Levy payers challenge AHDB sector chair Mike Sheldon over proposed levy hikes
10th Nov 2023 / By Alistair Driver
Levy payers posed a range of searching questions to AHDB Pork Sector chair Mike Sheldon during an online AHDB Funding the Future event on Thursday, as AHDB seeks support for a proposed increase to its levy rates.
AHDB confirmed plans for a 20% hike in the pork levy at the start of October, which would see the total pig levy, which hasn’t changed since 1996, go up by 21p to £1.26/pig from April 2024. The producer levy would increase by 17p to £1.02 and the processor levy by 4p to 24p. This would raise approximately a further £1.5 million, taking the total levy to around £8.6m.
AHDB is proposing levy increases on a similar scale across the other three sectors, and, on Thursday, hosted a Funding the Future livestream event, which featured all four sector chairs in hour-long slots over the course of the day.
- You can view all four sessions in full HERE
With AHDB's Angela Christison chairing proceedings, Mr Sheldon took questions on various topics from levy, starting with producers Robin Lawson and Anna Longthorp, who asked why processors can't pay a higher proportion of the levy as they appear to derive the biggest benefit from it, and why the levy couldn't be increased on a more gradual, regular basis, rather than in one big hike.
On the first question, Mr Sheldon said there was 'a long history as to why the levies are split as they are', but acknowledged there was 'no particular logic to it'. "It is a question that could be asked repeatedly into the future and that ratio between producer and processor levy could change, if that's what everybody in the sector agrees," he said.
He refuted the suggestion that the majority of the value of the levy accrues to processors, however. "The value comes to whole chain. How it gets split between producer, processor and others involved in the chain is a matter of commerce. But I don't think it's right to say the value goes more to the processor than the producer," he said, emphasising that integrators pay both levies.
On the proposal to raise the levy by 20% in one go, the first increase for more than 20 years, he said that, in future AHDB might look to introduce more frequent, smaller increases. "But we are where we are, and maybe we could or should have done something different in the past," he said, adding that it would have been 'impossible' to raise the levy over the past two or three years, given the financial state of the industry.
Questions also came in on whether AHDB could do more on a cross-sector basis to promote British farm produce and encourage retailers to stock more British food, and on the use of levy funds for training, including leadership skills, educating young people and other areas.
There were questions on slaughter data, including the share of processor-owned and indepndent pigs, and the credibility of AHDB's price reporting data, including the SPP.
Mr Sheldon was also asked what would happen if the proposed levy hikes did not go ahead. He acknowledged that this question kept him awake at night, and explained how AHDB would not be able to deliver full value-for-money for pork levy payers in future without the extra funds it needs.
Pigs Today Podcast
In a special Pigs Today podcast recorded in early October, Mr Sheldon explained that AHDB needs to increase the levy to maintain and enhance the services it delivers across its priority areas – exports, domestic marketing and industry reputation.
He highlighted, for example, that the return on AHDB’s domestic marketing spend is starting to dwindle, but said by investing more, it can deliver better ‘bang for levy payers’ buck’.
He said AHDB acknowledged that levy payers are under pressure, themselves, but urged them to see the levy as an ‘investment’, highlighting the development of export markets as a prime example of where levy spend delivers significant returns.