Background – statement from Kate Rowell:

“As the world gears up to compete for high-value UK retail market access, levy bodies must also gear up to be able to deliver on behalf of businesses within their supply chains. QMS has not requested a levy increase since 2010, and we want to remain fit for the future of Scotland’s iconic Scotch brands, promotional work and market development.

“With this in mind, as we announced at the Royal Highland Show, we plan to hold industry workshops throughout Scotland during November and December, to discuss the delivery of our five-year strategy and, as agreed by the QMS board, a proposed levy increase to fund this vital work.

“To continue to deliver good value for money and integral support to Scotland’s red meat supply chain, as well as to ensure that rising costs are managed, QMS will propose a new mechanism for setting the levy from Spring 2024, adding a small inflationary rise each year to ensure our financial model remains sustainable. This mechanism will be reviewed at the end of the five years, to ensure it remains fit for purpose.”

An update on 13 March 2024:

Following extensive consultation with industry stakeholders and dialogue with QMS levy payers at a series of winter workshops, the QMS board requested that Mairi Gougeon, the Cabinet Secretary for Rural Affairs, Land Reform and Islands, approve an increase in QMS' levy rates. As per the requirements of the QMS order, the Scottish Ministers have now approved this request. A levy rise, based on CPIH from January 23- January 24 of 6.8% will therefore be implemented for processors and producers, from 1 April 2024. Thereafter, QMS are proposing that levy increases will revert to annual increases in line with the CPIH index. This marks the first time that QMS has requested a change to the levy in 13 years. As presented at the winter workshops, the increase will ensure our financial model remains sustainable and that QMS remains fit to support Scotland's iconic Scotch brands, promotional work and market development, both here in the UK and internationally. This levy setting mechanism will be reviewed at the end of the five years as part of future consultation on strategy at that time.

Commenting on the announcement, Kate Rowell, Chair of QMS said: ‘We are pleased that Scottish Ministers has approved the levy increase which will ensure continuation of the work that QMS has committed to prioritising for farmers and processors across Scotland. The new rates will allow us to invest in our key activities underpinning our vision to make Scotland THE choice for premium red meat, during a critical time for all businesses. QMS will continue to proactively engage with the whole red meat chain as we navigate the future together, and look forward to showcasing some of our new work streams over the coming months.’

Q&A:

Why do you need to increase the levy?

As we are already seeing, the Scottish red meat sector faces growing global competition, with many countries targeting the high-value UK market, as well as our export markets. We need to gear up to be able to deliver on behalf of the red meat supply chain from farm to fork.

We have not requested a levy increase since 2010, and everyone is aware of the substantial global inflationary pressures. We want to remain fit for the future of Scotland’s iconic Scotch brands, ensuring we can continue important work to drive productivity and profitability, domestic and international promotional activity plus critical market development work.

How did QMS consult this levy change?

The QMS Board were keen that we allowed for full consultation with as wide an industry subsection as possible. From that a 3-pronged approach was taken to engage with each of the three constituent groups that either are levy payers or represent levy payers. A detailed explanation of the consultation that took place with each constituency is below:

Producers

• 11 face to face evening meetings were arranged in: Dumfries, Stirling, Lanark, Kirriemuir, Inverurie, Dingwall, Thurso, Orkney, Ayr, Oban and St Boswells. Following feedback from producers, an additional meeting was also scheduled for Campbeltown.
• The meetings were held from 7-9pm, with the following agenda:
  • Intro and strategy overview
  • Overview of current activity
  • Overview of potential new activity
  • Break out sessions:
    • Regional priorities
    • How QMS engages with its stakeholders
    • Discussion on levy proposal and how spend should be prioritised
    • Feedback and Q&A
• Meetings were chaired by a member of the QMS board, and either one or both the QMS Chair and Chief Executive, and members of the QMS staff team.
• Meetings were advertised 3 weeks in advance in a variety of different places:
  • QMS newsletter (sent to >7500 members of the QMS QA schemes)
  • The Scottish Farmer
  • QMS Social Media (Facebook, Twitter, Instagram and Linkedin)
  • Local newspapers to each of the events (eg, press and journal)
  • Stakeholder press (eg, NFUS weekly newsletter, NFUS social media)
  • Local networks (eg, leaflets left at Auction Markets)
  • Reminder at other QMS meetings eg Monitor Farm events, Agriscot

In addition to the face-to-face meetings, one online webinar was also held in late January 12.30-13.30 to give those who had not been able to attend a face to face meeting the opportunity to engage with QMS. The webinar was delivered by the QMS Chair, Chief Executive and two board members and comprised of a 30-minute presentation, followed by a 30-minute q and a whereby attendees were invited to submit questions in advance, as well as during the webinar.

QMS also engaged with processors through a series of 1:1 meetings and discussions with SAMW.

Is there a shortfall at present?

Yes. A recent independent QMS Impact Review shows that in the period 2017-2021, before current inflationary pressures, the static levy eventually led to a £1 million a year shortfall in spending power.

What does my levy money go towards?

Approximately 75 per cent of levy income is spent on marketing and promoting Scottish red meat, followed by industry development (meat eating quality, genetics, supply chain, etc), corporate services, market development (supporting processors, butchers, overseas markets, etc) and economic services (market intelligence, statistics, etc).

It is estimated (in the independent Impact Report 2023) that for every £1 of QMS levy payment during the period 2016-2022, there has been circa £5.50 worth of benefit to the industry at the production level when compared to the rest of the UK.

The current Monitor Farm Scotland programme, though managed by QMS, is fully funded by Scottish Government, with no QMS levy contribution.

How can we be confident you are delivering value for money – especially for my part of the supply chain?

When we launched our five-year strategy at the Royal Highland Show, we made it clear that for us to act as a catalyst in the market, we need to be arrow-focussed on where we can make the most difference. We are now ruthless and commercial in our focus, with three pillars of work which define our activity over the next five years, fostering profitable and innovative supply chains to make Scotland the choice for premium red meat. We have clear targets and a transparent way of tracking and measuring the impact of everything we do.

How will the mechanism for increasing the levy work?

It will be based on an annual calculation of CPIH, and will track that figure. The annual rate for 2023 is 6.8%. Every year going forward, QMS will undertake an engagement exercise with processors and producers ahead of the CPIH increase, which will be ratified by the QMS board before going to ministers for final approval. There will be an annual ‘brake’ to sense check for extreme market conditions or levels of inflation, and a full review after five years to ensure it is fit for purpose.

Why do you think you need this new mechanism?

It is better to have a small inflationary increase each year than a large jump after a number of years, or we risk seeing our ability to compete in an increasingly tough world market dwindle as we don’t have enough to invest in marketing, promotion, and so on.

The mechanism will be reviewed at the end of the five years to ensure it is fit for purpose. It will ensure we can continue to deliver good value for money and integral support to Scotland’s red meat supply chain, as well as ensure that rising costs are managed.

Will the levy be going up even more? Even though you have a new mechanism for setting it, there is less and less livestock and that is bound to reduce the amount of money you get in over the next few years.

We do not foresee the levy going up by more than the CPI rate, unless there are some extreme market conditions or levels of inflation; the annual ‘brake’ will allow this to be sense-checked. The full review after five years will also ensure that the mechanism we are proposing is fit for purpose.

How does the levy compare with what farmers are paying in England and in Wales?

Farmers in England and Wales are likely to see levy increases too, with AHDB completing their levy consultation, and HCC in Wales completing their levy consultation this time last year. The tables on this page show the levy rates for this financial year, the next financial year if we stay static and the levy rates if all three nations apply increases.

Are we paying up for all the lost levy with the cattle and sheep which are being processed in England?

No, agreement was reached that the levy for Scottish-born stock is collected by AHDB and is repatriated to Scotland. This is currently worth about £1.2m per year. AHDB have just completed their own levy increase excercise and have implemented new levy rates from the 1 April 2024.

What have you done to manage costs within QMS – are we just paying up for your overspending or poor budget management?

We are acutely aware of offering value for money, and we manage our budgets tightly – this has particularly been the case in recent years where we have needed to work with the impact of a static levy at times of rising costs, which has led to a £1m shortfall in spending power.

We have reduced our overheads where we have been able to, and have prioritised.

We are now ruthless and commercial in our focus, with the new strategy based on three pillars of work which define our activity over the next five years, fostering profitable and innovative supply chains to make Scotland the choice for premium red meat. We have clear targets and a transparent way of tracking and measuring the impact of everything we do.

Can’t you just do less of the ‘telling us how to farm’ activity and concentrate on actually selling what we produce?

A high proportion of levy money (75%) is spent on marketing and communications, at home and overseas, in order to drive sales of Scottish red meat.

About 25% is spent on industry development which covers progressive technical issues such as genetics, eating quality and sustainability, among others. It is critical that producers remain competitive in a global market, and our technical development focus is about seeking out, commissioning and publicising research, ideas and guidance which will help Scotland’s red meat producers become even more efficient and effective. Productivity and profitability – along with sector sustainability – drive everything we do from a supply chain technical perspective.

What does the marketing and communication spend cover, and is it value for money?

Independent research as part of the Impact Review 2023 found that QMS’s investment in marketing and communications has seen a net return for Scotland’s red meat sector of £6.85 for each £1 of levy spent.

This work includes wide-ranging marketing and advertising such as our ‘Make It With Cred’ consumer campaign which reached 73% of 18 to 39-year-olds in Scotland, as well as education toolkits, reputation management, myth-busting publications for the COP26 and COP27 events, and resources to help the sector communicate around topics such as Veganuary.

We also invest in external affairs – working to influence other organisations, governments, politicians, special advisers, non-governmental organisations and others across the political spectrum. Our expertise in these areas includes climate change, sustainability and the environment; international trade and the new UK/EU relationship; economic impact and employment; consumer trends, retailer engagement and Scottish red meat in the supply chain; and animal welfare.

We also set up and run the cross-industry Scottish Red Meat Resilience Group, a partnership formed by key stakeholders from across the Scottish red meat supply chain to discuss issues and challenges affecting the sector, produce analysis on key topics and, where appropriate, speak with one voice.

How much extra money will this change in the levy bring in?

We estimate that the levy increase in Scotland will bring in an additional £125,000 in 24/25, which will help address the shortfall due to inflation. In addition, new levy rates following AHDB’s proposed levy increase would also lead to an increase in repatriated levies.

What will you do with the extra money?

It will ensure we can successfully deliver the five-year strategy. This will allow us to continue to represent Scotland’s iconic Scotch brands, to maintain and increase important work to drive productivity and profitability, domestic and international promotional activity plus critical market development work. A sufficiently funded sector-specific body is crucial to deliver these aims and ensure our industry’s future potential is not compromised.

Nearly 13 years since the last increase is a long time – why haven’t you looked at increasing the levy before?

Historically, we have operated only by asking for a levy increase sporadically; this was last done in 2010, and before that, in 2001 for cattle and sheep and 1999 for pigs. However, we now believe it is better to have a mechanism for incremental increases which keep pace with inflation, rather than a potentially big jump after a number of years.

Why aren’t we having a vote like English levy payers did about AHDB?

The AHDB vote, Shape the Future, was about asking levy payers if they agreed with the proposed priorities for each sector (cereals and oilseeds, dairy, beef, sheep, pigs). They were then asked to rank the importance of the work AHDB should do to support those areas. The results and feedback are being used by the sector councils to make funding decisions in the sector they represent on the work AHDB will deliver for levy payers.

Rather than a survey, and as we represent the red meat sector only, QMS decided to talk to our levy payers face-to-face in a series of evening workshops . This follows extensive engagement since April 2022 which included our open meetings, invited meetings and increased stakeholder engagement with the membership organisations who represent our levy payers as we shaped our new strategy. We are also keen to have your views and feedback via email or post if you cannot attend one of the workshops. Please see details of how to get in touch above.

I’m a farmer with dairy, arable, beef and sheep and I feel like I’m going to be paying a lot of levy to AHDB and QMS and not getting much back for it. How can I opt out?

The levies paid to AHDB and QMS (and HCC in Wales) are statutory, so set in each country’s legislation. This means there isn’t an option to opt-out.

In terms of value for your business, it may be worth talking to a QMS and/or AHDB board or staff member as there may be opportunities/representation/knowledge we offer which may be useful.

Does QMS and its work really help – are we doing any better than our other GB competitors? And what would happen if we didn’t pay the levy?

Independent analysis in the Impact Review 2023 shows production and retail performance of Scottish beef, lamb, and pork have exceeded that of the rest of the UK over the reference period (2016-2022) by £130m at production level and £124m at retail level.

The consultants add: “We believe that if levy payments were stopped and QMS was unable to carry out activities we conclude that within five to eight years, the Scottish Red Meat sector would perform in line with the rest of the UK.”