BPC to cut expenditure

The British Potato Council is proposing levies remain at the same level next season in its latest budget submission to government, which has yet to be ratified.

However, making cost savings will be critical for the levy body to meet its budget constraints in the future, if it remains in place after its statutory review, the consultation period of which ends on Dec 21.

“Increasing the levy is not really an option given the current state of agriculture,” acknowledges BPC chief executive Helen Priestley.

But the BPC will need to cut costs, particularly as the £2m pot received from the Potato Marketing Board is now virtually gone, she says. “That’s not a surprise. We”ve been drawing on that as agreed when we were set up and managing accordingly.”

Reducing the cost of collecting the levy, currently £450,000 a year, could go a long way to meeting the projected 5% savings required, she suggests. “For example, changing to collecting the levy via the single farm payment could, as a very rough estimate, save £250,000.”

Other levy collection alternatives could be changing to a tonnage-based levy, collected at the point of purchase as used by the HGCA, or a turnover levy as used by the HDC, she adds. “There’s advantages and disadvantages for each system.”

But changes are unlikely before the 2006/07 financial year, she adds. “There has to be a change in legislation, which requires industry consensus, first.”

Meanwhile, the BPC is proposing a 5% cut in its budget for next year in its submission to government, a move which industry will be consulted on before it can be implemented, she says.

If it does go ahead that will likely mean some cuts to frontline expenditure, at least temporarily, she admits. “It is not possible to absorb all the reduction from support costs alone.”

The long-term goal is to increase the proportion of front-line expenditure compared with support services. “At the moment it is 75:25 in favour of front line, which isn”t what most companies run at. We need to shift that in the right direction,” she concludes.

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