AHDB warns of escalation in levy rates
By Heather Bright, Partner and ARA specialist
In light of spiralling operational costs, the Agriculture and Horticulture Development Board (AHDB) has forewarned farmers about the potential escalation in levy rates for its services, effective from April 2024.
Sector councils under the AHDB, including those that represent beef & lamb, cereals & oilseeds, dairy, and pork producers and processors, have initiated conversations regarding this impending change.
According to the levy organisation, a hike in levy rates would mitigate the effects of increasing costs and their impact on AHDB’s purchasing power. It should be noted that the beef & lamb and cereals & oilseeds sectors haven’t witnessed an increase in levy rate in over a decade, while the dairy and pork sectors have seen no changes in over 20 years.
The AHDB highlights that the stagnant levy rates, coupled with inflation and modifications to the board’s tax status (which now restricts it from reclaiming VAT), have led to a 40 per cent reduction in the spending power of levy funds over the past decade.
The annual levy funds are typically allocated towards independent research, the development of AHDB’s Strategic Farm networks, and activities focused on identifying new export markets and boosting domestic marketing.
However, Will Jackson, AHDB’s divisional director of engagement, voiced concerns that without a hike in the levy, the organisation could lose the expertise vital to the four sectors it represents. In his statement, Jackson underscored the urgency brought on by the current economic climate to take decisive action. “Although recommending a levy increase is never ideal, we believe the current economic conditions necessitate urgent action to offer clear, tangible benefits,” Jackson explained.
Over the following months, the AHDB intends to engage with key industry stakeholders and levy payers for discussions on the proposed changes. Following approval, the new rates could come into effect from April 2024.
On a concluding note, Jackson highlighted the importance of levy payers’ input in shaping future plans. “The feedback we received from levy payers through ‘Shape the Future’ provided valuable insight into their priorities, and the sector councils used this information to develop the Sector Plans. This marks the first time AHDB received direct feedback from levy payers on our services, indicating where additional levy income could be most effectively invested,” stated Jackson.
If you are concerned about how the potential levy increases could affect you, please contact your Moore Thompson representative today.