented from April 2024, if approved by Ministers.
There have been no increases in the Dairy and Pork levies for than 20 years, while the Beef & Lamb and Cereals & Oilseeds rates have remained unchanged for 10 years. As a result, the spending power of levy funds over the past decade has been reduced by up to 40% due to inflation and changes to AHDB’s tax status, meaning it can no longer reclaim VAT.
AHDB said it was focused on delivering the objectives set out in Sector Plans that were published in November 2022, with pork levies focused on three priorities – exports, domestic marketing and industry reputation – and some services discontinued, including the Pig Health Scheme and Real Welfare Programme. This was accompanied by a reduced pork levy budget.
Although significant savings have been made across the sectors, including exceeding a two-year cost reduction target of £7.8m by £700,000, AHDB said rising costs are continuing to add pressure on sector budgets.
With agriculture facing unprecedented pressures, including inflation and the reduction in the Basic Payment Scheme, it said its services – tackling opportunities and challenges that cannot be addressed by commercial organisations, individuals or governments – were becoming more important than ever.
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.
“Through Shape the Future, levy payers gave us direction on what is most important to them, and the Sector Councils used this feedback to develop the Sector Plans.
“This was the first time that AHDB had received direct feedback from levy payers on the work we do for them, and these results gave us a good indication of where we would need to invest further levy income.
“In order to deliver against these priorities, AHDB is having to adapt the work it’s delivering at a time when budgets are being impacted by inflation and a budget reduced by changes to our VAT status. Without a levy increase, we will lose the expertise and impact that the four sectors need.”
NPA chief executive Lizzie Wilson said: “AHDB, similar to many other industry organisations increasingly consider just what they are able to deliver from the reduced income they receive, whilst still demonstrating value for money to their levy payers.
“AHDB previously committed to prioritising three key areas; maintaining and building the sector’s reputation, increasing domestic demand and market access and export promotion, but a lack of adequate resource will mean diminishing effectiveness.”
She encouraged all levy payers to engage fully with AHDB as part of this consultation process to ensure that levy payer views are represented.