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The end of an era: where now for Producer Organisations?

View profile for Julie Robinson
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Roythornes have advised more than 15 producer organisations (POs) since the Fruit & Vegetables Aid Scheme was established in 1996. We have always kept a close eye on legal and policy developments affecting the fruit and vegetable sector, not least over this last year when the Government has sounded the death knell for the F&V Aid Scheme in England.

EU laws governing POs and the F&V Aid Scheme became “retained EU law” in the UK following Brexit. But under the Agriculture Act 2020 the Secretary of State was given the power to amend that retained EU law “for the purpose of securing that it ceases to have effect” in England.

Under that power the Government has now legislated to close the F&V Aid Scheme in England at the end of 2025. It has done this by preventing the approval of any new operational programmes starting on or after 1 January 2024, and by preventing the extension of any existing operational programmes which would result in them ending after 31 December 2025.

The Q&A below summarises our understanding of the implications for POs.

Can a new PO be set up now?
No new operational programme can be approved for an English PO which would begin after 1 January 2024. That is not the same as saying that no new PO can be recognised (see below); it will just not be able to draw down match funding under the F&V Aid Scheme.

Can we amend or extend our current operational programme?
Operational programmes ending on 31 December 2023 or 2024 can be extended for 24 or 12 months respectively as needed to roll them on until the F&V Aid Scheme ends. We can see nothing in the regulations that will prevent in-year amendments to operational programmes as are currently allowed subject to approval by the RPA. If this is likely to be an important issue for you we suggest you obtain seek guidance/a definitive position from the RPA as soon as possible.

What alternative matched-funding schemes will be available to English POs from 1 January 2026?
At the Farm to Fork Summit on 16 May 2023, the Government gave assurances that a replacement for the F&V Aid Scheme would be put in place in England from 2026, as part of the Government’s suite of new farming schemes. The Government said that it would expand the scheme to ensure that more growers, such as those in controlled environment horticulture, could access investment.

The sector’s understanding of this very clear pledge was that a horticulture-focused scheme to facilitate investment would be put in place. However, nothing further has been announced by Defra on this front, and there are fears that the Government may simply be looking to ‘tick the box’ by including horticultural businesses access to Farming Investment Fund grants (e.g. Farming Equipment and Technology fund, Improving Farm Productivity grants)

The difficulty for the sector is that the real strength of the F&V Aid Scheme is that it allows groups of producers to work together to plan investment over a multi-year operational period. That is not what the Farming Investment Fund schemes offer; they are not a ‘replacement’ for the F&V Aid Scheme.

Concerted lobbying will be needed to educate and convince decision-makers of the value to the fresh produce sector of a targeted scheme that enables planned investment in research, green innovations and productivity-enhancing facilities.

POs will want to consider how they will move forward if no similar replacement match-funding scheme is introduced.

What are the implications for existing POs in England if there is no similar replacement scheme?
If POs were set up with the sole intention of drawing down the financing available under the F&V Aid regime, then POs may wish to review the rationale for continuing in their current form. However, there will almost certainly have been additional benefits for members, such as shared production planning systems, collaborative marketing, shared investments and R&D. Members may wish to continue to enjoy these advantages, with the benefit of the competition law exemptions that recognised POs enjoy (see below). Undoubtedly POs will want to review how they will operate after 1 January 2026.

In the absence of any replacement scheme, individual members of POs will need to ensure they understand the provisions of their PO constitutions including the ramifications of any departure from membership. At the very least the practicalities may well be complex if there are shared facilities and other PO assets on land owned by a withdrawing member.

Will we need to change our constitutions, member agreements and contracts with third parties?
Freedom from the sometimes restrictive EU F&V Aid Scheme regulations will give POs the opportunity to adapt the way they work in a way that may be less burdensome and more commercial, for example in relation to storage, packing, marketing, the percentage of a member’s production that must be sold through the PO or the buying-in limits. Member agreements and constitutions may need to be amended to reflect any changes made.

Marketing contracts usually refer to the F&V Aid Scheme rules; these references will be redundant from January 2026. Internal PO rules have also had to align to the regime, for example in relation to voting (one member one vote); these can be changed from January 2026.

Are there any advantages to continuing as a producer organisation?
There are valuable exemptions from UK competition law which apply to recognised producer organisations (s 3(1)(c) and Schedule 3 of the Competition Act 1998). These were introduced following Brexit to make sure that farmer collaborations that had been exempt from competition law under EU legislation continue enjoying the same protection under domestic law.

The exemptions cover activities which might otherwise fall foul of the general prohibition on anti-competitive practices: collaborative production planning, marketing and supply contract negotiation.

The RPA has confirmed that new producer organisations in the fresh produce sector may continue to be set up despite the ending of the F&V Aid Scheme.

Where does this leave Scottish POs?
Agriculture is a devolved matter. The draft Agriculture and Rural Communities Bill 2023, as currently drafted, will allow Scottish ministers to change, extend or end CAP legislation as it applies in Scotland, and the original proviso, in the Agriculture (Retained EU Law and Data)(Scotland) Act 2020, that PO legislation could only be modified to simplify or improve the regime will be repealed. In other words, Scottish ministers will have the power to modify and even end the F&V Aid regime as it applies in Scotland, although we note that the Cabinet Secretary for Rural Affairs recently talked about using the Agriculture Bill to continue government support for producer organisations in Scotland.

Can we just move our head office to Scotland?
The F&V Aid regulations specify that a PO must have its head office located in the constituent nation where the majority of the Value of Marketed Production is calculated or where the majority of members are located. That would mean a significant re-organisation for any English PO considering this extreme option. In addition, a PO cannot move its head office until the end of the operational programme currently in force.

Written by Julie Robinson and Peter Cusick.

The above Q&A is intended as a general summary of our understanding of the current position as at today’s date; that may change as more details are released, particularly in relation to Scotland.

If you have any queries, or would like advice on the implications of the changes for your PO, please do get in touch with either Julie Robinson (for general queries) or Peter Cusick (for dispute-related matters).