DRAFT AGRICULTURE AND HORTICULTURE DEVELOPMENT BOARD (AMENDMENT) ORDER 2022
(2 years, 6 months ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Rebecca Pow)
I beg to move,
That the Committee has considered the draft Agriculture and Horticulture Development Board (Amendment) Order 2022.
As ever, it is a pleasure to have you in the Chair, Sir Gary.
This statutory instrument, a draft of which was laid before the House on 29 March, will deliver a reformed and more accountable Agriculture and Horticulture Development Board, which will play an important role supporting farmers through a time of significant transition. While the instrument marks an end of the AHDB’s levy work in the horticulture and potato sectors, it also marks an important new beginning for how the AHDB engages with and delivers for other sectors, including cereals, oilseeds, beef, sheep, pork and dairy.
The draft instrument respects the outcome of the recent ballot of levy payers in the horticulture and potato sectors, in which more than 60% voted to end the AHDB statutory levy. It is clear from the ballot and industry feedback that the statutory levy mechanism is not meeting the diverse needs of horticulture and potato businesses, and a different approach is needed going forward.
It is important to highlight, however, that although the overall result of the horticulture ballot supported an end to the statutory levy, there are diverse views, with some subsectors such as soft fruit, tree fruit and mushrooms voting to keep a levy. I recognise the concerns of some growers about losing investment in important research and crop-protection activities that the AHDB levy traditionally funded. Therefore, while the draft instrument respects the ballot by repealing the statutory levy provisions, it also ensures that the horticulture and potato sectors remain in scope of the Agriculture and Horticulture Development Board Order 2008.
This means that any parts of the industry that want to continue to work with and fund the AHDB are able to do so on a voluntary levy or commercial basis in future. That enables the AHDB to continue to deliver legacy research and plant-protection services to those sectors during a transition period. I assure hon. Members that the Government continue to engage proactively with the horticulture industry to develop alternative industry-led funding models for research and development activities.
The Minister for Farming, Fisheries and Food, my hon. Friend the Member for Banbury (Victoria Prentis), who should have been moving consideration of the draft SI but was unable to do so, recently chaired a roundtable with industry to discuss that issue. She was pleased to hear that the industry is coming together to formulate new funding models, such as grower-led syndicate funding for priority crop research and development activities, and the potential for a voluntary levy to fund activities that require a more co-ordinated and long-term approach, such as for crop protection, pesticide application or horizon scanning for sustainable alternatives.
The draft instrument also marks the beginning of a new direction for the AHDB: an AHDB that is more accountable to levy payers in other sectors, including beef, sheep, pork, dairy, cereals and oilseeds. It also delivers a new duty on the AHDB, giving levy payers a regular vote on sector priorities. That is something that people particularly requested—they wanted a more regular say, and that will happen every five years. In future, therefore, levy payers will have more influence over AHDB sector programmes, and over how much levy will be raised and what it will be spent on. The whole thing will be more focused on what those paying the levy say they want.
The AHDB has been working hard to deliver that already through its “Shape the Future” campaign. That is where levy payers vote—as they have just voted—on the priorities that they want the AHDB to deliver over the coming months and years. That is a momentous step forward for the organisation, marking a turning point by putting levy payers right at the heart of everything it does.
I draw the Committee’s attention to a technical drafting point. As a consequence of removing the horticulture levy provisions, the draft instrument will broaden the definition of the horticulture industry in the AHDB order. The definition will now include the growing of a wider range of horticultural products by way of business. That will deliver more flexibility in future as it will enable more businesses in the horticulture sector to work with the AHDB on a voluntary levy or commercial basis if they wish to do so. To support such flexibility, the draft instrument also includes provisions to clarify that the AHDB can charge to cover the cost of services that it may deliver in future to any agriculture or horticulture business that is in scope of the AHDB order.
Those legislative changes sit alongside significant governance and cultural changes that the AHDB has already put in place to deliver a more inclusive democratic organisation that is in a stronger position to meet the needs of farmers. We all know how important that is, particularly right now, and the changes should set them up well for the future.
Daniel Zeichner (Cambridge) (Lab)
It is a pleasure to serve once again with you in the Chair, Sir Gary. I thank the Minister for her introduction, which was thorough and fair. She will be delighted to know that we support the measures. Our discussions are also informed by the debate that was held in the Lords yesterday, which I shall refer to later. We very much agree that the Agriculture and Horticulture Development Board plays an important role. The statutory change to the way it works is significant because, as an industry-funded body, it is important that confidence is maintained. The changes will play an important part in that.
Anyone watching what is happening in the sector could not have helped but notice 18 months ago that there was a lot of passion around the vote. There were strong views on both sides of the argument in the horticulture and potato sectors, and it is fair to say there was considerable disappointment among those who had always advocated an industry-wide approach when the ballots were lost. Also, there was for a little while some scepticism as to whether the Government would honour the outcome of the vote. Today they have, and we welcome that. It is right that when Governments make agreements, they honour them. As I am sure others find, there is a view, not just in agriculture but in wider society, that those in power do not always listen. Whereas the previous point was perhaps partisan, this one is not. People feel that the world is changing rapidly, but that their views are not always taken into account—I think there was a sense of that in the farming sector. Today it is good that the Government and the AHDB are listening.
Before going into the details of the draft instrument, I want to follow on from the Minister’s comments and say a little bit about the organisation at its heart. It was established under the previous Labour Government and plays—I am sure this is widely agreed—an important role in British agriculture. Although there is a lot of rhetoric about how good we are at investing in research and development, anyone standing back and taking an independent look at our country’s record would have to admit that we are not always quite as good at it as we would like to be.
Looking back at the agricultural and food sector, there have been times in the past when we perhaps did rather better. It is often easy not to think too much about the future and just carry on in any sector doing what we do but, given the pace of change in the modern world, that is not going to work. That is why having a body that can invest in a whole range of things, analyse what is happening in markets and look at new innovations is essential. It is often best done collectively, but that, sadly, is also something that we in the UK do not always do well.
The AHDB has played and continues to play an important role. I pay tribute to Nicholas Saphir, Tim Rycroft and their colleagues as they try to align the organisation more closely with the concerns of those who pay for it, which is not always easy. As politicians, we are sensitive to how difficult that can sometimes be.
Working across a host of agricultural sectors, the AHDB undertakes important research, development and farm-level knowledge transfer, along with working to improve supply chain transparency—that is particularly important at the moment—and stimulating demand to help develop export markets. The fact is that farming is a tough business and most farms do not have the time, resources or capacity to engage in detail in these activities. Of course, some of the bigger organisations are well placed to do it themselves, and some sub-sectors are better placed than others, as the Minister has hinted, but I am afraid there is some concern for smaller producers.
The AHDB plays an important role in pooling the financial resources from farm businesses big and small to invest in improving the sector for everyone. I would argue that the Government continue to come up short in their response to the problems engulfing our supply chains and export markets, but many farmers are reassured that the AHDB is working on their behalf. However—exactly as the Minister said—for potatoes and horticulture, the decision is made.
The first component of the draft instrument is the removal of statutory levies in the horticulture and potato sectors. As I said earlier, that decision comes as a direct result of a ballot held by those sectors, and it should rightly be respected. Both votes saw a turnout of more than 60%, and in both cases, close to 70% of the votes were for the statutory levy to end—that is a strong mandate.
The departure of those sectors will mean that the AHDB’s annual funding of £57 million is reduced by around £13 million. I am told and reassured that, because the board’s finances are already managed on a sector-by-sector basis, the loss of horticulture and potatoes is organisationally manageable, but shared costs inevitably mean that it will have consequences. We should always remember that there are direct consequences for those individuals who lost their jobs during the winding-down process, and there is also the loss of their valuable expertise. Inevitably, there is concern that there may be a move for a similar dismantling in other sectors, but I am reassured that, as the Minister indicated, the results of the AHDB’s first vote on levy payer preferences, about which I will say a little more later, shows strong support for much of the board’s work programme.
I have a couple of concerns regarding the impact of the end of the statutory levy on potato and horticultural producers. I hope that the Minister will address my concerns or pass them on to her ministerial colleague to address at a later point. There is industry concern in the potato sector about the end of the Fight Against Blight service and the yellow water trap aphid monitoring service. I am told that the Scottish Government are currently helping the industry to find a long-term solution, and that the AHDB has facilitated the transfer and delivery of those programmes to the James Hutton Institute so that a stopgap solution can be found.
In horticulture, the AHDB will continue to provide until 2023 the funded service on emergency chemical crop protection authorisations for minor use, while the industry—facilitated by the Department for Environment, Food and Rural Affairs, I hope—tries to reach an agreement on how such a service should be funded and organised. However, achieving consensus on which secretariat should administer the process is apparently proving a challenge. I would be grateful if the Minister could tell us what actions her Department is taking to ensure that the key services provided by the AHDB can continue in some form, following the end of the levy in those sectors.
As the Minister indicated, it is clear—I think the AHDB acknowledges this—that the votes to end the levy in those two sectors were partly a product of the body not listening closely enough to levy payers and changing too slowly. However, the AHDB also believes that the “no” vote resulted from severe financial pressures caused by supply-chain pressure and low profit margins. I am concerned that, because the Government are still failing to get to grips with the various crises that are affecting the industry as a whole, too many producers have been left in a very difficult position. For them, opting out of the levy was one of the very last resorts as they sought to keep their businesses afloat. That may be the better option for individual businesses in the short term, but the harm it could cause the industry as a whole, as evidenced by the various schemes that are now under threat, could be significant.
I am also a little troubled by a potential unintended consequence of allowing producers in the potato and horticultural sectors to purchase services directly from the AHDB. That is clearly a response to the situation we find ourselves in. It is good that producers can continue to have a relationship with the board if they so choose, but there is a danger that it unfairly disadvantages smaller producers. The removal of the pooling effect of the levy, and of the ability to buy services directly from the board, could mean that larger producers will continue to benefit from the work of the AHDB, without sharing those benefits with smaller producers who will be less able to afford direct services. Will the Minister tell us what assessment her Department has made of the impact on smaller producers? If a disparity is found, what steps will be taken to address it?
My colleague Baroness Jones raised in the Lords yesterday a series of questions that I will put to the Minister today. She queried when the Department first became aware of the unhappiness in these sectors that led to the ballot being called, and what was done at that time to address it. She suggested a range of possibilities. Was it the cost of the levy? Did people feel they were not getting value for money? Are we sure that the new ballots to shape priorities will really address those concerns?
Could the Minister also say a little about the relationship with the devolved nations as the AHDB goes forward? On the legacy research and plant protection services referenced in paragraph 7.2 of the explanatory memorandum, could the Minister explain how the value of previous research will be protected and built on?
I was struck by the Lords Minister’s comments in his comprehensive reply to Baroness Jones of Whitchurch:
“It is not appropriate for public funding to replace levy-funded activity”—[Official Report, House of Lords, 17 May 2022; Vol. 822, c. GC7.]
I appreciate that he was seeking to draw a distinction, but does the Minister agree that there are bound to be overlaps and that we should not rule out filling gaps where it is in the wider public interest that work could be done.
In conclusion, we welcome the decision to enhance levy payers’ voices through a vote at least every five years on the AHDB’s priorities and work programme. I know that the AHDB has already been making efforts to improve levy-payer engagement, including the new requirement for members of sector councils to be ratified by levy payers. The results of the first vote, released this Monday, indicate, I hope, a bright future for AHDB. We want the organisation to succeed and flourish, and trust that the measures will assist in that process.
Steven Bonnar (Coatbridge, Chryston and Bellshill) (SNP)
It is a pleasure to see you in the Chair, Sir Gary. I thank the Minister for laying out the Government’s reasoning for the instrument. Save for a few quick points, I would like to echo most of what the Opposition spokesperson has stated, and I look forward to the Minister’s response.
As horticulture and potato sector levy payers democratically voted by a majority to discontinue the levy, it is only right that their wishes are respected. Furthermore, when devolution is respected and consent sought prior to legislating in this place, devolved Governments are often content and balance is retained, as opposed to UK Ministers encroaching on devolved areas.
The Scottish Parliament has approved this draft amendment. Its main reason for doing so is that, following the Brexit transition period, the UK was classed as a third country, and under EU Commission rules, sensitive products—which seed potatoes and ware are classified as—require separate technical listings for trade to be allowed from third countries.
Of course, under the Northern Ireland protocol, and as is the case with exports to the EU, the movement of Scottish seed potatoes to Northern Ireland is banned. Scotland is the world leader in seed potato production and Europe is the largest and most lucrative market for Scottish seed potato, agriculture and horticulture exports. For that reason, we support the measure.
Rebecca Pow
I thank those who have made an input to this debate. I very much welcome the support of both shadow Ministers—from Scotland and from the Labour Bench—and I agree that it is absolutely right that we respect this democratic vote. The Government said that we would, and we have done so. It is the right way to proceed, as is listening to the views of our farmers. That is critical, and one good thing about this tweak is that the farmers themselves will be much more involved in the research and the requirements they want from the levy, which, after all, they are paying.
I also agree that it is important that we equip our farmers—particularly in such times as we are facing—with the very best research, data and scientific advice. I believe that the AHDB has in the past done a great deal of that, but it will now be even more tailored towards our farmers so that they will get what they need and want to keep them in the globally leading position that they already hold. However, we must work on going forwards.
I recognise that there are concerns regarding the loss of £14 million of the annual levy funding for horticulture research and the need to retain skills and research capabilities in these sectors. We must recognise, however, that the one-size-fits-all approach—that is, the previous mechanism—is not working for the diverse needs of these sectors. That is why it is clear that we must listen, and their view in the ballot was to end the statutory levy contribution.
As I have previously highlighted, new approaches to funding horticultural research and crop protections are being worked on, including voluntary levies, subscription or membership models, and commercial agreements with the AHDB or other suitable organisations capable of co-ordinating and delivering applied research services for the industry. Obviously, many bodies do such work, such as the amazing UK Centre for Ecology and Hydrology, which I visited just this week. The work it is doing for a wide range of different industries in the farming and environment space is phenomenal, and East Malling and all the other research centres, such as the James Hutton Institute in Scotland, will all have their place.
The shadow Minister, the hon. Member for Cambridge (Daniel Zeichner), raised the issue of whether pooling the money would help the bigger industries, such as the beef and sheep sectors, more. I believe that the new approaches that are being worked on for horticulture and the potato industry will get around that, with smaller groups of individuals, such as those in the horticulture sector, able to get what they need out of the research. Voluntary levies have some advantages over statutory levies, which are classified as public money and are therefore bound by tighter rules and restrictions, as was outlined in the other place yesterday. Funding from voluntary levies can be used in a much more flexible way—for instance, to lever in match funding from other investment. Discussions with industry on those options are ongoing, with the aim of agreeing new industry-led funding models over the coming months.
I recognise the increasing importance of supporting our horticulture sector, particularly as we face the challenges of rising input costs. We are all looking at the opportunities and barriers that the horticulture sector faces in supporting sustainable growth and increasing productivity, especially given that sustainability, food security and so forth play such an important role. That includes looking at innovative ways of doing so, such as vertical farming. I have seen some of that myself; what can potentially be achieved is phenomenal, and we are looking at powering some of that with solar panels. The world seems to be really accelerating, with greater automation and other technologies that can help maximise crop growth and increase productivity, but we are also working hard to tackle the labour supply challenges that the sector faces.
I expected the shadow Minister to mention the seasonal worker visa, but he did not do so. That visa will be extended through to 2024, allowing overseas workers to come to the UK for up to six months to harvest both edible and ornamental crops. Some 30,000 visas will be available this year to cover this harvest period, which will be kept under review.
Daniel Zeichner
Only in the sense that I am responding to the Minister’s contribution, Sir Gary. Having just spoken to representatives from the poultry sector, I wonder if the Minister could make representations to the Home Office to try to unlock some of the problems affecting recruitment. She always has a sunny disposition and an optimistic view of the world, but there are a lot of problems out there.
The Chair
I am sure she will do that, but we will now go back to the order, if that is okay.
Rebecca Pow
Thank you, Sir Gary, for keeping us absolutely on track. Of course, we are dealing with horticulture, and I hope the shadow Minister is pleased that there will be 30,000 visas to help that sector. I am absolutely sure that that case is being made for the whole horticultural industry.
I understand the frustrations expressed about the fact that reforming the AHDB has taken some time and has potentially come too late for people in the horticulture and potato sectors who have voted with their feet. There were delays, but those were due to the inevitable reprioritisation of work because of covid-19. Before the ballots were triggered, the AHDB had already started that journey of reform, including engaging with the horticulture and potato sectors on options for modernising the levy mechanism. Views across the sector on the statutory levy have, however, been very polarised, and agreement on a new statutory structure was not forthcoming before the ballot was called.
I will answer a couple of further questions. A point was made about the ongoing blight service and the aphid monitoring service, and I note that Scotland already has an arrangement to keep those going. We are in discussion with the Scottish Government and key bodies, such as the James Hutton Institute, on the impacts of the potato levy ending and on how Scottish potato businesses want to find key services. We will provide more detail when those discussions have concluded. I hope that answers the shadow Minister’s questions. I will be happy to write to him if there are any further details, but I think that covers it for now.
The shadow Minister also asked whether the draft order covers the devolveds as well. It has been made quite clear that it does, but there are varying degrees of involvement, depending on the sectors.
I would like to give assurances that the AHDB is fully committed to putting levy payers at the heart of its operations, and a significant change programme has now been implemented. A new skills-based board is in place, and at least 50% of its members are current or recent levy payers. Levy payers can now vote on the membership of the AHDB sector councils, making them more representative and accountable—that was raised and has now been dealt with. Additionally, the results of the AHDB’s Shape the Future campaign have just been published and can be assessed on the AHDB website. I think they came out yesterday, and they give important levy payer feedback. It shows that farmers value the work that the AHDB does to open new export markets, to educate consumers, to promote UK produce, to provide reliable independent data and market intelligence, and to provide products and services that help farmers to be more efficient, more profitable and sustainable. All the detail of what came out of the recent assessment is on the website.
This instrument provides much-needed certainty on the end of the statutory levy in horticulture and potatoes, enabling the industry to move on and develop new funding models that are better suited to their needs. Importantly, it also underpins the beginning of a reformed and more accountable AHDB to other levy-paying sectors, delivering value for money and supporting our precious farmers, whether they are in Wales, England, Scotland or Northern Ireland. We are making the whole system more accountable and delivering what our farmers really want and need. On that note, I commend this instrument to the Committee.
Question put and agreed to.