Ian PotterMarketing Services Limited T/A Ian Potter Associates
Sallyfield Lane, Stanton, Ashbourne, Derbyshire
DE6 2DA
Tel: 01335 324594
POTTER”S RESPONSE TO AHDB DAIRY’S BUSINESS PLAN CONSULTATION
Here are my comments on the 2016-2019 AHDB Dairy Business Plan, which are a combination of my own thoughts and those of nearly 40 others who have contacted me with their thoughts, some of whom may have emailed you directly. I have attempted to address in particular the three questions you stated as of particular interest to AHDB.
In Amanda Ball’s opening to the business plan she comments “we will continue to work closely with industry in all parts of the supply chain to co-ordinate and avoid duplication.”
Yet some of the work you conduct IS duplication and is already carried out by more specialised and qualified private sector businesses. For example, the work on costings duplicates and potentially undermines costings work from the likes of Kingshay, TSDG, Kite and Promar, so why do it? Similarly, the work on Genomics has also attracted criticism. If AHDB Dairy wants to provide services already on offer from others it should be commercial and market them separately, without the cushion of levy funding.
A number of the 16 Extension Officers (EO’s) appear to be former dairy farmers and managers. Their role within AHDB Dairy amounts to being a facilitator. However, as was demonstrated from the ‘Economic Consultancy for Dairy Farmers’ scheme, when it comes to real hard business advice farmers need experienced consultants and advisors on-farm with the necessary skills and experience, which the EO’s do not possess, hence this work was outsourced.
There are a number of farmers who, somewhat harshly and uncharitably, claim a number of the EO’s and technical team are either yesterday’s people and/or failed dairy farmers or allied industry people who have landed themselves with a nice non-commercial (i.e a cushy) job in AHDB Dairy for whom the organisation try to ensure they are fully occupied. It’s not a good starting point or image to have. Does AHDB Dairy really feel this large team of EO’s and technical officers are all required? I, and some of the dairy farmers who have contacted me, need convincing.
I could spend a considerable amount of time commenting on the business plan. However, on examination I do question whether levy payers really need AHDB to commission research into optimising the housed environment for dairy cows to improve welfare and productivity in this economic environment (as proposed in the plan) as opposed to helping find new markets for our extra milk, which is sloshing around without a profitable home?
Dairy Market Weekly, Datum Monthly and other similar information
The average content of these publications was described as “fairly mediocre stuff” by one of your levy payers and others have made similar, at times unprintable, comments and I generally have to agree although there are signs of recent improvement. Spending levy payers money to compile weekly and monthly bulletins/newsletters, which duplicate information freely available elsewhere is pointless and a waste of money. If AHDB was to attempt to sell these publications the likely uptake would, in my opinion, be extremely low.
On page 18 of the 2016-2019 business plan under “Services to levy payers” mention is made of providing technical services, including a range of publications and meetings plus extensive market intelligence data including milk prices, input costs etc. In farming terms extensive means a smaller output from a large area. AHDB Dairy either needs to up the standards and provide intensive information and statistics or move away from this self adopted remit. It has to ditch the (very apt!) Peter & Jane Teach Yourself primary school stuff and either publish nothing or provide more factual hard hitting commentary, such as that recently published of the 26th November headed “First Milk Turnaround Progress.” In this rather unique instance the team did not simply regurgitate a press release or the facts and chose to offer an interpretation. This I found refreshing and interesting.
As AHDB is aware I have raised questions as to how statistically robust some of the dairy data is, only to be blocked and blackballed by the staff who hide behind confidentiality, commercial sensitivity and FOI rules. I still do not understand why, when challenged, the organisation tries to hide, sulk, or takes its proverbial bat and ball away. The BBC (another levy funded organisation) wouldn’t do those things if it got a hard time from The Daily Mail, for example! The same applies to the Chairman and Board who have recently decided that any challenges by me are a case of “Potter seeking self gratification” and should be ignored, regardless of the degree to which my thoughts are shared by, or echoed by, those of your levy payers. With respect, AHDB Dairy should be able to take criticism and scrutiny, and defend itself to give sound justifiable answers and demonstrate real leadership. The BBC wouldn’t ignore that Mail journalist and say “we’re not going to talk to you anymore”!
Under the heading of Services to Consumers I do believe AHDB Dairy has an important role to play in conjunction with other industry bodies, especially to education providers and in protecting the sometimes fragile image of dairy farming. Surely lessons were learned in the mishandling of the Nocton Dairies application, where DairyCo as then was regularly caught off guard in defence. The allocation of additional funds in this area would be considered a good long-term investment by a number of levy payers, as opposed to some of the more unpopular and controversial directions in which the levy goes.
A number of levy payers have commented to me that the primary focus and strategy of the organisation appears to be spending significant amounts of levy to essentially encourage unrestricted expansion and significant amounts of time, resources and money defending what you do and how the levy money is spent.
A leading industry figure has sent me a 10 point dairy farmer decision questionnaire at the end of which will guide the dairy farmer as to his or her future for those who follow the questions intelligently. Sadly at the end he states “What is more useful to dairy farmers now? This checklist, or the £1.6million AHDB Dairy spends each year on communications and so-called market intelligence producing elementary information hardly any farmer worth his or her salt reads?” AHDB Dairy has to reverse this image, but it will take time and requires a change of direction.
Exports and promotion
This is the key issue I have with the three-year dairy plan. In Amanda Ball’s opening introduction she states “with much of the demand growth coming from growing economies in developing countries”
On December 17th AHDB Dairy’s news page declared that “imports of liquid milk into China are growing with the UK successfully tapping into this market, with volumes up 16% to a value of £7million”. It stated that UK exporters have a foot in the door, however the three processors who attended the FHC Show in Shanghai in November told me they are teaching themselves how to swim in this market and making their own costly mistakes. They say it’s very complicated, and they desperately need the help of an experienced dairy export manager. The other five sectors of AHDB appear to be focussed on exports, especially meat, so why isn’t dairy? All three told me that their European and New Zealand competitors were years in front of them, and that it was time to sit around the table to have a re-think and re-set the AHDB Dairy budget with exports in mind!
Having said that, all three commented that UKTI (UK Trade & Industry) and CBBL (China British Business Council) were both fantastic but they need specialist dairy negotiators to deal with the Chinese authorities and their formalities. All claimed they had received NO help or communication from AHDB to get into China.
They feel the market in countries like China is there for someone to take but we lack ambition and help for small and medium British players to get onto the pitch. It’s not confined to China but that country looks like a great starting place now that it is the world’s largest economy.
However, of the £7.3million a year in levy revenue and £22million over the three-year budget for this business plan NOT ONE penny is allocated to export development. In contrast the five other AHDB sectors spend on average £5.24million a year on export development!
This is even more inexplicable given the fact that on page 6 of the plan it states that one of only two AHDB priorities is to “Grow market opportunities”. If AHDB Dairy’s export budget remains zero it runs against one of AHDB’s main strategy.
On top of the export issue, there is also no money allocated at growing the domestic dairy market either!
Only this week NFU Deputy President, Minette Batters, in her opening presentation at the Semex Conference stated “there’s an urgent need to get British dairy brand recognised and revered across the world …..” followed by “…but at present we are leaving all the promotion and market development on dairy products to our processors.” If Minette hasn’t been talking to the same three British processors who attended the recent FHC Show in Shanghai then she has certainly received the same message all three fed back to me. Surely AHDB Dairy can see that all roads point to the organisation having a key role to play on behalf of GB dairy farmers. It cannot stand idly by watching what happens.
Minette was very clear that what is missing is a joined up approach of promotion both domestically and export.
Indeed the AHDB Chairman, Peter Kendall, has gone on record as stating that growing our exports is one of his key visions to grow British agriculture. Does this apply to the other five sector boards but not dairy, I ask?
In connection with exports this statement from one AHDB meeting minutes is jaw dropping: "At the beginning of April Karen Morgan started in her post in China. The post is a diplomatic one and will not report to anyone from AHDB directly although is being mainly funded by AHDB with strong input via Peter Hardwick. The board would like to see a programme of work for Karen to better understand what is planned.' So basically AHDB’s levy payers pay for the role, but it has no say in what the person does. I find this incredible!
Your stance on international and domestic promotion of British dairy products has to change if you are to win the hearts and minds of your levy paying customers.
Volatility
In Amanda Ball’s opening introduction to the plan she states “dairy markets are expected to remain volatile” and “adapting to new volatile global market, where having an effective supply chain is fundamental to the future success of GB dairy farmers”
Yet other than in the opening pre-amble no mention is made as to what part AHDB Dairy intend to address the issue of volatility which your strategy director recognises. Not one activity refers to volatility, which is unbelievable. Volatility is strangling agriculture, in particular dairying, and makes it almost impossible for dairy businesses to plan. In dairying solutions have to be explored. We may need to work with others to develop risk management tools but for AHDB Dairy to simply play lip service to volatility but to then bypass it for three years is not an option.
Conclusion
You state that the AHDB Dairy Business Plan addresses the specific needs of the GB dairy sector but I do not believe you hold sufficient evidence to back up this claim and think that convincing levy payers will be difficult.
As I understand it the AHDB Dairy Board is tasked to produce and implement a dairy plan with the most appropriate strategies to meet the challenges facing the GB dairy industry. In my opinion, based on my experience, observations and knowledge of dairy farmers, plus their comments to me via my bulletin and Dairy Farmer article, a full re-think of the strategy is required before the plan is signed-off or dissatisfaction will remain among many levy payers.
In my opinion AHDB Dairy fails to convince a significant number of hard working levy paying customers that it does “provide the best possible value for money to levy payers”. There is, however a small band of people who are unquestionable in their view that it provides best value. That group of people is The Board.
In addition I urge AHDB Dairy in future to allow a longer window of opportunity for levy payers to respond because six weeks is far too short - unless there is a good reason for keeping response times so tight. The monthly farming magazines serving the industry like Dairy Farmer and British Dairying don’t have a chance to feature anything on the plans between the consultation being announced and the deadline, for example. Also, it might be a good idea to provide something by way of responses from the Board to those who take the time to study the business plan and offer their comments. One levy payer who has corresponded with me is questioning this, together with why the responses from levy payers are not collated and made public, even if names are withheld. It’s all about AHDB Dairy demonstrating it is transparent in an attempt to shake off what is viewed by some as a secretive and dictatorial organisation who claim it consults but then ignores what is says and simply does what it wants.
Looking through the plan under “Risks” it’s clear AHDB Dairy recognises that in many of its activities it suffers from lack of levy payer engagement, duplication, interest and support. I believe it has to address this to convince farmers that its activities deliver value and make a real difference. A number of levy payers have grown tired of the lack of leadership shown by AHDB Dairy, in particular the lack of recognition as to the real issues that should be tackled.
AHDB Dairy is no different to the 12,000 or so remaining GB dairy farmers. It has to run the business intelligently and smarter. Certainly the proposed budget is very extensive, but light and vague on detail. Perhaps this is deliberate! For example, there is £12.4million budgeted for R&D and knowledge transfer but no further detail or split. It reads like a massive slush fund. The budget covers £22million but little detail is provided and no indication as to how AHDB Dairy will evaluate value for money. The image this conjures up is that the organisation is not professional, commercial and not accountable to levy payers.
I hope (but doubt) you will take on board my comments together with those of other levy payers who have taken the time to study the plan. Perhaps your Chairman and board will, on this occasion, be persuaded to review what AHDB Dairy plans to spend the levy on.
Another detailed look at what is being proposed is required in my opinion, especially what role it can play in helping the industry reach new markets. AHDB Dairy can’t have a strategy for the industry to produce more milk without a complimentary one to deal with it all!
As the plan stands the organisation can be accused of pursuing volume in order to boost the amount of levy money it has available to spend.
Finally, there are only two options open to AHDB Dairy in relation to the current levy: it is either frozen or reduced. The latter won’t be in the genetic composition, and much of the levy will not doubt already be committed – even the additional levy money that has come from the additional milk that wasn’t predicted over the last two years, and budgeted for. Any proposal to increase the dairy levy would go down extremely badly.
Ian Potter
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