Ask AHDB – Dairy Levy Increase - Questions and Answers

[TFF]

AHDB’s Dairy Sector Council would like your questions about proposals to improve services and deliver more by increasing levy rates from the start of the 2024/25 financial year.

Sector Chair Lyndon Edwards will be taking part in a Q and A session, responding to questions from levy payers, at AHDB’s ‘Funding Your Future’ livestream event on 9 November.

Lyndon is an experienced organic dairy, beef and arable farmer with more than 40 years’ experience in the industry. He has a passion for sustainable agriculture and holds numerous industry roles.

You can find out details of the proposals for the Dairy Sector here: Funding Your Future 2023 – Dairy | AHDB

The Sector Council are proposing an increase in levy rates to:

• Increase consumer marketing campaigns
• Increase education work with schools
• Highlight the low environmental impact of Dairy production
• Stimulate more export demand to grow overseas sales

The Dairy Live Q and A session will start at 12:00 GMT on 9 November. Any questions not responded to on the day will be answered after the event and shared in this thread.

 

[Chris F]

We’re working with AHDB to get as many questions from farmers regarding the proposed levy increases in each of the 4 sectors. As per the Defra Q&A threads we have run before, these will run with the same aims. This thread is only for questions, all commentary will be deleted.

Please read all the questions and use the upvote or downvote buttons to indicate which questions you agree with as opposed to asking the same question twice. This will allow AHDB to understand which questions are most important to farmers.

The thread is open for questions now and will close at midnight on Tuesday 7th November. The Q and A’s are being held on the 9th November and the AHDB are aiming to answer all questions on the thread after the event if they aren’t covered in the live Q and A. The livestream will be included in this thread and also ran in the header of this section on the 9th November.

Please take some time to read the information relevant to your sector and then ask your questions below.

 

[buffalo_soldier]

Why are we receiving no defence from the increasing and completely over the top demands from Red Tractor?

They are nothing more than a time, cost and mental burden. That you are assisting in adding to.

 

[sjt01]

As all the useful functions that DairyCo used to do are now carried out by our milk buyer/cooperative, and our excellent local representative has now left, I see no justification for a levy funded body. What are you doing that the likes of Arla and Muller are not doing, which might justify a levy at the existing level, let alone an increased levy?

 

[Same95]

I agree with Buffalo. We need help to reduce the red tractor burden....and also our green credentials to be recognised, protected from retailers and eventually properly valued.

 

[vantage]

Why hasn’t the misinformation in “Weeatbalanced”, been amended to show the true figures, according to GWP*?

 

[Hesstondriver]

question :
We are seeing reviews in to the RT assurance for Grains and cereals, when can we expect similar levels of burden reduction within Dairy sector ?

How quickly could the requirement for RT Dairy Farms required to be RT for beef be removed?

Does the ADHB fully understand the connection between uk feed mills requiring all grain to be RT and the knock on cost consequence to the UK livestock sector including Dairy?

@Chris F Feel free to consolidate and or paraphrase , but i think you'll guess the theme !

edited to make them leading questions

 

[sjt01]

question :
We are seeing reviews in to the RT assurance for Grains and cereals, when can we expect similar levels of burden reduction within Dairy sector ?

How quickly could the requirement for RT Dairy Farms required to be RT for beef be removed?

Does the ADHB fully understand the connection between uk feed mills requiring all grain to be RT and the knock on cost consequence to the UK livestock sector including Dairy?

@Chris F Feel free to consolidate and or paraphrase , but i think you'll guess the theme !

edited to make them leading questions

Arla farmers should also get an answer to why Red Tractor is needed when Arlagarden is so much more relevant.

 

[Hesstondriver]

Arla farmers should also get an answer to why Red Tractor is needed when Arlagarden is so much more relevant.

So the question to Adhb here should be :

why do you continue to endorse RT when the supply chain has its own bespoke accreditation?

or

how much longer are you going to continue to endorse RT when the supply chain has its own bespoke accreditation?

 

[Annie]

AHDB's Dairy Sector levy proposal Q & A session is now LIVE. Watch here on The Farming Forum.

 

[AHDB]

Source: Video – Fraser Jones, dairy farmer Mid-Wales

With the proposed increase in levy payment, what will that money be spent on and will that be ringfenced to certain areas as I believe it needs to be put in to education of people outside of farming about the products rather than AH&W which it's currently doing so?

Answered at live event: Dairy: Funding Your Future - YouTube

(3:46) Well, certainly following last year’s STF event our levy payers told us what they wanted us to do more of. And it was really 3 areas – marketing: they want us to do more marketing of our products. They wanted us to defend our reputation to the industry and they wanted us to do more work on exports so those are the three areas that we’ll look to spend the extra levy money on.

 

[AHDB]

Source: Video

Why such a big increase? This is more than a 30% increase

There are 2 main reasons: 1) Levy Payers have asked us to do more on top of existing activities, particularly on Marketing, Exports and Reputational Defence; 2) the Levy Rate hasn't increased in more than 20 years, and with inflation, spending power has declined every year since then. For context, the additional cost of a 0.02ppl increase for the average GB dairy farm producing 1.65m litres per annum would be £330 year.

 

[AHDB]

As a business manager - when i am investing on farm, I need to know the payback on money I wish to borrow and the timescale as well as justify what I am investing in. Can the AHDB confirm when we, as levy payers will see the payback for this additional investment in particular and confirm what the multiplier effect benefit is for the levy payer.

The process is same as you outline for all AHDB activities, but worth bearing in mind that some activities are targeted to influence consumers attitudes rather than return on cash invested. For each worksteam (e.g. Marketing, Exports, Environment, Animal Health and Welfare) the Dairy Sector Council see operational key performance indicators (monthly or quarterly measures) and longer term (annual measures) at each of their meetings along with commentary on progress.

 

[AHDB]

Source: Video – Bil Higgins, dairy farmer, Shropshire

If we assume a 60p levy output per 1,000 litres why are we only spending 7p on defending out reputation and educating kids in school. Our biggest risk is our reputational risk and the damage that's been done in education, our next generation of consumers. Why is it the lowest % spend in the five areas of the budget?

Answered at live event Dairy: Funding Your Future - YouTube

(13:35) There’s a chart we used behind the scenes, so that’s where he’s (Bill) got the 7p figure. What I would say from a broad perspective is, first of all, everything we do is about promoting our reputation, or defending our reputation. So, consumer marketing: the We Eat Balanced and Eat Like a Lioness, and Love Lamb marketing campaigns - 20p out of every 60p is spent on the marketing campaigns. Defending our reputations is two things. As Lyndon talked about, it could be academic studies that are criticising dairy, it could be stories on the BBC website that we would pick up on. Then we’ve areas like exports which is 8p (of the 60p), promoting our products overseas. As Lyndon talked about, we can get a tanker, 10 tankers, 100 tankers of milk or dairy products and move that oversees. It gives us high profile premium markets, it gives us options. And the final two areas are environment, which is 15p out of the 60, environment and genetics, and also animal health and welfare. So, I take Bill’s point when he’s talked about the 7p in black and white it is about that much but everything we do, which is in line with what levy payers said they wanted us to do, what they said was important, is about promoting the reputation and defending the reputation.

 

[AHDB]

How much of the levy is spent on bureaucracy and HR and these sorts of thing and how can they be minimised going forward?

The Dairy Sector Council receive a detailed finance report at each meeting which breaks down spend into the main spend areas. This can be summarised as Dairy sector specific activities and central shared service costs. Dairy sector specific activities account for around 89% of levy spend while central shared service centre costs are around 11% and include, Finance, HR, Facilities, IT, Procurement, Legal etc…
Like all costs, central shared costs are kept under review.

 

[AHDB]

Question around market failure and the services that the board provide - if the board wasn't there would I be able to get the services elsewhere?

The Sector Council went through line-by-line all the activities that AHDB Dairy Sector funded last year and ensured that it was not funding work that is already supplied by the market. For any new activity, it must pass the ‘market failure’ test.

 

[AHDB]

Firstly I believe a lower percentage of the levy payment should go into animal health & welfare section because I believe there are better returns on the money spent in other areas. I also feel that AHDB have stands at a lot of agricultural shows and I kind of disagree with this as I don't see them as that busy and think it would be better spent on shows outside of agriculture to try to get to people in the inner cities to educate them about milk, farming and everything we do.

We do a small number of agricultural shows (e.g. DairyTech, UK Dairy Day, Welsh Dairy Show and AgriScot) as it allows us to speak to a proportion of levy payers who do not attend our meetings or webinars. It’s a good point about doing shows outside agriculture and we will have a look at that with other AHDB Sectors.

 

[AHDB]

Source: Video – Matthew Pilkington, dairy farmer, Northamptonshire

Biggest challenge on farm today is the training and building of high performing teams, I would like to see the levy spent on management training programmes, such taking our herd persons to herd managers and eventually to become their own farmers

Answered at live event Dairy: Dairy: Funding Your Future - YouTube

(17:53) I there’s two aspects to (deciding whether we fund) training, one is about market failure: there’s already a number of suppliers and proprietors out there who are doing training. So the question towards the sector council is, should they be putting money towards that there’s a number of existing players out there? And I think the other point would be, when we asked levy payers to tell us what are the most important activities that AHDB do – there was marketing, there was exports, there was reputational defence and areas like training came down the lowest. So the spending power has been declining over the last 20+ years and the view of the sector council was we put as much money as possible into the areas that resonate with farmers. So training isn’t not something we greatly focus on. clearly it is needed for the industry but it’s one of these conundrums – if AHDB did everything that farmers asked them to do then we wouldn’t have the money to spend in the really important areas.

 

[AHDB]

Source: Video – Will Pritchard, dairy farmer, Pembrokshire

Why is the levy not charged at a percentage of the total milk check rather than a fixed rate per litre that way when the industry does well AHDB does well. When the industry doesn't do so well pressure goes on to AHDB to deliver as well.

Answered at live event Dairy: Funding Your Future - YouTube

(23:18) well, there’s several reasons. The first one is cost of collection and easy of collection. For the milk processors who actually collect the levy from farmers and pass it on to us, the fact that it’s the same amount per litre makes life very easy and cost-effective. The other reason is when we’re sitting down and doing our budgeting at AHDB, we have to commit to spending on different areas of the budget to areas that farmers have told us is important to them, and the fact we’ve got a consistent amount, we know what we’ve got, does make our budgeting much easier.

 

[AHDB]

Can we ringfence levy collected in Wales for specific spend to support the Welsh dairy industry?

Answered at live event Dairy: Funding Your Future - YouTube

(19:45) We get exactly the same question in Scotland as that. So, for a bit of context... there's circa 2 billion litres produced in Wales so about £1.2 million which comes into AHDB. When we asked for the views of levy payers in Wales what were the most important areas, it was almost exactly the same as dairy farmers across Britain said, so it was exports, marketing, reputational areas. It was a carbon copy of that. So what I would say on that, if I can reassure any Welsh people who are watching, of that 1.2 million we are spending money on the areas you asked us to spend money on which is 1.2 million, 400 grand of that will go into marketing. We're spending the money on the areas that farmers have asked us to spend money on.

I completely agree. I was at the Welsh Dairy Show a couple of weeks ago down in Carmarthen and the questions I get asked there are exactly the same as I get asked at other dairy shows and farmers’ opinions are very much the same.