Speculation grows over AHDB redirection

Speculation grows over AHDB redirection

Following the announcement that AHDB is restructuring its market development team, Meat Management looked behind the scenes to consider what may be going on.

The Agriculture and Horticulture Development Board (AHDB) recently announced it is restructuring its market development team and admitted “a small number of redundancies” will be necessary. However, fears that marketing is actually being downgraded very significantly in order to cut costs are circulating throughout the industry.

The pending redirection of AHDB’s market development department is a subject of speculation throughout industry.

In the March print edition of Meat Management, Meat Management columnist Mike Britain commented that AHDB is actually slashing its marketing headcount by around 50%. When asked to confirm, the levy board refused to respond, but rumours of redundancies, particularly from the AHDB Beef & Lamb and AHDB Pork sectors, continue to filter out.

Although AHDB remains tight-lipped, reliable sources have informed Meat Management that the head of domestic marketing at both Beef & Lamb and Pork as well as the head of trade and product development at Beef & Lamb have all been made redundant and are due to leave AHDB at the end of June. The restructure is also expected to establish two marketing streams: one dedicated to the Beef & Lamb and Pork sectors, the second to other sectors including Dairy, Cereals and Potato – in place of AHDB’s current sector specific marketing teams.

A new post, head of domestic marketing, is also said to be in development to straddle these two newly-formed sectors and co-ordinate marketing activity across the whole of AHDB. The post is yet to be filled but it is understood that internal applications have been made.

The previously dedicated trade marketing teams of Beef & Lamb and Pork are expected to be combined in a re-named Retail and Foodservice Engagement team. Following the redundancies of current department heads, the new combined team is also expected to be smaller and staffed at a less senior level – suggesting that Mike Britain’s comment last month that the trade marketing headcount would halve from 10 to five may not be far off.

In its October edition, Meat Management also disclosed that the AHDB Beef & Lamb trade marketing budget for the financial year 2018/19 year would be slashed by about 60%. At the time AHDB criticised the report as inaccurate but despite requests from MM would not provide figures to substantiate its comments.

At the time of publishing this article, AHDB had refused to comment in detail about staff changes, saying that it is “still in the middle of the restructure, and to provide comments at this point in time – either on specific individuals or on any restructure outcome would be irresponsible.” Meat Management has not received any further update from AHDB.

Industry views

Industry members have suggested AHDB chairman Sir Peter Kendall may be moving the focus of AHDB from food towards farming.

Meanwhile, senior meat industry executives have acknowledged to Meat Management that change is inevitable and are also withholding any detailed comment until the process is complete.

However, some are already expressing quiet concern. One view is that AHDB is not addressing the fact that it is ‘top heavy’, operating with a senior management team of 19 directors. At one time the AHDB team consisted of six executive directors in a total senior management team of just nine – this number has more than doubled over recent years.

To compound what some have described as a ‘bloated top team’ is a growing opinion that marketing within the red meat sectors is being relegated and that trade marketing in particular is losing experienced people who will not be replaced.

Industry commentators have also expressed a view that AHDB will be less able to deliver meaningful support for industry as a result of this latest restructure. The coincidental departures of the strategy directors of both Beef & Lamb (through
resignation) and Pork (through retirement) add to speculation and concern.

Throughout the supply chain there is also growing opinion that the levy board is moving away from the traditional support activities offered to the meat trade – whether processors, retailers or foodservice operators – and towards a focus of direct support to farmers. Some have expressed the view that AHDB chairman Sir Peter Kendall is heavily focused on farming as “farmers pay the levy”.

It remains to be seen how the wider meat industry – the processing sector in particular – would react to a potentially narrower focus and any possible reduction in marketing support. The pig industry could be said to have ‘form’ in adopting a somewhat unilateral approach to protecting and promoting its own sector interests.

More significantly, there may well be unease throughout the individual AHDB sector boards that the levies raised within each sector will continue to be used solely and transparently to their discrete benefit and not used to subsidise other sectors.

Future of MLCS

At the same time as these structural changes are taking place, AHDB has announced plans to sell its commercial subsidiary, Meat and Livestock Commercial Services Ltd (MLCSL), to the private sector company HallMark Veterinary Compliance Services. MLCSL is currently run as a separate company and returns any profits to AHDB.

In a press statement, AHDB said that moving MLCSL to the private sector would “open up opportunities for greater efficiencies and synergies not possible under the current public ownership model and secure the company’s future.”

The same reasoning was used a couple of years ago when Defra sold off the body responsible for food safety and quality – the Food and Environmental Research Agency (FERA) – by selling, for £20 million, 75% of FERA to Capita, a leading outsourcing company. At the time of the deal, Capita expressed the ambition to increase FERA’s £40 million annual turnover to £700 million within 10 years.

Earlier this year, Capita issued a profits warning and saw its market value halve. The Government was quick to reassure the market, however, insisting that Capita was not in danger of falling into liquidation as had happened to another outsourcing business, Carillion. The Cabinet Office quickly stepped in to defend the outsourcing model where Government services are farmed out to private companies.

It is not known whether Defra has pushed for the sale of MLCSL. However, industry is of the understanding that the Government department has been more closely involved in the day-to-day operation of AHDB under its present chief executive than was previously the case. It is understood from reliable sources that the latest restructure of the marketing function within AHDB went to Defra for sign-off.

One thing is for sure, the feeling within AHDB must be mixed at present as staff go through the redundancy process (a process which is expected to be completed this month). Meanwhile, the industry awaits an official announcement from AHDB on its future and only time will tell how a new structure and redirection delivers.

Previous / Next posts...