Defra commits to cash support for producer organisations

A government decision to maintain the annual €40m (£35m) EU funding for producer organisations (POs) has been hailed as a huge boost for the fruit and vegetable sector.

The decision taken by Defra means it will take over the funding after Brexit and has guaranteed it until the end of this parliament – scheduled for May 2022.

The €40m of support for UK POs is currently provided by the EU under the Fresh Fruit and Veg Scheme.

Growers in the 33 UK organisations then use their own money to match the funding, pound for pound, to create a total of about £70m. This can be used to help fund improvements in their operations, including to storage and processing facilities, hiring specialist staff and developing new varieties. 

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Jack Ward, chief executive of the British Growers’ Association, explained his relief at the continued funding, which he said was vital for the organisations to operate and remain competitive. 

“While the government had committed to funding general farm support beyond Brexit, POs had not received the same confirmation until this week,” Mr Ward said.

Key competitor countries all make far greater use of the available funding because growers in continental Europe collaborate to a far greater extent. While the UK draws about €40m (£35m) a year, France, Italy and Spain take about five times more, at close to €200m (£175m) each year to fund their POs.

‘Huge advantage’

“This would have given them a huge advantage over the UK if funding had not been continued,” Mr Ward said.

“We would have seen UK production quickly wound up and companies switch to those EU member states with the financial support and a supply of cheaper labour,” he explained.

The decision means British growers can make plans with more confidence, which is excellent news, Mr Ward said.

He added that Defra had been positive about POs during protracted negotiations with unions and representative bodies.

“The feeling was that the concept of POs may even have a role to play in other sectors in the longer term,” Mr Ward suggested.

NFU horticulture and potatoes board chairman Ali Capper said she was delighted that Defra had confirmed funding would continue, even under a no-deal Brexit.

‘Much-needed clarity’

Mrs Capper – a Herefordshire apple grower – said the confirmation would provide “much-needed clarity and certainty for the grower-members of producer organisations, which sell 50% of all British fruit and veg”.

“These groups provide significant value to the horticulture sector by encouraging co-operation between growers, increasing productivity and channelling investment in the latest technology,” she said.

The NFU is keen to continue working with Defra to shape the future of producer organisations and to extend the benefits more widely across the horticulture and potato sectors, Mrs Capper said.

More good news

Julie Robinson, partner for Roythornes Solicitors and former NFU legal expert, added that the latest decision came on the back of more good news for POs buried within the Agriculture Bill.

Ms Robinson has been embroiled in the legal issues surrounding Brexit since the referendum vote in June 2016.

The vote had cast doubt over the legality of POs, which were defined within the EU legal framework, but appeared to contravene British competition laws.

“The bill now provides for a domestic producer organisation regime along the same lines as the current EU regime,” Ms Robinson said.

“Crucially, it also retains current competition law exemptions, allowing them to operate.

“We are now watching to see if other sectors such as sugar or beef may be allowed to set up POs in the future,” she said. 

Producer Organisations – all you need to know

How many POs are there in the UK and in what sectors?

The latest figure is 33, according to the British Growers’ Association. Sectors involved are fruit and veg, with soft fruit featuring highly.

What is current PO funding worth?

Total EU funding is about €820m (£718m) a year. Of this, UK fruit and vegetable POs receive about €40m (£35m) a year. Each PO receives 50% of its operational fund, capped at 4.1% of qualifying turnover. PO members then match the EU money pound for pound to create a funding pot.

Where does the EU money come from?

It is classified as EU financial assistance under Pillar 1 payments within the Common Market Organisation regulation.

What is it for?

The combined EU money and producer investments fund the organisation’s operational programme. This can include: developing new varieties, building shared storage facilities, automating production lines, hiring specialist staff and improving sustainability.

What are the aims?

Working together as a PO enables individual growers to manage the production, storage, grading, packing and marketing of their produce more effectively. The overall aim is to strengthen growers’ position in the marketplace and to increase their viability.

Source: Julie Robinson, Roythornes Solicitors

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