AHDB written submission to Farm Assurance Review commissioners

AHDB has made its submission to the commissioners leading the independent Farm Assurance Review. Our response is below in full.

Introduction

Assurance schemes¹ have proliferated throughout the world to provide customers, whether trade or end consumer, with confidence that a product has been independently verified to defined standards. This is especially important when the product is either variable by nature, potentially dangerous to the consumer, or in circumstances in which legislative standards are unclear, weak or non-existent. Primary produce can fall into any of those categories.

Retailers and supply chains have increasingly recognised not only their legal obligation to ensure food safety, but also the potential for assurance to help develop customer loyalty.

A diversity of farm assurance schemes operate in this area. At one end of the spectrum, the supply chain, including manufacturers, validate suppliers’ production standards for food and feed safety purposes, and demonstrate compliance with other legislation. Such schemes are usually, but not always, provenance disinterested, an example being Global Gap.

At the other end of the spectrum, more focussed schemes seek to add value to produce by certifying a specific production system, provenance or attribute above food and feed safety, for which compliance to defined standards enables access to a premium market or markets.

An example of a scheme focused on provenance is Bord Bia’s Sustainable Beef and Lamb Scheme in Ireland, while an example of a scheme focussed on organoleptic qualities is USDA Prime beef. Schemes focussed on methods of production include organic certification, which is legally defined in legislation, as opposed to voluntary schemes such as RSPCA assured and Pasture for Life.

Voluntary farmer and food chain assurance schemes have also grown throughout the world to defend and promote local produce in domestic markets and to support exports. In addition, NGOs have developed schemes that seek to provide customers with confidence with regard to a specific cause, such as Fairtrade (fair returns to producers); RSPCA assured (animal welfare); and UKWAS and FSC (sustainable woodlands and forests).

In addition to assurance schemes’ diversity of objectives, there are also variable degrees of audit rigour of their compliance by scheme users.

¹ This discussion focuses on farm assurance, as opposed to trade assurance schemes such as UFAS and TASCC in the cereal sector.

Analysis of the current context

Strengths 

1. Schemes that designate identifiable real or emotional benefits of provenance or specific systems of production tend to be focused and supported by a committed community of producers, such as Irish, Scottish or Welsh farmers, or farmers committed to organic or pasture fed production methods. Confidence in the value of participation in such schemes is comparatively easy to maintain and promote. 

2. Farm assurance in the UK was established following the 1990 Food Safety Act, which required due diligence across the supply chain. Assurance marks now have a high level of awareness with consumers¹, and in the red meat sector, there is evidence that assurance can boost sales and improve consumers’ perception of the industry². 

3. Perceptions of both value and engagement vary considerably by sector. In some sectors (e.g. pork), the value of assurance to users³ is relatively uncontested, and in some schemes (e.g. Scottish Quality Crops) a cooperative ownership model has helped to facilitate user ownership and clarity of purpose. 

¹ Research from AHDB and YouGov (2023) shows that consumers have a high level of awareness of assurance marks with some assurance marks having over 80% recognition with the general public. 40% of consumers surveyed claim that the meaning of assurance marks is very or quite clear.

² AHDB research on red meat online shopping from 2023 showed that search page results which contain welfare messaging and assurance scheme logos saw purchase intent increase by 5%pts. These webpages significantly increased consumer perceptions of the red meat category boosting their positivity by 11%pts. There were also significant uplifts in consumers viewing the products as tasty, health, sustainable and high quality when there was messaging about animal welfare and assurance schemes versus a baseline.

³ User refers to farmers and processers who participate in an assurance scheme.

Weaknesses 

4. The perceived dominance of retailers in the standard setting process has led to a sense of powerlessness amongst many scheme users. The risk of multiple inspections has led to audit fatigue amongst some who participate in multiple assurance schemes, compounded by limited alignment and duplication between schemes and a lack of transparency regarding earned recognition (e.g. Renewable Energy Directive for Cereals). 

5. A challenge for any scheme that seeks to provide multiple benefits to different stakeholders is the risk of constantly raising standards to meet a particular stakeholder’s demands, thereby increasing costs to scheme users for limited or no additional value. Where this is dealt with by voluntary bolt-on standards there is the perception that this will lead to unnecessary standard creep over time. 

6. It can be difficult to develop and maintain confidence in value amongst users of baseline assurance schemes that encompass a broader church of users, and do not designate the benefits of provenance or specific systems of production described above. This challenge is heightened when assurance brand promotion is not visible on the shelf, such as in the case of cereals and oilseeds, where baseline schemes are focused essentially on providing industry customers with due diligence. 

7. In some sectors, the specific purpose of assurance is unclear; does it represent a universal buying specification, a brand, or a de facto regulatory body? The value of baseline scheme participation is particularly contested amongst users when standards over-deliver against export market requirements (e.g. lamb), or when import standards’ equivalence (e.g. cereals) is unclear. 

8. The relationship between assurance standards and relevant legislation is not always clear, both in terms of the extent to which any given standard goes over and above legislation, and the rationale for baseline scheme standards including adherence to some aspects of legislation but not others. 

9. Inconsistent interpretation of standards by auditors can also reduce trust in the audit process. Auditors and assurance schemes can be perceived as the gatekeeper to market, with no recourse to an external body if non-compliance restricts market access. 

Opportunities 

10. There are opportunities to embrace efficiencies offered by technology in audit planning (e.g. utilisation of a single online portal for all schemes) and delivery (e.g. digitalisation of evidence submissions). 

11. When standards are perceived as being owned and imposed from above without clear communication as to the added value compliance will generate, a sense of powerlessness and disillusionment amongst scheme users is the inevitable result. In this context, there is now a clear opportunity to reset users’ ownership of both the standard setting and audit processes. 

12. There is also an opportunity to move from prescriptive to outcome-based standards¹ to reduce the perception of a heavy handed / unnecessary administrative burden. 

13. Clear communication as to the rationale behind each standard and the added value (i.e. market access facilitated) or proportionate due diligence delivered, would enhance trust and ownership amongst users.

¹ E.g. recording the regular monitoring of cereal moisture content (prescriptive) to selling grain within specification (outcome)

Threats

14. There is a risk of further disengagement of users unless the value of each baseline standard is communicated effectively. Users must be able to challenge any standard that does not deliver value for them via a transparent and effective governance structure.

15. An assurance scheme that increases its standards in response to one customer’s requirements (e.g. retailers) and is universally applied across all suppliers to all customers, risks taking value out of the market. However, while tiered, segmented or bolt-ons to baseline assurance scheme may help reduce over-delivery against market requirements in some sectors, and facilitate users to access market premiums in others, it could also risk confusing consumers and diluting assurance brand integrity if not done well.

16. In some sectors, a failure to embrace new standards (e.g. enhanced sustainability requirements) risks handing competitors an advantage. At the same time, there is also uncertainty as to how bolt-on supplementary standards can avoid being merged into ever expanding base standards over time for no increased value to producers, as discussed above.

Principles of farm assurance that are fit for the future.

Considering the above SWOT analysis, and through the lens of value to the Levy Payers we represent, AHDB offer the Commission the following principles for consideration to underpin a farm assurance system that is fit for the future.

Purpose and value

1. The ability to provide consumers with confidence in food and feed safety is paramount to the effective running of supply chains.

2. AHDB view farm assurance as an important part of the UK agricultural and food supply chain, with some schemes providing confidence in food and feed safety and others providing confidence in other attributes, such as provenance, animal welfare or environmental sustainability.

3. There is only value in assurance over the legal baseline to UK agriculture and the supply chain when it demonstrably enables the development or defence of markets, and / or facilitates access to premiums that exceed the costs of compliance, and / or can demonstrably reduce the administrative burdens of compliance with legislation and market requirements e.g. through earned recognition leading to fewer inspections.

4. All schemes must have a defined purpose. It must be clear to users that a scheme is either meeting legislative food and feed safety requirements, or, if its standards go above legislation, that additional market access or a financial premium will be enabled for those who participate. In some markets for some sectors, a simplified baseline assurance scheme may be adequate to deliver market access (see point 10, below).

5. The legislative basis for all assurance standards should be clear and transparent in audit guidelines. Baseline schemes focussed on food and feed safety legislation and volume commodity markets should also be able to clearly articulate their purpose and value, and avoid increasing standards above regulatory requirements unless there is clear value to users in doing so.

Governance

6. If standards in a baseline scheme do go above legislative requirements for the benefit of market development, the rationale should be made clear to users and any decision should be open to challenge, and as appropriate changed, through an accountable governance structure. Such transparency and accountability are vital to maintain confidence and support amongst users.

7. Evidence suggests that there is merit in a cooperative type ownership model of baseline assurance schemes between farmers and primary processors, in order to foster ownership and to maintain transparency of purpose.

8. Baseline assurance schemes must never be seen as the imposition of a gate keeper and due diligence provider controlled by manufacturers and / or retailers. While recognising and delivering the needs of the consumer, retailer or manufacturer, such assurance standards must be equitably controlled by farmers and the supply chain¹.

9. AHDB believes that trust and ownership amongst scheme users will be enhanced if an independent body, not associated with any single assurance scheme, is tasked with: 

a) Enabling scheme users to easily compare all audit requirements for all schemes
b) Interpreting minimum food and feed safety legislative requirements and advising baseline scheme owners to help ensure fairness and proportionately to protect users from unwarranted ratcheting up of standards
c) Coordinating the certification of scheme auditors on behalf of all scheme owners and scheme users
d) Acting as a point of appeal/arbitration in the event of a dispute between scheme users and owners

¹ i.e. the point at which the product materially changes (e.g. abattoirs/processors in red meat, primary processers in cereals).

Differentiation

10. There is an ongoing discussion in the industry about how to prevent loss of value when baseline schemes increase their standards in response to the needs of one group of customers. Where a customer desires higher standards that can be met through an assurance scheme with separate brand identity, e.g. for welfare standards, this should allow the capture of higher value for delivery of higher standards. However, AHDB question whether a baseline assurance scheme that attempts to deliver higher standards through a differentiated, tiered, segmented or modular assurance scheme, but under one brand, can practically and/or effectively capture value.

11. A competitive, healthy assurance market, potentially with multiple schemes engaged at and above the regulatory baseline level, could help to stimulate innovation and progression and give scheme users choice in the marketplace. A choice of certification provider could also give users choice and help ensure value and fairness (see 12 b) below).

Audit process

12. While the rigour of any assurance scheme is clearly dependent on an effective audit process to establish and maintain credibility, efficiency and simplification should be embraced at every opportunity in the audit process. 

a) A less prescriptive, more outcome-based approach to assurance audits should be encouraged wherever possible.
b) Users should be enabled to select a single auditor from a certified panel of auditors to meet all their audit needs (i.e. multiple schemes’ standards can be audited in one visit). A clear separation between assurance scheme and auditor services would also mean that auditors will balance the needs of two customers: the scheme operator in need of an audit with integrity, and the scheme user seeking an efficient and proportionate audit.
c) A risk-based approach to audits should be adopted by scheme owners, with earned recognition embedded as a guiding principle. 

13. A full and detailed discovery process to understand how new technology could improve and facilitate the assurance auditing process should be commissioned. This could potentially include a single online portal that gives users clear visibility of all assurance schemes and standards of relevance to a given sector, and enables them to be linked together in a single audit requirement by one accredited auditor.

Future reviews

14. As the food and farming landscape evolves, with new market needs emerging on a regular basis, AHDB is supportive of regular strategic reviews to ensure farm assurance in the UK stays relevant to stakeholders’ needs.

Appendix 1

The assurance landscape is nuanced and varies by sector. AHDB's sector councils offer the following overview of the assurance landscape in their sector.

Cereals & Oilseeds

In the cereals and oilseeds sector there is a predominant market requirement for assurance delivered in England and Wales by Red Tractor, a private non-profit company, and in Scotland by Scottish Quality Crops, a co-operative.

Assurance in Northern Ireland is run by a partnership of the Ulster Farmers Union and Northern Ireland Grain Trade Association, but with very limited domestic production and large imported supplies the context is more nuanced and domestic grain markets tend to be under-developed in comparison to Great Britain.

The significantly reduced availability of markets in Great Britain for unassured combinable crops means that farmers feel constricted and controlled by whatever standards are put in place.

It is worth noting that the domestic farm assurance standards are almost unique in a global context. This is emphasised when we look at the cereals sector on a global scale and the homogenous and fungible nature of cereals and oilseed that allow them to move freely around the world in significant volumes. The difference between our farm assurance versus trade assurance that dominates global markets is clearly an issue that needs addressing.

The lack of transparency about standards imposed on wheat imports is a cause of deep frustration amongst many growers, whose produce enters the supply chain at the same point as imported supplies meaning provenance is not identifiable on the shelf. AHDB is currently comparing the methods of assurance for domestic and imported crops (draft version of report to be shared with Commission).

A significant loss of trust amongst portions of growers in England means that profound change is almost certainly needed. We believe that any incremental adjustments to the current assurance structures will fail to reset divisive perceptions which have become entrenched.

There are lessons to be learnt from successful, positive and trusted schemes within the UK. Scottish Quality Crop’s co-operative ownership structure and clear utilisation of member views is a shining example of how effective assurance can be in providing required confidence, meeting regulatory standards and engaging effectively with their farmer membership. We would encourage the Commission to review this positive area of assurance implementation and display how lessons could be embedded in all schemes.

On a global level, there are further examples of where assurance schemes are placing greater emphasis on trusting farmers to know how to safely grow, handle and store grains.

Some growers perceive that rather than being a mechanism that provides producers with better market access, lower administrative burdens and/or premiums, assurance in this sector has become primarily a mechanism whereby the supply chain can manage liability in the event of contamination, poor quality or other factors. Supply chain counterparty liability is comprehensively managed via contract law, and ensuring all users of assurance are aware of this is important.

In our opinion, from a farmer/grower perspective, this has led to an unwarranted expansion of standards and requirements that either go beyond the basic requirements of Food Standards Agency legislation or meet it in overly onerous ways.

Finally, it should also be noted that there is a complex landscape within the cereals sector for how formal and more informal assurance is applied. For example, organic certification and other schemes such as Wildfarmed, conservation crops and supply chain specific schemes such as Jordans breakfast cereal contracts, mean that there are wider considerations to ensure branding and assurance are not conflated.

Elaborating on the above principles for the C&O sector

Principle 7 – With regards to the equitable creation and initial ownership of standards and schemes, the Cereals and Oilseeds Sector Council believe that an independent body such as a levy board is the most independent place for this to start.

Principle 10 – There is a need to capture value for any standards above legal minimum. We are conscious that if farmers must have assurance to supply into the market, then those who control those standards are critical and farmers should have choice as to the standards they deliver to.

Other factors to consider

The cereals supply chain is unique domestically in that at the point at which production decisions are made, there are a multitude of destination options for that grain. For instance, for feed wheat, grain could end up in animal feed production, in human consumption via premiums for hard wheats into flour mills at lower quality specifications, in bioethanol production, in distilling, be exported or even in pet food. Whilst this is not an exhaustive list, it shows the variety of delivery points and hence end-user requirements which are not unilaterally known at the point of planting, harvest, sale or even collection.

This is where the contractual and logistical element of the grain chain needs considering and a point where assurance and contractual needs are conflated. If farmers are producing to higher standards above the legal requirement at a customers’ request, then the assurance system needs to not hinder the ability of farmers to capture value for those higher standards.

The clarity of end-market requirements for Renewable Energy Directive (RED) verification needs to be available to growers. Whilst RED II certifications are viewed by some as a perfunctory self-certification tick box, it is a vital requirement for farmers to be able to supply the Ensus and Vivergo bioethanol plants in England, and Girvan in Scotland. Any assurance scheme’s compliance with RED II has to be certified by an EU body, which has presented significant issues since Brexit.

The ability for domestic grain to enter these bioethanol facilities has increased demand in the Yorkshire/Humber region and has supported the delivered price of feed wheat (and hence feed base price for milling premiums). This affects the entire market due to logistics and haulage rates (e.g. moving grain from Cambridge to Humber).

This is another example of the complicated nature of flexible delivery destinations for the cereals supply chain that needs to be considered in any future changes to existing or new schemes, to ensure that farmers have the flexibility to allow them to maximise their potential financial gain from participation in schemes.

This complexity may be extended in the future with regards to precision bred crops (genetic editing). With a separation of UK and EU standards in this area, any assurance scheme will need to differentiate between ‘standard’ and precision-bred crops. With exports of grains, ingredients and final products to the EU from the UK, any UK seller of these goods may be required to hold proof that no precision-bred crops are in products. Assurance pathways can be used to support this differentiation.

Beef & Lamb

There are four different baseline assurance schemes operating in the UK. Two are run by levy boards, one by a co-operative and one by a not-for-profit company. The ownership models of assurance schemes in Northern Ireland, Wales and Scotland may help support relationships with farmers.

A large number of lamb producers in England are not assured due to their ability to supply into export or wholesale markets. In this context, the purpose of baseline assurance needs absolute clarity. It is our view that a baseline assurance scheme should be something akin to a farm MOT, a periodic snapshot to demonstrate compliance with current industry expectations. The parameters of any scheme must be relevant, carefully defined and be open to external scrutiny to prevent mission creep.

Beef farmers currently have the option of not being assured by selling store animals to finishers who can market animals as assured after a 90-day period. Lamb producers can do the same but after a 60-day period. While Whole Life Assurance is a laudable aspiration and is delivered by Quality Meat Scotland with the aim of securing a premium through Scotch Beef and Lamb branding, we consider that it can only be achieved in England if there is clear value in doing so and if the requirements of a baseline scheme are recognised as easily achievable by all.

In terms of the use of technology in the audit process, in general the Beef and Lamb sector is at the lower end of the spectrum. Whilst demonstrably capable of adopting new technology, for example British Cattle Movement Service online services, a sudden expectation to move to an unfamiliar portal could be interpreted by producers as a barrier rather than an incentive.

It is worth noting that the perceived value of assurance is generally quite low amongst many producers. The potential to run a financially viable, non-assured enterprise means that significant visible and tangible change will be needed to win back hearts and minds.

The Commissioners have received the first two beef and lamb standards comparative studies over the summer (North and South America comparative studies forthcoming).

Pork

The pork sector is highly consolidated and becoming more so. 

In practice this means that three large integrators produce, control and/or influence a significant proportion of national pig production. The four largest processors (which include the integrators) process most pigs in the UK.

Historically, the sector has not received direct farming support, and is very aware of the importance of assurance to the end consumer, and so to the whole supply chain.   The sector recognises assurance schemes are an important mechanism to help demonstrate the high national standards of domestic pig production and to deter and detect those who are not upholding the standards/reputation of the sector. Baseline assurance is seen as a necessary market access requirement.

Nonetheless, there are concerns around the distribution of costs, risks and rewards of compliance within the supply chain. Some producers feel that the cost and effort disproportionately falls on them whilst the whole supply chain and consumers benefit without apparent payment. As standards develop it is not always clear who will benefit/pay for the extra costs of compliance or whether these will be applied to imports.

It needs to be clearer who gains from increased assurance costs/efforts: farmer, processor, retailers, consumers, government/legal compliance? Furthermore, are beneficiaries throughout the supply chain/market paying fairly for the greater burden on domestic primary producers? Is ratcheting of standards also being applied to imports?

Is it too much to expect one dominant scheme to deliver what each part of the supply chain needs/wants in terms of animal welfare, environmental sustainability, and regulatory compliance? And can more be done to reduce the administrative and inspection burden for farmers, especially when complying with multiple assurance schemes?

Dairy

Dairy farmers in Great Britain need to be assured by Red Tractor (RT). Many dairy farmers also have to meet additional standards imposed by the milk processors they supply. As RT assurance is a condition of supplying milk to processors, compliance effectively decides who is allowed to supply milk and who is not.

Some farmers value assurance for several reasons. Firstly, it is a clear route to market, enabling market access and security of supply. The rigorous nature of the standards also provides a strong mechanism to defend individual farmers and the wider industry when challenged, as it achieves the regulatory requirements for safe food production through clear actions.

The value of a single assurance scheme in RT also enables some earned recognition, with a reduced frequency of Food Standards Agency audits cited as an example.

There are counter views as to the perceived value of RT in the dairy sector, with some seeing the prescriptive nature of standards as a tick box exercise that farmers have to do, rather than wanting to do to add value to their business.

Furthermore, some dairy farmers believe that as retailers and processors enact their own standards that are above and beyond that of RT, the value of RT is nullified to the point of not being necessary. There is a view that as consumers are unlikely to see RT branding on packaging, value capture is very minimal.

In terms of suggested improvements, base standards for dairy and beef could be aligned with extra requirements added on for dairy, so that the audit process for each sector can be amalgamated for efficiency and duplication avoided.

As discussed elsewhere, there should be more choice and trust in the market of assessors and auditors. An independent body to “audit the auditors” would be positively received.

The consumer has to trust what farmers are doing. Assurance should create value for both the farmer and consumer, but schemes have to be clear as to their specific definition of value to avoid confusion.

There is a need for improved use of technology in audits, with enhanced data sharing across platforms to enable proof of compliance against standards.