Livestock auction marts can’t sustain disproportionate business rate hikes, warns the Livestock Auctioneers Association.
It says that increased turnover does not always mean increased margins, and that repercussions will be felt beyond the auction ring unless affordability and running costs are considered when business rates are calculated.
Ahead of a meeting with the Valuations Office Agency (VOA) later this month, the LAA will be addressing the concerns of the industry with livestock auction marts facing an average increase of 86 percent in rateable values. It says the livestock industry is set to face a triple-whammy that could deliver a severe blow to the rural economy.
The valuation for rating of a livestock auction market is based on its turnover, and most marts have shown significant rises in the eight years since the last revaluation, according to professional surveyor and auctioneer John Hall, senior partner at Howkins & Harrison LLP, Rugby, Warwickshire.
“With stock values rising and favourable changes to the value of the pound, turnover has increased, but equally costs have risen and therefore there has been little or no change to margins,” said Mr Hall.
“Costs have seriously increased. Additional biosecurity measures, electronic identification of sheep (with cattle soon to follow), the extra people and equipment involved to manage these changes, all add up. Some have had to redesign their market pennage and lairage and big rises in water costs and effluent charges are major overheads for all markets.
Chris Dodds, LAA executive secretary (pictured), said: “Many of our members are telling us that they will either need to change something drastically, or cease trading.
“Some larger markets are facing rises of 200 or even 300%, which threatens the sustainability of the industry. Markets are the heart of the rural economy, and have an important social responsibility beyond the auction ring.”
“Undoubtedly, some markets will close and the service they provide, not only to farm businesses but also to communities and jobs, will be lost.”
The LAA believes cost increases will filter down the supply chain and ultimately hit the farmer. It says some 20% percent of an auctioneers’ commission already goes straight out on business rates, and this figure is likely to increase.
Mr Hall also believes two other factors will also seriously compromise the competitiveness of the industry. Traditionally, there has been a transitional scheme to help absorb rate hikes, and this has been balanced by a similar transition period for those who have benefitted from a decrease in rates.
He said previous revaluations gave a buffer of a maximum rise of 12.5% but this time it will go up to 42%. Changes to the appeals process means it is now more complicated and expensive to negotiate.
