Draft Agriculture and Horticulture Development Board (Amendment) Order 2023

Daniel Zeichner Excerpts

Wednesday 19th July 2023 General Committees

[Daniel Zeichner (Cambridge) (Lab)]

It is a pleasure to serve with you in the Chair, Sir Robert. I can confirm that we will not oppose this measure. I thank the Minister for his introduction, because we share the view that the Agriculture and Horticulture Development Board plays an important role in British agriculture, but we think it is right that any changes are given close consideration.

As we have heard, 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 and stimulating demand to help develop export markets. While some of the larger agricultural organisations have the resources and capacity to engage in those activities themselves, the vast majority of farms do not. Therefore, pooling financial resources from farm businesses large and small to invest in improving the sector for everyone is important. In fact, I would argue that the AHDB is more significant than ever, given the range of challenges facing the food sector.

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. I understand that Tim Rycroft is stepping down at the end of the year; I am sure that we would all thank him for the significant contribution to the evolution of the AHDB and wish him well for the future. I am also grateful to a range of organisations for their help in preparing for this instrument, including the NFU, the National Pig Association and the National Sheep Association. On the whole, I agree with the proposed changes, but I want to raise some questions and flag some concerns. We should use this opportunity to ensure that the AHDB maximises its potential to champion and support British agriculture and horticulture.

While we do not object to the expansion of AHDB work to non-levy-paying sectors, it would be sensible to create some governing principles and safeguards to ensure that the core sectors are not adversely affected in any way. Externally funded projects should be transparent and value-led in the interests of the agricultural industry, and any commercial work should be undertaken for a fee and not cross-subsidised, directly or indirectly, by the levy.

That work must not be allowed to have a detrimental impact on time availability or investment in the core sectors, and I would be grateful if the Minister could give his view on how that could be guaranteed. Indeed, it is important that the AHDB is not distracted from core business. Several representatives of the levy-paying sectors have said that they would like the AHDB to be able to devote more time to activities such as export promotion. Several have also emphasised the need for the AHDB to be as agile as possible in today’s fast-paced environment so that it can turn its attention swiftly to matters that need immediate attention.

It is helpful that producers in the potato and horticultural sectors can continue to access the AHDB’s services by purchasing them on an ad hoc basis now that they have voted to opt out of the levy payment. Clearly, that was a decision for those levy payers, but I was struck, on a recent visit to a major potato grower, on being told that data formerly available through the AHDB was no longer available, and they considered that to be a loss.

However, I also worry that there is a danger that this new arrangement could unfairly disadvantage smaller producers. The removal of the pooling effect of the levy, and 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. Perhaps the Minister could tell us what assessment his Department has made of the impact on smaller producers. If a disparity is found, what steps will be taken to address it?

Moreover, as I understand it, the AHDB believes that the “No” vote from the horticulture and potato sectors resulted, in part, from severe financial pressures caused by supply chain pressure and low profit margins. I am concerned that, because we still see many of the sectors struggling with the various crises affecting the industry as a whole, too many producers have been left in a difficult position. For them, opting out of the levy was one of the very last resorts as they sought to keep their businesses afloat. While that may be a good option for individual businesses in the short term, in the longer term, it could cause problems to the wider industry. Would the Minister tell us what action his Government are planning to take to deal with the broader challenges that farmers are facing, which have put so much pressure on some of them that they have felt the need to leave?

I also have concerns about the gap in horticultural research that may result from the withdrawal of the levy from the sector. I recall that in our debate on last year’s draft order, the Minister’s colleague, the hon. Member for Taunton Deane (Rebecca Pow), alluded to alternative centres for research in this area, including the outstanding UK Centre for Ecology and Hydrology, which I visited recently. It and other research institutes are conducting groundbreaking research on a range of crucial issues that impact the horticultural sector, but I remain to be fully convinced that we will be able to replace the lost research capacity quite as easily as some have implied. Can the Minister provide more reassurance on that point? In passing, perhaps he could remind us why the horticultural strategy has been dropped.

I have no objections to granting the AHDB powers to set a zero-rated levy, which it is currently unable to do. That seems to us to be a useful lever to help sectors that face severe challenges and are in emergencies, as long as the decision-making process is transparent, fair and consistent, and the financial assistance is relatively short-term. I also think that it makes more sense and would be much more efficient for the AHDB to seek approval for the appropriate authority to amend levy rates only when it proposes to change those rates, rather than maintaining the current state of affairs whereby the board has to seek approval for the rates on an annual basis, regardless of whether they are changed. Any change in the levy rate, particularly an increase, must be very carefully thought through and clearly justified to all stakeholders and the accountable body.

With regard to levy deductions, I agree that the levy collection provisions need to be modernised to reflect automated systems and consolidation in the supply chain. I also agree with the proposal that there should be greater consistency across industries about who is entitled to a deduction and about the quantity of that deduction. However, I call for transparency in the costs of levy collection being covered when a negotiation is being conducted.

In conclusion, we welcome the substance of the changes proposed for the AHDB, but with caveats and words of caution, particularly regarding the unintended consequences that I have outlined. I know that the chair and the executive team have been making concerted efforts to improve levy payer engagement and enhance the service that they provide. I sincerely hope that the changes we have discussed today will bolster the ability of the AHDB to help its industry to navigate some extremely difficult challenges, as its role is more important than ever.