I will start with a warning. This is a post for agricultural anoraks.
One of those things that can sometimes dominate debate in agriculture and which is almost completely unknown to the rest of the population is the levy system. Without going into too much detail, the levy is a payment made by producers to a levy board in return for support in terms of marketing and business development. Despite agriculture being almost entirely devolved this levy system remains one of those few areas that continues to be administrated from London.
In Wales the red meat levy paid by pork, lamb or beef producers is paid to the Welsh levy board – Hybu Cig Cymru – the amount of that levy is determined by Welsh Ministers. Hybu Cig Cymru do a great job and is a model that could help other sectors. All other levies are paid to the Agriculture and Horticulture Development Board, for Wales that means mainly horticulture and dairy as well as meat products from England. In addition to this there is also Seafish which, as the name suggests, is the UK’s seafood levy board.
These boards are responsible for providing support to producers, supporting the supply chain and marketing the goods. And in my view, their performance in supporting Welsh producers is dismal. In my experience the AHDB is an organisation that is almost completely devoted to the interests of the industry in England and cares little for producers in Wales.
This has been something which has tried the patience of many ministers and many government officials and over which there has been intensive lobbying over many years. And still there is no sign of change.
In three years in government I had the opportunity of meeting the chair and chief executive of the AHDB on one occasion. A sad 15 minute meeting in Aberystwyth. They appeared to have little to say to me. On the appointment of a new Chair I was persuaded by officials to write an effusive letter of congratulations and an invitation to Wales was issued. Even my most patient officials gave up the cause when we had received no reply some months later. “It’s very disappointing minister…” Too right it is.
This is a problem for us. I’ll give you an example. In terms of red meat, although we have our own board in Wales we lose over a £1m every year because the levy is collected at the point of slaughter and the processors are overwhelmingly concentrated in England. The same issue affects the Scots in exactly the same way. Together the Welsh and Scottish levy boards commissioned some research which was published in January 2013. I remember reading the first draft during a break in meetings in Brussels. Myself and the Scottish minister asked the UK (English) minister for his views. He didn’t challenge the findings, he simply groaned and signed a lot. He simply wanted the problem to go away.
The UK Government knows that the system doesn’t work but appears to have no intention at all of dealing with it.
Essentially there are three reasons put forward to maintain the current system. Firstly, that it’s easiest and simplest and we already have the structures in place to make it work – in essence it’s too much hassle to change anything. Secondly that the system works really well for Wales, the problem being that we neither understand or appreciate how good it is for us. We need to improve our communications. And then thirdly and finally, that there’s no pressure for change from English producers because the existing system benefits them.
This final reason of course is the true reason why change does not happen. I remember being told by a UK minister that change is impossible because the current regime suits England. He smiled and I smiled. We both recognised the unspoken truth. And a committee was duly established to improve communications.
And that’s why change is so urgent.
I have already written that Welsh agriculture needs more and faster reform. The levy system may hold a key to delivering this change. It is a system which is funded by the industry and one where control lies outside of government. It is industry-led and industry-focussed. The key for me is that the levy board must certainly include those who pay the levy but also those businesses who process and sell the produce – as well as crucially those who will be buying the produce. And whilst the inequity in red meat is an obvious and urgent imperative, it is not alone. Throughout my time in office I did not see the value for Welsh producers from either DairyCo or from Seafish.
I would like to see a Welsh Food Board, funded by the levies, and which would work with producers, processors, retailers and government to strengthen food production in Wales and to develop new markets for that food produce. This is an industry with not only the potential to transform the economy of rural Wales but also to be an example of what the sustainable green economy can achieve in terms of jobs and incomes and tackling poverty.
And a Welsh Food Board will make an immediate impact. Take the dairy sector for instance, currently suffering some real difficulties due to the Russian boycott of EU produce, a Welsh Food Board could provide the same support for this industry in both business development and new market development that HCC already does for Welsh lamb and beef. And that could help deliver real improvements for Welsh producers. I would guess that on-farm support would be more valuable to producers than the stream of increasingly-gloomy market data that DairyCo currently produce. This is an area that is never going to dominate the debate on the future constitutional settlement but it is an area where change must come as a part of the wider discussions on the next Wales Bill.
The Welsh food industry has the potential to grow significantly over the coming years. But it is crucial that we maintain as much value within Wales as possible, that we export value-added products and not simply the raw materials. Working with the new Rural Development Plan a Welsh Food Board has the potential to transform how this industry grows over the coming years. It can also create new employment in some of our poorest communities and provide much wider and great economic value for the whole rural community.
And if you want to see how it will work then you simply need to look across the Irish Sea where Bord Bia with an annual budget of over €40m is driving forward the Irish food industry. With a focus on industry development, marketing and the highly innovative Origin Green programme it is doing today what we talk about doing tomorrow. And that’s why change is not only important but urgent.