Analysis: What will AHDB levy spending review mean for farmers?

An internal review of the Agriculture and Horticulture Development Board is set to give farmers a say on how £60m of levy money should be spent – and who should control it.

Levy board bosses say they are keen to canvass opinion amid criticism and concern that the government failed to sign off a major AHDB Beef and Lamb marketing and promotional campaign – against the wishes of farmers.

See also: Government ‘failed to back beef and lamb campaign’

It follows the resignation of AHDB Beef and Lamb chairman Stuart Roberts, who stepped down last month, accusing the government of pursuing an agenda that threatened to undermine the sovereignty of levy boards over their own priorities.

Industry leaders have since restated their belief that farmers and other levy payers – rather than the government – should have the final say on AHDB expenditure, largely because board income is raised from the agricultural sector rather than from the wider taxpaying public.

The review will aim to determine the future direction of the AHDB and its activities. It will include potential priorities for the board – as well as ways of ensuring that promotional activity provides value for money and “real outcomes” for levy payers.

In a statement, the AHDB said: “We would strongly encourage everyone to take part in this review to make their views known. This will ensure the AHDB has a clear picture from farmers, growers and the supply chains across all sectors.”

The AHDB faces increasing scrutiny from a number of quarters. And the government’s insistence on having the final say when it comes to AHDB expenditure has fuelled concern that Defra could try to use levy money to plug holes in its own budget.

Government austerity measures mean Defra has already been told to prepare for budget cuts of up to 40%. This means a range of projects currently funded by the department could be curtailed or scrapped altogether – unless the industry agrees to pay for them.

It would make sense for the AHDB review to be scheduled so it can take into account any announcement of Defra cuts contained in the government’s comprehensive spending review, which is scheduled for 25 November.

This timing would give the AHDB a good opportunity to prepare for the government’s next triennial review of the levy body in 2016. This will examine whether the AHDB’s functions are still required and whether the AHDB is delivering them effectively.

Rather than granting levy payers greater control over the way levy money is spent, one suggestion is that ministers could use the triennial review to try to pull the AHDB’s £60m annual budget closer to Defra to help offset any departmental cuts from the comprehensive spending review.

This adds weight to the argument that the AHDB must be more savvy in the way it spends money if it is to retain its independence – especially as government rules require any marketing and promotional activity to provide clear value for money.

Rather than simply spending levy funds on promotional campaigns urging shoppers to “buy British” or “eat more meat”, the AHDB’s preferred route involves focusing on market development – both at home and overseas – to help farmers become more competitive and sustainable.

But the AHDB also insists it remains fully committed to getting sign-off for current marketing activities outlined in its corporate plan – a nod, perhaps, to the challenge it would face persuading farmers that marketing and promotion should be abandoned altogether.

Livestock farmers will miss out on nearly £9m in expected sales of beef and lamb after the government failed to sign off the second year of an industry-funded promotional campaign.

The AHDB Beef and Lamb campaign was due to start this autumn to coincide with the peak supply season for home-produced lamb. Similar work in 2014 added value to the carcass worth £3.3m to the beef and lamb sectors, according to AHDB figures.

In 2015, the combined growth target across the two sectors was about £8.7m, with AHDB Beef and Lamb proposing expenditure on consumer marketing of £1.2m. This would have amounted to a forecast return-on-investment target of 8:1.

Agreed by the AHDB Beef and Lamb board last November, promotions would have included television and print advertisements and social media activity.

The aim was to develop the market for “mini-roast” cuts of meat – easy-to-prepare joints of beef and lamb.

Last year’s TV advertising and internet campaign reached an estimated 5.1 million people. Some 68% said the advertisements made mini-roasts more appealing, with the digital campaign encouraging more than 100,000 people to visit
a recipe website.

But the government failed to sign off the campaign in time to secure autumn advertising slots. The precise reason is unclear. But in a statement, a Defra spokesman said: “As a public body, the AHDB has always been accountable to parliament for how it spends levy payers’ money.”

The AHDB leadership team was introducing crucial changes to give farmers better value for money, said Defra. “These changes will focus on both the best interests of the industry and delivering for levy payers.”