Wind-down and transition of all AHDB Horticulture and AHDB Potatoes activity and levies for 2021/22 period
On this page, you'll find information on wind-down and transition of all AHDB Horticulture and AHDB Potatoes activity.
Responses to questions asked by levy payers
Ministers were clear there would need to be a final 2021/22 levy.
AHDB must fund operational liabilities associated with the wind-down of contracts, people and assets and levy payers have a responsibility to cover the costs of winding up levy supported activities. This means a levy is needed in 2021/22 to supplement horticulture and potato sector reserves to cover these costs, and the statutory levy in the horticulture and potato sectors remained in place as a legal requirement for the financial year 2021/22.
We recognise the outcome of the ballots and the end to the statutory horticulture and potato levies has been confirmed by Ministers in their analysis report on the industry consultation and what they will do next to put in place changes to the legislation that governs AHDB.
2020/21 has been confirmed as the last year of the existing statutory levies in the report published by Defra and the Devolved Administrations on 8 March 2022.
We considered a number of approaches and where industry organisations have shown interest in taking on products, tools or services then staff expertise have also featured in those discussions, when appropriate.
For AHDB Horticulture it was estimated to cost c. £10.6M to meet all the liabilities through the planned transition of activities and the wind-down process. AHDB horticulture reserves at 31 March 2021 were £6.05M. The reduced 2021/22 levy rate is expected to raise £4.55M.
For AHDB Potatoes it was estimated to cost c. £7.4M to meet all the liabilities through the planned transition of activities and the wind-down process. However, AHDB potato reserves at 31 March 2021 were only £1.2M. These reserves are relatively low because over the last three years the sector has run an annual deficit, thereby reducing its reserves.
AHDB sector reserve levels were never set to fund a sector specific wind-down situation. The 2021/22 potato levy rate is expected to raise £5.6M.
AHDB Horticulture has historically sub divided the horticulture levy income between six main crop groupings, each represented by a sector panel. The allocation of budget to each panel has been in proportion to the income generated by each crop sector using optional data provided by most growers in the levy returns. This has given capacity to deliver research, knowledge exchange, EAMUs and crop protection regulatory work across the varied needs of a diverse sector.
Horticulture’s share of cross AHDB costs, such as leasing office space and the redundancies associated with restructuring have been broken down using the same principles. These principles also apply to the central staff costs for collecting levy etc.
For technical work - such as the EAMUs and Emergency Authorisations workstream, including the underpinning data collection through residue and efficacy trials as well as budget committed to completing contracted research - costs are allocated for each project at a panel level.
Panels and the Horticulture Board have been provided with full breakdown of costs to panel level.
Over the last few weeks, we have received a number of enquiries relating to EAMU programme costs, as external organisations start to explore what a future programme might look like and how it might be administered.
Please visit the section below for more information.
Should you require anything further about how this service is provided, please feel free to contact the team at EAMU@ahdb.org.uk.
For full detail on the costigs associated with the EAMU programme and service, Download Extension of Authorisation for Minor Use (EAMU) programme costings – 2022/23.
When AHDB was set up and BPC operations moved from Oxford to Stoneleigh, there were a number of exceptional reorganisation costs involved which were funded through those reserves. All of the AHDB Annual Report and Accounts (ARA) are available.
In the 2008/09 ARA, you will see an opening reserve of £4.16M for the Potato sector, which reduced to £1.36M at 31 March 2010 (as stated in the 2009/10 ARA Annual Report and Accounts). Subsequently the Potato sector has run board-approved deficits in some years, spending the reserves money on research, Knowledge Exchange, Marketing and Market Intelligence work to benefit potato growers.
Previous AHDB boards took a view that farmers would not want more reserves than necessary to operate cash-flow and a small contingency reserve.
There are 17 non-storage research projects that ran throughout 2021/22 financial year (four of which extend into the following one or two financial years) along with Strategic Potato (Spot) Farms final liabilities, and our Market Intelligence products that ran until June 2021. A few smaller contract commitments were included where we are part of cross sector arrangements (e.g. paying for a share of the contract with British Nutrition Foundation for the schools education programme). Expenditure was £2.5m and staff costs were £1.5m which brings the total to £4M.
Storage projects don’t profile precisely against the financial year with crops in store as late as Aug 2021 and project data processing/reporting taking place in December 2021. We've included expenditure of £0.1M against six projects which when added to staff costs of £0.5M brings the total to £0.6M.
Project titles are available here.
AHDB encourage all levy payers to act responsibly and pay the levy this year which is necessary to cover the wind-down costs of the activities in these sectors. AHDB remains legally obliged to pursue all overdue levy payments and AHDB will use its powers to pursue levy debtors through the courts if necessary.
A contingency of funding will be held for a period of up to six years to fund any residual liabilities which may arise in the horticulture or potato sectors. After this period the utilisation of any funds remaining will be discussed with the industry and government.
If there are any significant amounts of horticulture or potato funds remaining, over and above the required contingency, at the end of the wind-down process, the more immediate utilisation of these will be discussed with the industry and government.
The legislation that governs AHDB, stipulates that the levy raised from an industry sector must be used for the benefit of that sector. This means that the levy money from AHDB's other sectors cannot be used to settle any horticulture or potato liabilities that come to light over the next few years. Therefore, AHDB needs to retain some contingency funds for this purpose. Six years is deemed an appropriate period in which any such liabilities will have been revealed and after this period the utilisation of any funds remaining will be discussed with the industry and government.
If however, there are any significant amounts of horticulture or potato funds remaining, over and above the required contingency, at the end of the wind-down process, the more immediate utilisation of these will be discussed with the industry and government.
- The Potato Sector Board has had oversight of the potato activity wind-down process. Alison Levett remained as interim chair and has been attending relevant parts of the main AHDB board as an observer. This arrangement ceased at the end of March 2022, and members were thanked for their contributions in a closing meeting
- The Horticulture Sector Board has oversight of the horticulture activity wind-down process. Peter Judge is the interim chair and attends relevant parts of the main AHDB board as an observer. This arrangement will continue until March 2023, recognising the need to provide oversight of the EAMU/EA work and the remaining horticulture research projects (28 running in 2022/23, 11 in 2023/24 and 3 in 2024/25)
Levy payer communications and future access to research reports and fact sheets
Communications to levy payers are limited to in-season EAMU notifications (through our monthly Horticulture Update), potato storage results and essential updates, such as emergency pest and disease communications. We will update financial projections for both sectors on this site later in 2022.