Correspondence from the Chief Executive of the Home-Grown Cereals Authority (HGCA)
to the Chairman of the Environment, Food and Rural Affairs Select Committee
HGCA levy & implications for HGCA’S work
Thank you for your letter dated 22 January 2003 referring to the HGCA Board decision not to
recommend a levy increase for the year 2003/04. Before answering the specific points that you
raise, I feel it may be helpful to provide a little background regarding levy rates and the
unrestricted reserves, which are required to accommodate the annual fluctuations in income
arising from unpredictability of crop area and yield.
The grower levy was set at the current rate of 40p per tonne in July 1996 and apart from one year
at 38p per tonne in 1997/98 the levy has been at 40p per tonne ever since. Following the levy
increase in July 1996 there were several good harvests and this increased the level of reserves.
The Quinquennial Review of HGCA in 1998 noted these levels of reserve and requested that
deficit budgets be set to achieve a progressive reduction in our reserves. This was undertaken,
but the very poor harvest of 2001 resulted in an operating deficit of £2.4 million, accelerating the
reduction in reserves to the extent that we are predicting that our working reserves will fall to
£1.5 million by June 2003. This level is the minimum set by the Board and means that HGCA
would have to operate to a balanced budget from 2003/04 onwards. The Board initially
concluded that to continue to deliver the level of service currently supplied by HGCA a levy
increase was required to balance the budgets of future years.
Responses to your specific requests are as follows:
1. HGCA’s work programme
The work programme for the 1 July 2003 onwards is based on the current 5 year
Corporate Plan, which sets out a series of specific activities under the headings of
Planning, Producing, Marketing, Processing, Consuming, Managing and Communicating.
In line with the Corporate Plan, an Annual Business Plan for July to June i