FINAL invoices for the 2021 AHDB Potato Levy are being sent out to growers and a cash injection of £0.6 million is to help underwrite the shortfall remaining in wind-up costs.
A letter sent on behalf of Finance Director Naveen Gupta acknowledged the ballot of potato levy payers earlier this year and its subsequent communication with government ministers, and confirms the decision to completely wind down statutory levy-funded potato operations.
It states: “We understand that government will launch an industry consultation later this year on proposed changes to the legislation that governs AHDB and on future options.”
The potato grower levy rate for this year is £42.62 per hectare, the same as it was in 2020. Funds collected, together with sector reserves, will be used to cover the costs of winding-down all levy-payer activity in the potato sector, AHDB states.
The remaining levy payments will be used to complete research and storage programmes in which £4 million and £0.6 million had already been invested, as well as covering the costs of lease commitments, staff redundancies and the closure of the Sutton Bridge potato storage facility.
“For AHDB Potatoes it will cost in total around £7.4 million to meet all the liabilities through the planned transition of activities and the wind-down process,” the letter states.
AHDB Potato reserves at March 31st were £1.2 million (subject to audit) and the 2021/22 levy rate is expected to raise £5.6 million.
“AHDB and Defra Ministers do not want to continue the current levy in 2022/23 just to cover wind-down costs, therefore Defra has agreed, exceptionally, to underwrite up to £0.6 million to cover the potential shortfall,” the letter continues, adding that legal proceedings would be taken against any growers refusing to pay their remaining debts.
Excess funds at the end of the wind-down process will be held for a period of up to six years to fund “residual potato liabilities” which may arise. After this period the utilisation of any funds remaining would be discussed with the industry and government.
When questioned over what residual liabilities might entail, and whether any leftover would be re-distributed among growers, an AHDB spokesman said: “Residual liabilities could be any potential claims or litigations against AHDB Potatoes that arise post-wind down, e.g. relating to contracts, services, published information, copyright etc. The wind down budget is currently running on track, if this continues there should be negligible funds remaining at the end of the process.”
Interim Potato Sector Board Chair Alison Levett, who attends the main AHDB board as an observer and whose role will be reviewed in March 2022 when the current levy period ends, appealed for understanding from growers about the continued costs and why they were necessary.
“The Potato sector board gave strong direction that no new activities should be commissioned and that there should be immediate steps to reduce costs while the final Ministerial decision was awaited,” Alison states in a separate letter to growers, going on to add:
“I know that many of you feel frustrated that having voted to stop the levy that you are still being asked to pay one this year. However, I would ask you to recognise that we cannot simply abandon our contractual liabilities or not honour legal redundancy processes. The Potato Board have been very keen to emphasise the importance of a level playing field on this matter and that all unpaid levy bills should be pursued.”
The 2021 Potato Planting Return Form can be completed on the online levy returns portal: https://levyportal.ahdb.org.uk/ before March.
Sutton Bridge closure and legacy - see November issue of Potato Review. You can subscribe here.