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Application of revised annual levies to primary processors of fish and bivalve molluscan shellfish

1 Introduction

On 1 July 2008 the New Zealand Food Safety Authority’s (NZFSA) introduced a revised charging system to recover programme costs applying to primary processors of fish and bivalve molluscan shellfish (BMS shellfish).

The levy is based on the tonnes of fish and BMS shellfish primary-processed for domestic and export markets.

2 Levy rates

The table below shows the new levy rates for primary processing of fish and BMS shellfish as specified in the Animal Products (Fees, Charges, and Levies) Regulations 2007.

Levy	Levy on tonnes of material primary processed (GST exclusive) from 1 July 2008
	Domestic (all primary processors)	Export primary processors
Primary processors of fish other than BMS shellfish	$0.42 per tonne of fish (other than BMS shellfish) processed (if an operator processes only for consumption in New Zealand)	$0.82 per tonne of fish (other than BMS shellfish) processed (if an operator processes wholly or partially for export)
Primary processors of BMS shellfish	$3.88 per tonne of BMS shellfish processed (if an operator processes only for consumption in New Zealand)	$5.65 per tonne of BMS shellfish processed (if an operator processes wholly or partially for export)

NZFSA will measure tonnes processed on Greenweight (GWT).

3 Administration of the new levy system

The levies apply to all primary processors of fish and BMS shellfish (sea-based and onshore operations).

Primary processing is defined in the Animal Products (Definition of Primary Processor) Notice 2000 (see Annex 1).

The levy will be calculated on tonnes of material (fish and BMS shellfish) entering primary processing.

NZFSA requires all fish and BMS shellfish operators to provide an annual estimate (based on previous processing and expectations) of the total tonnages that they expect to primary process for the year ahead. Estimates of the annual levies were then calculated based on those estimates.

Operators will also be required to make a declaration of actual tonnages processed for the year ended 30th June. The final levy payable will be based on this declaration.

Adjustments will be made an operators final invoice to reconcile the total amount due with any levies already paid.

Operators may be required to provide verifiable records of total tonnages processed. NZFSA will also conduct reconciliations of company declarations against records it and other government departments hold to test the integrity of the system. The Animal Products Act provides significant penalties for any person convicted of an offence involving deception

The export rate is charged on all fish or BMS shellfish processed at plants or on vessels that process for export regardless of whether it is destined for the domestic or export market. The domestic rate is applicable to those processors that process only for the domestic market.

3.1 Fishing vessels

Fishing vessels operating under a Risk Management Programme who undertake primary processing of fish and BMS shellfish are levied according to the GWT tonnes of fish or BMS shellfish primary processed on that vessel.

Fishing vessels operating under the regulated control scheme set out in the Animal Products (Regulated Control Scheme – Limited Processing Fishing Vessels) Regulations 2001 are levied according to the GWT tonnage of fish and/or shellfish processed on that vessel.

The levy is applicable to:

those fish of any species processed at sea for the purposes of export that are not to be delivered to an on-shore primary processor: and

those of fish of any species that are filleted (but not their mere deheading, gutting, or scaling).

Where a fishing vessel is not currently registered under a regulated control scheme or with a risk management programme, the on-shore primary processor that receives fish or BMS shellfish from that vessel is subject to the levy. If fish received from these vessels have been partially processed, the on-shore site will be required to apply the Ministry of Fisheries’ conversion factors (see 2.3.2) to calculate the GWT tonnage of that fish or BMS shellfish.

NZFSA recognises there was an issue if fish processed at sea that was intended for direct export is then landed onshore for further processing, that further processing is considered primary processing and subject to a levy. Some vessel operators did not know the final destination of their product when making estimates which could in those circumstances result in double counting, on the vessel and onshore.

The final declaration process provides an opportunity for vessel operators to reconcile estimates with actual tonnages primary processed. Operators will have records (through the calculation of fisheries conversion factors) of the fish filleted at sea. Further, records supplied to, or held by, licensed fish receivers’ will provide information as to whether the fish was exported directly or delivered to an onshore primary processor. Adjustments will be made to the total levy payable and credits, debts, refunds or payments made as necessary.

3.2 On-shore primary processors of fish and BMS shellfish

On-shore primary processors of fish and BMS shellfish are subject to the levy according to their total GWT tonnage of primary processed fish and BMS shellfish.

The levy is applicable to all fish that are processed. However, an exemption from levy is provided for fish filleted at sea and are further processed by an on-shore primary processor as those fish have already be levied on the vessel operator.

3.2.1 Partly processed fish and BMS shellfish Material

The new levy rate is based on tonnes of fish or BMS shellfish processed. Where on-shore primary processors receive fish partially processed, NZFSA will require the processor to apply the appropriate conversion factors (or numbers) to calculate the GWT tonnage of the fish or BMS shellfish in question. The conversion factors for fish outlined below are based on conversion factors in the Fisheries (Conversion Factors) Notice 2005 (See the Ministry of Fisheries Website).

For some species of BMS shellfish such as Bluff oysters (which are counted by the dozen) or pipi and cockles (usually counted by the bin or the sack) and scallops which are reported on processed weight [wet weight], the on-shore primary processor may need to convert numbers (dozens), sacks and bins of each species into GWT tonnage information, so that NZFSA’s BMS shellfish levy can be applied. Conversion rates for most species of BMS shellfish are provided below (still to be developed).

3.2.2 Conversion factors to calculate greenweight¹ for fish (other than BMS shellfish)

The conversion factors described in the Fisheries (Conversion Factors) Notice 2005 must be used where a fish and or BMS shellfish processing site receives a quantity of partially primary processed fish for further primary processing.

The following table² shows a general hierarchy of processed states, with representative conversion factors. NZFSA notes that conversion factors for a particular state will vary according to species.

State	Reporting Code	Conversion Factor
Gutted	GUT	1.10
Headed and Gutted	HGU	1.50
Dressed	DRE	1.80
Fillets: skin-on	FIL	2.50
Fillets: skin-off	SKF	3.10
Surimi	SUR	4.30
Fish meal	MEA	5.60

For more information please see the Fisheries (Conversion Factors) Notice 2005.

3.3 Conversion numbers to calculate tonnage for BMS shellfish

BMS Species	Number of BMS shellfish to 1 tonne (1000 kg)
980 Foveaux Strait dredge oysters are equivalent to 100 kg	9800 Foveaux Strait dredge oysters
One dozen pacific oysters = 0.8kg	Approximately 1250 dozen pacific oysters

4 Business Rules

The NZFSA web link for information about NZFSA’s invoicing policy in regard to the revised levies can be found at:

http://www.nzfsa.govt.nz/animalproducts/legislation/08-09-business-rules-apa.htm

Annex 1

Definitions of primary processing of fish and BMS shellfish (from Animal Products (Definition of Primary Processor) Notice 2000)

1 Operations that categorise a Person as a Primary Processing

For the purpose of the definition of “primary processor” in section 4(1) of the Act, a person who, for purposes of trade or for reward (otherwise than as an employee), carries out the operations or processes described in this notice as primary processing operations or processors in relation to a specified animal product or material is to be treated for the purposes of the Act as a primary processor of that product or material.

2 Fish – On-Shore Processing

1. The primary processing of fish on-shore occurs at the place where—

a. the first methodical assessment of the suitability of the fish for processing is made; and

b. (b) the fish are processed.

2. Without limiting the generality of subclause (1), the following operations carried out on-shore also constitute primary processing of the relevant type of fish (whether or not coupled with a methodical assessment of suitability for processing):

a. the deheading, gutting, or filleting of finfish:

b. the tubing of squid

c. the wet-storage, depuration, or shucking of shellfish:

d. the removing of roe from kina:

e. the holding of crustaceans live (otherwise than in a marine farming operation), or their tailing:

f. in relation to fish to be sold whole or after processing at sea, any steps (including washing, chilling, freezing, or packing) taken to ensure their delivery to a buyer in good condition.

3. For the purposes of subclause (1)(a), “assessment'' may include a visual check to ensure that the fish are in a satisfactory condition for processing to a product fit for human or animal consumption, or any other check provided for under the Act.

[Fish (clause 7) —on-shore processing in general terms, primary processing of fish on-shore will be treated as occurring at the place where the fish are both first assessed for their suitability for processing, and actually processed. Clause 2 also sets out an inclusive list of activities that are to be treated as primary processing.]

3 Fish-Processing at Sea

1. The following operations carried out at sea constitute primary processing of fish:

a. the filleting of finfish (but not their mere deheading, gutting, or scaling):

b. in respect of fish of any species processed at sea for the purposes of export that are not to be delivered to an on-shore primary processor, any other process normally applied to fish, including—

i. washing, chilling, freezing, and preserving:

ii. deheading, gutting, scaling, and tubing:

iii. packing, transport, and storage.

2. Subclause (1)(a) does not include the filleting of finfish that are to be consumed by the crew of, or workers on, the vessel concerned.

[Fish—processing at sea (clause 8) - the filleting of finfish at sea will be treated as primary processing (whether or not the fish are to be delivered to an on-shore processor). In the case of all fish processed at sea for export without delivery to an on-shore processor, however, all processes normally applied to the fish will be treated as primary processing.]

See Annex 2 for information about the landed state codes for on shore and sea-based processing that relate to some of the primary processing activities mentioned above.

Annex 2

The table below provides some of the landed state codes used by the fishing industry for sole or principle landed states for on shore processing and for processing at sea (from Fisheries (Reporting) Regulations 2001 (Part 3)). These codes have been selected to provide the codes for some of the primary processing activities listed in Annex One. This is not an inclusive list of primary processing activities that are subject to the primary processing levy.

Landed state codes for sole or principal landed state for on shore processing (from Fisheries (Reporting) Regulations 2001 (Part 3)).	Landed state codes for sole or principle landed state for processing at sea for landing in NZ (from Fisheries (Reporting) Regulations 2001 (Part 3))
Green (or whole) GRE (e.g. rock lobsters)	De-fat fillets DFT
Gutted GUT	Fillets: skin-on FIL
Headed and Gutted HGU	Fillets: skin-off SKF
Headed, gutted and finned HGF	Fillets: skin-off untrimmed USK
Dressed DRE	Fillets: skin-on untrimmed UTF
Dressed straight-cut (stargazer) DSC	Surimi SUR
Dressed - V cut (stargazer) DVC	Fillets: skin-off trimmed TSK
Headed, gutted and tailed HGT	Fillets: skin-on trimmed TRF
Gilled and gutted tail off GGT	Tailed (scampi) SCT
Gilled and gutted tail on GGO	Tailed (rock lobster) RLT
	Tentacles TEN
	Fins FIN
	Shucked and shelled SHU

¹ According to the Fisheries (Conversion Factors) Notice 2005, “The total allowable commercial catch for most fishstocks is specified as the total weight of whole fish that can be taken. Total weight is referred to as the greenweight. Greenweight means the weight of fish prior to any processing or removal of any part of the fish.”

² Taken from Ministry of Fisheries document Fisheries (Conversion Factors) Notice 2005