Red Tractor royalty fee rise ‘not linked to AHDB funding cut’

Red Tractor has defended an increase in its annual royalty fees for its farm-assured members, insisting it has no relation to the AHDB’s recent decision to end its funding for the scheme.

Members of The Farming Forum had expressed their frustration over receiving letters from Red Tractor explaining their royalty fee would be increasing from about £35/year to £45 – a 29% increase.

Indeed, some had suggested that the fee increase, which will be implemented from 1 April 2022, was linked to the AHDB’s decision in December to end its £250,000 of annual funding for the food assurance scheme.

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But a Red Tractor spokesman told Farmers Weekly that the claims were untrue and misleading.

“Red Tractor reviews the costs of running the UK’s largest food and farming assurance scheme annually and, like all organisations, it is facing price pressures,” said the spokesman.

“We know members are experiencing rising costs too, so the increase in our royalty has been kept as low as possible. In many cases members will see a small increase in their annual royalty fee, equating to less than 20p/week.

“Red Tractor’s royalty fee is significantly less than other assurance schemes and offers good value, with members enjoying maximum market access for minimal audit burden, fewer government agency inspections, and the ability to purchase effective rodenticides without needing to complete additional training, among many other benefits.”

Farmers Weekly understands that the £10 increase is part of a three-year transition to rebalance its member royalty fees in some sectors that historically had been below the costs of running the scheme.

‘Less than 10% of costs’

In many cases, the Red Tractor royalty fee makes up less than 10% of the overall charge an assured member pays their certification bodies.

Steve Tolhurst, a mixed farmer based near York, said he faced paying more than £500 for his renewal fee for membership to his two Red Tractor schemes – Beef and Lamb and Combinable Crops and Sugar Beet.

The bulk of this fee consists of the cost of inspection audit services carried out by SAI Global, which has announced a 2.5% increase across all schemes this year due to “high levels of inflation”.

Mr Tolhurst said the £500 figure also includes £90 in royalty fees payable to Red Tractor for membership of both schemes (£45 for arable and £45 for livestock).

“Theoretically, we’re looking at a 29% increase in Red Tractor royalty fees, which is well above the government’s predicted 5% increase in inflation,” he added.

“We had no notification from Red Tractor over the past three years that this had been their intention. It has just been dropped on us in the past few days. It is penalising smaller farmers like myself, as larger farmers pay the same fees. Red Tractor doesn’t make any allowances for farm size.”