TFA welcomes the review of levy bodies
10/08/05

The Tenant Farmers Association welcomes the review of levy bodies being conducted by Rosemary Radcliffe. The timing is opportune given some converging factors as follows:

Firstly, and most obviously, there is the implementation of the recommendations of the Curry Commission Report which, amongst other things, argued that British agriculture should find a way of becoming re-connected with consumers. This is something which should be at the heart of the remit of levy bodies.

Secondly, we have the increasing dominance of the supermarkets and calls for their power to be curtailed by statutory codes of practice and an ombudsman.

Thirdly, we are expecting major and rapid change in the agricultural sector as a result of the new Single Payment Scheme. Many producers are already considering their options for change into the short to medium term.

Fourthly, there is tremendous focus on the obstacles created by the EU State Aid Rules. Levy bodies often refer to these when explaining their inability to promote British products to British consumers.

Fifthly, there are growing concerns about the confusion caused by the current rules on country of origin labelling. Consumers are not given clear information and this leads to an ability to make informed choices. Again this is something into which levy bodies should have input.

Existing Levy Bodies

Each levy body performs differently and levy payers hold strong perceptions about the value of their individual characteristics. For example many perceive the research programme of the Milk Development Council (MDC) to be of high value. Many in the arable sector will view the Home Grown Cereals Authority's (HGCA) work on the recommended lists, export markets and grain sampling to be important. The Meat and Livestock Commission (MLC) is seen to be good in working behind the scenes with wholesale and retail purchasers. Equally though many have been critical of activities such as the MDC's generic promotion of milk, the HGCA's research programme and MLC's recent promotional activity based on "Beefy" and "Lamby".

However the TFA believes that there is a potential danger from being deceived into thinking that given this range of perceived performance there would be merit in creating a single "super levy board" encompassing arable, livestock and milk. The TFA believes such a body would be unworkable given the conflicts of interest that would emerge.

For the remainder of this paper, rather than seeking to look at each of the individual levy bodies being reviewed, a view is expressed about the desirable attributes of a hypothetical, good levy body. With this in view, it is important to state the TFA's overriding position that whatever activities are undertaken, it will be important to ensure that the cost to the levy payer is justified by the value of what is being delivered. This is particularly the case when services are available elsewhere on a commercial basis.

State Aid Rules

An important area to tackle prior to deciding whether there is a future for levy bodies is the State Aid Rules. The TFA believes that a large portion of levy bodies work should be about assisting and facilitating marketing of British products to British consumers. If this is to be thwarted by State Aid Rules then serious questions need to be asked about whether there is any future for levy bodies

Marketing

Marketing should be the key and most significant focus of levy bodies. It is important to underline that this does not mean promotion. The TFA believes that institutionalised bodies like levy bodies are inherently bad at activities relating to promotion. The TFA sees little value in generic promotion or in levy bodies producing state or generic branding. The TFA believes that levy bodies should be facilitating marketing activity amongst the farming community. This could be done through sponsored training programmes and workshops, production of resources to encourage farmers to consider their marketing skills and grant aiding corporate and co-operative arrangements to produce brands and local marketing initiatives. The role in marketing should be to facilitate rather than doing it.

We must also deal with the crucial issue that farmers who pay levies assume that promotion and research is being taken care of wholly by others. As we move into an increasingly unsubsidised and global market farmers will need to be encouraged to do more of both. Levy bodies should have a primary role in facilitating those activities at farm level.

Information

An important function of levy bodies will also be to provide timely, accessible information to levy payers on market conditions, market prices, product information and benchmarking data. This is one of the functions which is valued by levy payers to existing levy bodies. In whatever new arrangements are put into place, it would be important to ensure that a key component will be information and advice.

Research

Levy bodies need to fund or conduct research in areas which the private sector are either ignoring or where the returns are too far away for commercial players to make a sensible decision to invest in such research. As part of this research programme, the levy bodies need to consider how they transfer the knowledge and technology to levy payers. It is important that information obtained through research funded by levy bodies does not get into the hands of our competitors in other countries. Levy bodies should not be simply producing research for research sake, but looking at where the gaps are, funding that research and ensuring that it is there for the benefit of levy payers.

The TFA does not see a role for levy bodies to co-ordinate all research in their area of expertise, but to be at least be aware of what is going on so that they can ascertain where gaps may exist and fill those gaps as appropriate.

Overseas Promotion

As with domestic promotion, the TFA believes that there is role for levy bodies to facilitate overseas promotion. Many farmers, farmer co-operatives and corporate entities will wish to market their brands overseas. The levy bodies should provide a key role in co-ordinating such activity rather than simply promoting the generic product of British grain, British meat or British dairy products. Levy bodies should be promoting trade fairs and encouraging and grant aiding brand holders of food products in the UK to attend those fairs to promote their wares.

Lobbying

Although constituted by statute, levy bodies should see themselves as entirely separate from Government and find ways of engaging with Government to ensure that issues affecting their sector are promoted when the Government is considering new legislation or new policies. Levy bodies should work alongside existing farming organisations in forwarding this work. The statute itself should provide the enabling framework for bodies to be able to be independent of Government.

Governance

The TFA believes that levy bodies should look to developing corporate governance structures, rather than structures that seek to mirror arrangements seen in Government. The arrangements should be more in keeping with Board and Shareholder relationships rather than committee and council type structures. Levy payers should appoint the Board with the majority of places on the Board reserved for levy payers. External Board members should be considered but not where they have a conflict of interest with the ethos of the levy body. For example, there are likely to be conflicts of interest between producers on the one hand and processors and retailers on the other. They should not be expected to share the governance of levy bodies. Producer interests must outweigh all others. It will also be important to seek the active involvement of working farmers ensuring that they are properly recompensed for their time away from their businesses.

It is however important not to consider that democracy and levy payer elections alone create good governance. There will be a need to attract high calibre individuals with sound business acumen and strong leadership skills.

Conclusion

The TFA believes that levy bodies need to show clearly how they are impacting for the better on the sectors that they are seeking to promote. The TFA believes that the above structure would provide the right platform for levy bodies to work effectively for the benefit of levy payers. If such a structure cannot be achieved then the TFA would question whether or not there should be a future for levy bodies at all.