Fruit and veg producers hit in EU dispute

The Rural Payments Agency (RPA) has confirmed that it is delaying payments under the Fruit and Vegetable Aid scheme after European Union auditors raised issue with the way the scheme was being run.

The scheme encourages fruit and vegetable producers to form co-operatives known as Producer Organisations. It then encourages their growth and expansion by providing funding to help meet the cost of investment.

However, officials from Brussels have raised concerns regarding the criteria and methodology that the RPA is using when giving recognition to these Producer Organisations, leading the agency to delay payments while the matter is resolved.

The RPA and its parent department Defra are now discussing the issue with ministers, saying they recognise the issue as a "priority".

However the National Farmers' Union (NFU) called the payment delay "extremely disappointing" while the head of one Producer Organisation said that some may struggle to pay their staff's wages due to the delay.

John Smith, chairman of Northern Mushrooms organisation based near Thirsk, said his organisation was expecting a payment in the region of 600,000 last month. He told the Yorkshire Post he was very angry at his organisation having to pay the price for a disagreement between bureaucrats.

"If the auditors are not happy with the RPA's way of doing things that is there problem." There had been a back catalogue of errors at the RPA, he said.

"We were due for a payment of approximately 600,000. As is well known, the fresh produce industry struggles to make two per cent net margins and as such few horticulturalists are flush with vast reserves of cash. As a consequence, there is real concern that many PO programmes, involving both investment and people, are about to hit the buffers.

"I have now had the unenviable task of having to tell staff they might not get paid. We are currently working on contingency planning so that they can be given something."

The payment delay comes after another torrid 12 months for the RPA, which culminated this summer in Farming Minister Jim Paice taking personal charge of reforming the department.

Blunders over delayed and miscalculated payments have led to it facing several fines from the EU and a series of critical reports have heaped pressure on its bosses, with one senior figure famously calling the RPA a "masterclass of maladministration".

NFU horticulture board chairman Sarah Pettitt said: "The NFU is extremely disappointed that the RPA has taken the decision to extend their payment deadlines meaning that Producer Organisations will not get the payments for which they have made claims.

"This decision by the RPA can only increase the sense of a loss of confidence with the way in which the scheme is being run. We are discussing the issue at the highest level in Defra and making the case for payments to be resumed as soon as possible."

A joint statement from Defra and the RPA statement said: "As we said in our statement to POs, issued last week, the issues raised by the EU auditors are serious for both the industry and UK taxpayers.

"We will be discussing these issues with Ministers and we are well aware that they are a matter of priority. In those circumstances, it seemed to us both sensible and proper to warn POs that RPA might not be able to meet its published target dates for payments.

"There are 15 Producer Organisations who have submitted a claim for an in-year payment which is currently not being paid in accordance with our payment targets."