AHDB mulls levy rate increases as spending power declines by 40%

Levy rates may be increased for AHDB's service starting from next April, the organisation has warned farmers against a backdrop of rising costs.

AHDB Sector Councils representing the Beef & Lamb, Cereals & Oilseeds, Dairy and Pork producers and processors have begun holding discussions on the potential move.

The levy organisation explained that increasing levy rates would address the impact of rising costs on its spending power.

There has been no increase to the levy rate in the Beef & Lamb and Cereals & Oilseeds sectors for more than 10 years, and no change in over 20 years for Dairy and Pork.

Because of this, the spending power of levy funds over the past decade has been reduced by up to 40%, according to AHDB.

The organisation said this was due to inflation as well as changes to AHDB's tax status, meaning it can no longer reclaim VAT.

Each year, the levy is invested in independent research, AHDB's Strategic Farm networks, activity to identify new export markets and domestic marketing.

But AHDB's divisional director of engagement, Will Jackson warned that without a levy increase, the organisation would lose the expertise and impact that the four sectors needed.

He 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."

AHDB confirmed that conversations would be held with key industry stakeholders and levy payers during the coming months.

If approved, new rates could be implemented from April 2024.

Mr Jackson added: "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."