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    NFUS Responds to Agricultural Levy Board Review
09/02/06

NFUS has agreed with the main conclusions of the Radcliffe review of the UK’s agricultural levy boards, however, does not believe the proposed new structure for UK levy boards is the right way forward.

The Union has agreed that sector-specific levy bodies should continue, covering cereals and oilseeds, horticulture, milk, potatoes and red meat. These should continue to be funded by a statutory levy.

NFUS also believes the report correctly identifies the main issues that need addressing, in particular the need for levy boards to be accountable to the levy payers in the industry by whom they are funded.

However, NFUS does not believe that the proposed new model for UK levy boards addresses these issues, nor is it necessarily an improvement on the current situation. The Radcliffe report has recommended the establishment of a holding company (so-called ‘NewCo), responsible to UK Ministers, which would set and collect levies. These levies would then be distributed to the individual levy bodies (SectorCos). The third element to the model was the establishment of a service company (ServiceCo) which would provide common back office services like finance, human resources and IT.

Quality Meat Scotland, the country’s devolved red meat levy body, was included in the Radcliffe report and the subsequent consultation. NFUS has reiterated its firm view that there should continue to be a Scottish red meat body, accountable to Scottish Ministers. NFUS has also stressed that direct accountability to levy payers is the top priority and believes that a majority of the Board should be made up of levy payers, preferably by election, along the lines of its New Zealand equivalent.

NFUS President John Kinnaird said:

“We met Rosemary Radcliffe a number of times during her review and her report hits the nail on the head when it comes to identifying the main issues. These are accountability, the scope of levy bodies’ activities, levy payers’ value for money and cost-effective operation.

“We totally agree that the industry needs a levy body for each of the main sectors and a statutory levy system is the only viable funding route. Given the significant market change arising from subsidy reform, together with changing consumer preferences and an fast- moving regulatory environment, effective levy boards are more important now than ever.

“However, I don’t believe the introduction of New Co would help with accountability of levy boards, especially to levy payers. It just seems to create another layer of governance.

“The principle behind ServiceCo is sound. However, effectively creating a monopoly by forcing the levy boards to use this service company doesn’t fit with the principle of ensuring best value. Cost-effective operation is essential but it would make more sense for levy bodies to jointly tender in the private sector for common services like IT and human resources.

“It is only a few years since Scotland’s devolved red meat body was established and the same arguments in its favour then hold true now. Therefore we would not want to see QMS independence diluted, although opportunities to work with other levy bodies to avoid duplication must be grasped. Accountability to the industry is again key and the New Zealand model is worth considering whereby the Board is elected by levy payers to ensure full accountability. It could then co-opt other elements of the supply chain to ensure it was inclusive.”

  • The review of the UK’s agricultural levy boards began in March 2005 and was conducted by Rosemary Radcliffe.

  • The five levy boards covered by the review were (budget in brackets):
    1. British Potato Council (£5.9 million)

    2. Horticultural Development Council (£4.7 million)

    3. Home Grown Cereals Authority (£9.8 million)

    4. Meat and Livestock Commission (MLC’s income is split between four devolved bodies: English Beef and Lamb Executive (£11.3 million); British Pig Executive (£7.3 million); Quality Meat Scotland (£4 million) and Hybu Cig Cymru (£3.6 million))

    5. Milk Development Council (£7.3 million)
  • The review also included Quality Meat Scotland (QMS), which receives the Scottish red meat industry levy and carries out the functions of the Meat and Livestock Commission in Scotland, reporting to Scottish Ministers.

  • The Review examined the needs of the agriculture sectors and the role and performance of the levy bodies that serve them.

link Westminster Meetings Highlight Food Supply Chain Concerns
link NFUS Continues To Fight Injustices In Food Supply Chain
link No Benefit To Farmers Of Increased Retail Milk Price Rise

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National Farmers' Union
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