Funding Your Future: your Cereals & Oilseeds sector questions answered

As part of Funding Your Future, we asked for your questions about the proposed levy increase and the work we do. Below are the answers to the questions we received from Cereals & Oilseeds levy payers.

NB: all answers are from Tom Clarke, AHDB Cereals & Oilseeds Sector Council Chair and board member, unless stated.

Can we legally give assurance for free? We pay VAT on assurance when we buy it so should be charging VAT when we sell it even though we do no show a cost on the invoice. Would having to show the cost of assurance +vat separately on the invoice help with the assurance creep we have seen over the past decades?

Answer: AHDB does not currently run any assurance schemes in Cereals and Oilseeds sector. Assurance is run by Red Tractor in England and Wales and by Scottish Quality Cereals in Scotland and a new scheme is being drawn up between UFU and NIGTA in Northern Ireland. There also exist other specific assurance schemes such as LEAF, Freedom Foods etc.

AHDB is calling for an independent and fundamental review of assurance, which will include the issues you raise regarding VAT. If you are referring to the Cereals & Oilseeds levy, we did used to charge VAT on the levy, but that will no longer be the case since a ruling from HMRC last year.

Should there be competition for the provision of grain assurance services, or should there be a single assurance brand?

A similar question was answered during the live Q&A session but AHDB is conducting a review (in consultation with BFU and other levypayers) into all the processes and testing that would be required for domestic grain to enter all UK end-markets outside of the current assurance schemes.

This study will help inform further discussion of this topic and the possible options available for the future. AHDB is calling for an independent and fundamental review of assurance, which will include the issues you raise.

Could AHDB introduce a basic declaration on the passport type assurance to counter the unfair contributions to RT which disadvantaged your non-assured levy payers? Would solving the assurance issue not be the best use of levy payers' money?

AHDB is conducting a review (in consultation with BFU and other levypayers) into all the processes and testing that would be required for domestic grain to enter all UK end-markets outside of the current assurance schemes.

Will you support and work towards an alternative assurance scheme for UK farm produce to compete with Red Tractor as this clearly falls within your remit to find new ways to promote UK produce? AHDB funded Red Tractor with considerable sums (£240,000) per year for several (over 10?) years, which one of your representatives described to me as 'help with start up costs', until they were withdrawn under pressure from the British Farming Union. Will you therefore fund 'start up costs' for an alternative assurance scheme to Red Tractor to ensure that there is competition in the best interests of UK producers and to prevent unnecessary over regulation of the Red Tractor scheme which unfairly favours the interests of the British Retail Consortium?

As I stated last October at the Shape the Future event, AHDB helped set up both RT and SQC, and I’m sure the Sector Council would look at offering similar help to any new assurance schemes that are put forward. I also answered a similar question at the Funding Your Future live Q&A.

Coming up to date, AHDB is conducting a review (in consultation with BFU and other levy payers) into all the processes and testing that would be required for domestic grain to enter all UK end-markets outside of the current assurance schemes. This study will help inform further discussion of this topic and the possible options available for the future. AHDB is also calling for an independent and fundamental review of assurance, which will include the issues you raise.

Why does Tom Clark think that the difference in price between unassured cereals and world market price is the magic 'premium' that RT talk of? World market price minus for being unassured is not a 'premium' no matter how you dress it up. Indeed he found it funny when I mentioned this on this forum.

I do not think that. I was amused that you thought I did.

Why is AHDB not finding a market for unassured grains? It seems between them and RT/AIC unassured outlets are diminishing rapidly. It's certainly harder finding an unassured market for my crops that it was five years ago.

This was answered during the live Q&A.

Can AHDB confirm how its CEO Tim Rycroft voted on Red Tractors GFC module in his position on the Red Tractor board? if (as rumoured) he was not present at the vote did an AHDB representative vote in favour of it? Who exactly from AHDB was involved in the 'unanimous approval' of GFC? Was GFC discussed/voted upon by sector boards? If so what were those discussions and what was the results of any votes? Did AHDB consult formally with any farmer levy payers outside of boards on GFC? What is AHDB’s current position on introduction of GFC by Red Tractor in the future? I think there are some fundamental issues of trust between farmers and AHDB leadership and boards that the answers to these questions will hopefully clarify.

This was answered during the live Q&A.

Will AHDB set up an independent grain assurance scheme to stop the RT monopoly and give farmers choice? After all this is in the AHDB’s remit according to government legislation: 5. Developing, promoting, marketing or operating - (a) standards relating to the quality of products, or (b) systems for the classification of products. 6. Developing, reviewing or operating schemes for the certification of products or of operations connected with production or supply of products. (Taken from gov.uk)

A similar question was answered during the live Q&A, but AHDB is conducting a review (in consultation with BFU and other levy payers) into all the processes and testing that would be required for domestic grain to enter all UK end-markets outside of the current assurance schemes.

This study will help inform further discussion of this topic and the possible options available for the future.

Our farm business didn't renew Red Tractor membership in 2023, and so we lost our 'earned recognition' status. We therefore flagged up for a local authority Food Standards inspection which was carried out by a qualified Food Standards officer. This independent inspection covered grain handling, drying and storage facilities; HACCP documentation, policies, procedures, pest control, field records and grain drying records. The inspection was very similar to a Red Tractor inspection, yet currently passing this inspection is not recognised as 'assured' for supplying grain to the mills. After passing this inspection, would AHDB consider my grain to be safe for use in the animal feed and human consumption sectors? If it's not recognised as safe, why not? Or if it is (recognised as safe), is AHDB willing to help get this standard recognised and accepted by the mills? If AHDB isn't willing to help get this standard recognised by the mills, then why not?

A similar question was answered at the live Q&A event.

But to clarify, AHDB is conducting a review (in consultation with BFU and other levy payers) into all the processes and testing that would be required for domestic grain to enter all UK end-markets outside of the current assurance schemes. This study will help inform further discussion of this topic and the possible options available for the future.

You finally stopped funding Red Tractor in 2021, although in reality you should never have funded them. Is it now time you worked for the levy-paying producers' benefit and completely distance yourself from RT and allowed UK produce the same rights as foreign imports?

A similar question was answered during the live Q&A.

How much money in total did AHDB pay to Red Tractor and why? Did anyone of the other five 'company guarantors' (owners) give any money to Red Tractor? Would you be asking for more levy if this money had not been gifted to a company controlling farmers' access to markets? Is the money handed to Red Tractor the cause of the levy increase?

AHDB cut funding of £250k per year to Red Tractor in 2021. I do not know if any of the other members of the ownership body have ever provided funds to Red Tractor.

Yes. The increase in levy is needed to ensure we do not cut our existing services to levy payers, and have the resources to provide more value back to our sector. For example by improving the Recommended List, and funding £1m per year in one–off priority research guided by levy payers.

No. AHDB spending power has been eroded since the last levy increase in 2011 by around 40% - this is due to accumulated inflation, as well as standard pay rises and the HMRC ruling that AHDB can no longer reclaim VAT, which alone has cost Cereals & Oilseeds £1m per year. Stopping the funding to Red Tractor is among many other spending cuts we have made over the last 12 years to preserve our spending power in key areas like the Recommended List, Market Intelligence, Fungicide testing etc. For example; spending on research was £2.5m in 2011, and is only £600k in the current year – a cut of over 75% or £1.9m per year. We need a levy increase in order to deliver more back to levy payers. The Sector Council has decided this will not, however, include a resumption of funding to Red Tractor.

During the past 32 months that you've been aware AIC have accepted Gatekeeper lab-tested cereal imports, but specifically haven't accepted this method for UK grain; what actions have you taken to ensure equivalent market access for levy payers?

A similar question was answered during the live Q&A but AHDB is conducting a review (in consultation with BFU and other levypayers) into all the processes and testing that would be required for domestic grain to enter all UK end-markets outside of the current assurance schemes.

This study will help inform further discussion of this topic and the possible options available for the future.

Why should I and other UK farmers vote to increase the levies, or even continue with them, in light of the revelation that AHDB representatives voted in favour of the Red Tractor 'Green Module' at the board meeting when it obviously favours the interests of the British Retail Consortium rather than UK farmers?

A similar question was answered during the live Q&A.

The single biggest impact to cereal farming revenue and prospects is the import of cereals into this country. If the government cannot control imports not grown under the same specifications as that of the UK, will the AHDB look to support UK farmers in demonstrating this and look to ways of publishing data on imported grain end use?

A similar question was answered during the live Q&A, but AHDB is conducting a review (in consultation with BFU and other levypayers) into all the processes and testing that would be required for domestic grain to enter all UK end-markets outside of the current assurance schemes.

This study will help inform further discussion of this topic and the possible options available for the future.

Do you support the current calls from UK farmers for changes to the way UK grains and oilseeds are unfairly disadvantaged by having to meet the costs of assurance which imported grains do not have to comply with and will you help UK farmers by working towards setting up a framework whereby UK grain and oilseeds will have access to UK feed mills/grain merchants on the same basis as imported grains and oilseeds?

See the response above.

Do any members of AHDB staff get an income from the AIC, NFU, RT, or any other organisation in the food chain for being one of their board members? If so is this a conflict of interest?

I (Tom Clarke) am directly elected by growers to be a member of the NFU Sugar Board, and I do receive an honorarium for this work. I have done so for the past six years. I believe this experience complements and benefits my new role as sector chair for Cereals and Oilseeds and as an AHDB board member. I am used to raising a levy and ensuring it is spent well and in line with levy payer interests. Indeed, speaking personally, I believe there a good lessons to be learned from how NFU Sugar Board operates, and utilises the legitimacy that it derives from having a directly-elected board.

More widely, all AHDB board members and sector council members are required to make a public declaration of their interests, and this is updated regularly and published on our website. All sector council members now must be ratified by a vote of levy payers on appointment, or for existing members, when seeking a second term of three years.

Furthermore, all AHDB board members and sector council members must abide by the Nolan Principles of Public Life and the regulations as set out in the 'Managing Public Money' guidance laid out by the Government. These regulations exceed any requirements of private companies or organisations. The same regulations apply to AHDB staff members, although in most cases the AHDB will be their sole occupation.

How many on the C&O council are: 1. NFU members; 2. NFU office holders; 3. Farmers; 4. Others, please specify whether miller, wholesaler etc. Is the C&O council controlled by NFU?

I (Tom Clarke) am an NFU member and am directly elected by growers to the NFU Sugar Board. I have been elected twice and have served six years so far. Of the remaining 12 members of my sector council: One has a position on the NFU Crops Board; one has a position on the NFU Scotland Crops Board; one has a position on the UFU Crops Board. All sector council members must declare all their interests, and this declaration is available on our website.

Of the 13 members of the council (including myself): Nine are farmers; one is a merchant from a farmer-owned co-op; one is a miller. Only two council members are not levy payers, and they have been appointed for their expertise. One is a leading independent agronomist and the other is an international trade expert and agricultural economist.

All sector council members are now ratified by a vote of levy payers – either on appointment, or when seeking a second and final term of office. C&O is controlled by levy payers and operates within the rules laid out by the government. It is not 'controlled by NFU'. Indeed, we are accountable to far more levy payers than the NFU is.

Can AHDB develop a tick box on the grain passport to confirm produce is produced legally to UK standards as part of developing access to markets?

A similar question was answered during the live Q&A.

Around 85% of AHDB funding comes from farmers. How many of these want digital grain passports, what will be the cost of this, how much of it will be paid by farmers and what will be the payback of this initiative to growers in pounds spent to pounds returned?

This was answered during the live Q&A.

If there's to be a digital passport, will it be able to hold quality data for which we may get paid, e.g. protein, moisture, HFN, bushel? Following on from this, as there are price penalties for low bushel, which suggest bushel is a parameter of value, can AHDB negotiate with processors to provide price premiums for higher bushel weights i.e. quality marks/systems to add value?

This was answered during the live Q&A.

Can you justify why you need extra revenue and what will the price benefits be to the producer?

This was answered during the live Q&A.

Is levy payment from each sector ring-fenced to be used in that sector or does it go into an overall pot?

Yes, it is all ring-fenced by law, and can only be spent on the sector from which it was raised. AHDB has strict accounting procedures to ensure this happens.

Why does AHDB nearly without fail, persist in overestimating planted areas (particularly wheat) and predict more often than not record-breaking harvests which do nothing but dampen output prices? Examples include this last year predicting a 15.5mt harvest when in reality it was nowhere near, and then recently estimating a 1% increase in planted wheat area which is clearly way, way off the mark with the current weather. Looking from the outside it looks to be either done on purpose or total incompetence.

At the same time as we predicted a 15.5mt harvest, the trade was predicting a 16mt harvest. Everyone’s predictions were lowered during the year as the crop developed. All estimates are made at the time, with the best available information.

AHDB does not claim to have perfect foresight, but we are an independent organisation with no 'skin in the game' - as such the information we provide can be relied upon to not be biased (unconsciously or otherwise) to favour buyers or sellers – simply to help inform the market and provide greater transparency. We published our Early Bird survey on 14 November which is currently predicting that the UK wheat crop will drop to its smallest area since 2020, with a 1.3% fall on last year. This is alongside falling areas for all winter sown cereals and OSR.

To whose benefit is it to publish the annual planted area and harvest tonnage reports for free access? As a levy payer I would prefer that information to remain private for the benefit solely of those who contribute the information, in order to give us a benefit, not broadcast/given away to the very marketplaces we’re selling to.

The grain trade is extremely concentrated and there are really only a handful of trading houses. They have most of the information at their own disposal. By providing a free and independent source of this information to all (especially growers and smaller traders etc) AHDB provides transparency and helps to level the playing field for those who would otherwise be buying and selling without the advantages that the larger trading houses have. Some of the information we collect, the corn returns, are a legal requirement.

How does AHDB keep it real, mud on the boots, useful information for those out in the field?

This was answered during the live Q&A.

Further to this can they say what proportion comes from farmers and what proportion comes from processors?

This was answered during the live Q&A - 83% growers, 17% supply chain.

Do you think by sitting on the fence you are not seen to be working for the grower which is where the main source of income comes from? Is there a risk by being seen like this by the growers, they could call a vote and if so what do you do to bring growers onside?

AHDB is not a farming union, and is prohibited in law from lobbying government. We do undertake a lot of work in defending the reputation of our sectors, but perhaps less so in Cereals and Oilseeds than in the livestock sectors. I believe the work we do underpins huge parts of the farming industry, and provides much more value back to the sector than we receive in levy. 83% of the levy is raised from growers, but arguably more than 83% of our work is of benefit to growers.

As a farmer I know it can seem like there is no one on our side, but there is. AHDB is there to provide the things that farmers alone cannot, and to provide the independent evidence, research and support that farmers couldn’t provide for themselves or obtain from commercial organisations. Everyone can benefit, that’s why everyone contributes.

The best way for us to reconnect with our levy payers is to deliver value back to their businesses and be bold and unashamed in claiming and branding what we have done. For too long we have been timid, and not very good at blowing our own trumpet. I hope and expect that is changing. But if we can’t demonstrate that value then we deserve to be abolished.

Is AHDB compromised in its efforts to support growers by taking levy payments from other sectors in the supply chain (even though processors just knock the levy off what they pay the farmers)?

A similar question was answered during the live Q&A.

Will AHDB stop taking money from processors? Personally I am happy pay more levy IF AHDB is only working for farmers in a strong and cooperative way.

This was answered during the live Q&A.

Further to this can they say what proportion comes from farmers and what proportion comes from processors?

83% from growers; 17% from merchants and processors.

How will £1m on research be directed by levy payers and how will that research be disseminated to levy payers?

This was answered during the live Q&A. This part is also relevant.

How can AHDB ensure that all research from strategic and monitor farms gets out to more farmers? Not enough are aware at present.

This was answered during the live Q&A.

Why aren't new varieties only added when they bring significant improvements? I propose at the very minimum greater than the LSD for yield. There is too much churn on the list.

This was answered during the live Q&A.

For further information also see:

AHDB Delivering the future of farming (Cereals & Oilseeds session)

Theory to Field: Recommended refinement - Crop Production Magazine

Podcast explores Recommended Lists (RL) review results

RL review - how are we implementing low input regimes on all the varieties?

This was answered during the live Q&A.

For further information also see:

Scoping review: impact of different crop nitrogen nutrition scenarios on cereal and oilseed varietal performance

Scoping review: impact of fungicide programmes on cereal and oilseed varietal performance

Could AHDB provide a method for growers to demonstrate RED II compliance?

If the current assurance schemes are unable to provide this, then it is something AHDB can look into, but it is difficult for non-EU member countries to obtain RED II compliance. We understand measures are being put in place by Red Tractor which hold the best chance of obtaining RED II compliance.

If there is a levy increase what will AHDB do on top of what we already do to help reduce the risk to my business?

AHDB does a lot to help de-risk farming. Much of our research including the recommended list, Fungicide trials and our monitor and strategic farm network exist to provide the results and learnings on new approaches, techniques, practices, products and varieties so that individual farmers don’t have to find out for themselves. Our Market intelligence and analysis contributes towards increasing transparency and understanding of agricultural markets - reducing the risks for farmers in marketing their own products and in choosing which crops to grow.

Arable farming is likely to be exposed to greater risk in the years ahead, with markedly more market and climate volatility as well as changing regulations and trade patterns and new farming systems & products as well as carbon and other sustainability and environmental markets.

I want to see AHDB doing more in all these areas getting ahead of the innovations and changing conditions and testing them via research and collaboration, supporting and cushioning risk taking by pioneering farmers and sharing the learning and benefits so that all may benefit quicker and more fully. This is where I hope levy payers will suggest areas for us to apply our new funding of £1m per year for research which will become available if we secure a levy increase.

At present I can only see six growers on the Cereals and Oilseeds council directing where levy is spent. That’s way less than 1% of all levy payers represented. Could a system be implemented to have a vote on all future projects before getting funding granted so each individual levy payer can have their say? A simple email explaining the project/trial etc and a vote of 'yes' or 'no' with a minimum of 50% vote turnout across the sector. It would take seconds out of an individual levy payer's day but provide a much better overview of the industry priorities as a whole.

This was answered during the live Q&A.

What plans does AHDB have to increase the democracy of council decisions? Should it run simple levy payer polls on issues?

A similar question was answered during the live Q&A and also here.

Can we have a simple democracy? I suggest along the lines of NFU Sugar? Just need two nominations by other levy payers to be put on the ballot. Then one member one vote.

I am a fan of the direct democracy used by the NFU Sugar Board. Ultimately, AHDB operates within the rules set by the Government. I understand that systems with more direct democracy have been considered in the past and could be again. The current system; where the AHDB board has a majority of levy payers, sector chairs are appointed by ministers but are all current or recent levy payers, and where levy payers get to ratify (or not) sector council members - is already much more democratic than the old AHDB, and more democratic than many representative and public sector bodies.

Sector council five-year plans are consulted on with levy payers and activities voted on. The last such exercise was only last year (2022) in the 'Shape the Future'. The momentum is definitely in the direction of more involvement, consultation and scrutiny by levy payers, with levy payers at the heart of AHDB – as well as more direct democratic accountability.

Why are we still drying cereals to 15% when 16 was fine previously? Think of the extra carbon that could be given away by doing this.

Good question. I suggest this may be an area where some of the new funds for research could be used.

I value the work AHDB does to guide efficiency and productivity but ultimately my ability to maintain a positive margin is dictated by the price at which I can sell. With so much political pressure to control food price inflation what will you do to ensure I receive a higher price for the goods I produce (and the occasional advert doesn't cut it!)? In the most basic terms, if you want more money, get us more money.

This was answered during the live Q&A.

To add to the above question, if you can't get more £s for the selling price, then you must work to reduce farm costs to try and maintain positive profit margin. Removing red tape would be one easy win.

See the answer above.

How much of current funding goes to pay pensions and what is the projection on this?

This was answered during the live Q&A.

Funding Your Future 2023 – Cereals & Oilseeds

Watch the Cereals & Oilseeds Funding Your Future live Q&A session

Find out more about Funding Your Future