A report rising from consternation over inequality in the top-fruit industry could see twice as many growers facing a revamped HDC levy.
Since DEFRA announced its intention to radically change the scheme two years ago, the top-fruit industry has been involved in a wrangle to address some of the changes.
An independent report by Séan Rickard, a senior lecturer in business economics at Cranfield University, has been published and was presented to delegates at the National Fruit Show in Kent last week.
Rickard was asked to review the system, which has angered many since its move from an acreage-based system to a turnover-based system. The shift, which brought top fruit into line with the rest of the produce industry excepting mushrooms, saw some 150 growers (53 per cent) fall below the turnover threshold of £60,000 and not have to pay the levy.
Rickard was appointed to assess the levy in January and released his report following consultations with leading organisations English Apples & Pears, the National Farmers’ Union (NFU) and the British Independent Fruit Growers’ Association.
He proposed several solutions to the multi-tiered problem. First, Rickard believes the threshold should be lowered to £20,000, creating an additional revenue of between 10 and 18 per cent, meaning all commercial growers would pay the levy as well as benefiting from the research the levy funds.
Rickard also proposed that the HDC “ends the system of permissible deductions, which would reduce the cost of collecting and administering the levy”.
He said: “The current system is very complex and confusing and it would make a lot of sense to go to a revenue per hectare system, but that would only work if the levy rate was reduced to 0.35 per cent, which would give the HDC the same amount of money.
“Revenue is the best metric against which to set the levy and in principle it is possible to vary the levy between sectors to achieve equity and meet varying needs. The amount wouldn’t make much difference and would save bureaucracy.”
Rickard also accused some growers of “game playing” in failing to fill in the paperwork correctly, pointing to some of his research, which revealed that growers were valuing equal-sized crops between £4,000 and £44,000.
It is thought the report could have ramifications across the whole of horticulture as DEFRA scrutinises the financing of research in all sectors.
Chief horticultural advisor Phil Hudson, who attended the event, told FPJ it was unlikely the reduction of the threshold, which Rickard described as “inexplicably” linked to VAT, would stir up too much controversy.
He said: “Clearly Séan has investigated this thoroughly and I doubt anyone will argue with a nominal figure of around £20,000 becoming the threshold. The deduction is a more thorny issue - we are in favour of simplicity and reducing red tape, but there may be some tension in that it could affect the levy they pay and growers who are supplying retailers incur more costs those who do not."
Of the alleged “game playing”, Hudson said: “While there are systems there are people who play the system but I don’t see it as a big issue and one that is more likely due to the confusion in changing systems.”
A delegate commented: “The problem with apples is that they vary in price wildly, depending who your end market is. If you supply a major retailer then you have to pay for marketing costs on top of the levy where you wouldn’t if you supply say, fruit bins.”
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