Potato and horticulture sector levies to end in April 2022, says DEFRA

DEFRA is to implement the wishes of growers who voted for an end to the AHDB levy on potato and horticulture growers. The decision was prompted by the 2021 ballots in which 61% of horticulture growers (802 levy payers voted) and 66% of potato growers (1,196 levy payers voted) expressed a desire to end the statutory levy. The levy on these sectors will be formally terminated at the start of the new financial year (April 2022).

Although the outcome of the ballots clearly indicated that most levy payers were no longer in favour of the statutory levy, the responses to the consultation were far less decisive. About 75% of those responding to the consultation were in favour of ending the statutory potato levy while opinions on the horticulture levy were split 32.3% in favour and 28.5% against.

The consultation received 476 responses with six received by email discounted from the analysis. Most respondents were levy payers with mixed farm businesses operating in multiple sectors.  Horticulture levy payers accounted for 120 responses while just 33 potato levy payers contributed to the consultation.  In addition to deciding the fate of the statutory levy, the consultation asked for views on how and if the services funded by the levy might continue.

Of specific relevance to the horticulture sector was the question on whether the AHDB should continue to deliver an application service for pesticide use, i.e. should it continue to support applications for Extensions of Authorisation for Minor Use (EAMU) and Emergency Authorisations (EAs)? These applications enable crop protection products authorised for use in other crops to be applied to minor crops, such as fruit and vegetables.

Nearly half (49.6%) of responses wanted to see this service continue with 8.7% voting against it. The remainder were either unsure (12.1%), did not answer (1.9%) or said it was not applicable to them (27.7%).

How such a service should be funded prompted some diverse responses including, a voluntary levy on businesses who use it most, a statutory levy, a charge on pesticide producers and government funding.

In response, the government recognised that many growers expressed a desire for a subsector levy to continue but concluded that it does not have the details needed to introduce the legislative amendments needed.

“For example, there are questions on who would pay the levy, how it would be applied and calculated, and whether there should be any exemptions,” notes the government’s consultation response.

“Therefore, as a next step we will engage in discussions initiated by industry led groups and trade bodies to explore in more detail the design of industry led funding options including statutory subsector levies and /or voluntary levies or other options,” it adds. It has set a deadline of the summer of 2022 to secure agreement on funding solution.

Given the importance growers attach to the pesticide applications service, the government has agreed that AHDB can use reserve funding to support applications and fund associated research and trials until April 2023 as an interim measure.

The response also considered the suggestion of the Growers’ Better Levy Group (GBLG) whereby the statutory levy could continue but delivered through a new grower-led organisation instead of the AHDB. It rejected the suggestion on the grounds that it would be too difficult to deliver.

“We have considered these views carefully and concluded that establishing a new statutory levy body for horticulture would be a difficult and lengthy process due to the considerable governance and regulatory requirements that now sit around statutory levy bodies,” said the government.

Instead, it will engage with members of the GBLG and other interested stakeholders to discuss other funding options.

It is worth noting, however, that the government has previously stated that this is not an activity it is willing to fund and that if it is considered to be of value to the industry, it should be prepared to meet the cost.

Details of the consultation outcome can be found on the Gov.UK website here: https://www.gov.uk/government/consultations/agricultural-and-horticultural-development-board-ahdb-reform/outcome/executive-summary-analysis-of-responses-to-the-consultation-and-what-we-will-do-next