The vote against statutory levies by the AHDB’s Horticulture and now Potato sectors are a blow for the organisation.
The AHDB was created in 2008 by restructuring six independent levy-raising bodies into a new model with independent boards served by a central administration, to save cost and increase efficiency.
Defra and the new AHDB management team have some difficult calculations to make in respecting the ballots while retaining the benefits of a trusted, central industry resource – one that will be especially important at a time of great structural change for the wider industry.
The potato and horticulture sectors are consolidated, so could organise their own R&D and knowledge transfer. Much of this work is already carried out by institutions and private companies contracted by AHDB – which could carry on with direct industry funding. Market intelligence will be harder to replace, and of course the loss of two sector boards would increase the central cost for the remaining four boards.
Meanwhile, Defra minister George Eustice has promised levy ballots for all sectors. Outcomes are hard to predict – the dairy and pork industries have consolidated into fewer hands since the AHDB was formed, while the cereals and oilseeds and red meat sectors are much more fragmented. But the Horticulture and Potato levy rejections set a precedent.
Defra is reported to be exploring a range of future AHDB options from voluntary subscriptions to paid-for services in place of the statutory levy for Potatoes and Horticulture. But voluntary levies won’t raise the same resources as statutory ones – there will always be those who won’t pay while benefitting from the contribution of others.
There is a tricky balance to achieve – Defra needs to get its offer right for the two sectors who clearly feel they are not getting value for money, while persuading the remaining sector boards to support the statutory levy principle.