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Cost Recovery Proposals for Dairy under the Animal Products Act 1999
8 Proposed Fees and Charges – Industry Goods (NZ Standards, Market Access, Export Standards and Compliance)
No changes are being proposed to the relative Crown/industry contributions. There are some changes to the description of some services provided to reflect the new NZFSA structure and to facilitate a harmonisation of approach across NZFSA. The proposed cost recovery method for dealing with most of the services provided by NZFSA is the same as that currently used under the Animal Products (Dairy Industry Fees and Charges) Regulations 2005.
8.1 Who pays?
The table below lists the sectors and persons from whom it is proposed the costs of services be cost recovered under the Animal Products (Dairy Industry Fees and Charges) Regulations 2005.
Service Area |
Who Pays |
Cost Recovery |
Total Costs 07/08 |
NZ Standards Activities Dairy specific standards Generic Standards1 |
Industry Industry |
Differentiated annual charge (based on company size as measured by raw milk collected) |
$528,087 |
Service Area |
Who Pays |
Cost Recovery |
Total Costs 07/08 |
Market Access Market Access General Market Access |
Exporters Applicant |
Differentiated annual charge (based on volume or value of exports). Time Based Charges ($/hr) |
$512,765 |
Export Standards Dairy Specific Standards Generic Standards Specific Costs National Chemical Contaminants Programme (NCCP) |
Industry/exporters |
Differentiated annual charge (based on volume or value of exports) Annual charge or fixed fee on volume or value of exports and fixed fee on raw milk or annual charge |
$951,691 $1,209,468 (NCCP) |
Compliance Industry performance (including system audits) Third Party audits Verification audits Non-compliance intervention |
Industry Third party Industry Industry |
Time based charge ($/hr)
|
$379,100 |
8.2 Proposed fees and charges
This section proposes fees and charges for Market Access and Export Standards, NZ Standards and Compliance costs. These are industry goods and therefore costs cannot be charged to users in line with use because use by one dairy operator does not detract from the use of the service by any other dairy operator.
The current practice for recovering industry cost such as programme costs from the dairy industry is through a differential annual fees charge which is set based on the size of the dairy industry operation. This option is equitable for small and medium sized dairy operations but imposes higher costs on larger business. Whilst it is a more efficient mechanism than levies, it also can influence the behaviour of dairy companies between each of the charging levels.
8.2.1 NZ Standards Activities
The estimated total cost recovery for NZFSA for 2007/08 is $528,087 (GST excl).
Dairy Industry Operator |
Market Share |
Cost Recovery Total for 2007/08 $528,087 (GST excl) |
Fonterra |
95.4% |
$503,795 |
Tatua |
0.8% |
$4,225 |
Westland |
2.6% |
$13,730 |
Open Country |
1.0% |
$5,281 |
Dairy Goat |
0.1% |
$528. |
Others (18 in total) |
0.1% |
$528. divided by 18 = $29 each |
8.2.2 Market Access
Dairy Industry Operator (Exporter) |
Current Market Share |
Estimated Cost Recovery Total for 2007/08 = $512,765 (GST excl) |
Fonterra |
90% |
$461,489 |
Others (167 small operators) |
10% |
$307 each |
The total NZFSA estimated costs to be recovered from the dairy industry for 2007/08 are $512,765 (GST excl). The percentage of fee payments is based on industry size (milk solids received from farm suppliers).
8.2.3 Export Standards and Systems
The total NZFSA estimated costs to be recovered for 2007/08 are $951,691 (GST excl).
Dairy Industry Operator |
Current Market Share |
Estimated Cost Recovery Total for 2007/08 = $951,691 (GST excl) |
Fonterra |
95% |
$904,106 |
Others (167 small operators) |
5% |
$285 each |
8.2.4 Compliance
The estimated total cost recovery for NZFSA for 2007/08 is $379,100 (GST excl).
Dairy Industry Operator |
Market Share |
Estimated Cost Recovery Total for 2007/08 is $379,100 (GST excl) |
Fonterra |
95.4% |
$361,661 |
Tatua |
0.8% |
$3033 |
Westland |
2.6% |
$9857 |
Open Country |
1.0% |
$3791 |
Dairy Goat |
0.1% |
$379 |
Others |
0.1% |
$379.10 (divided by the number of small industry operators) |
1 For a description of Generic Standards see below
New Zealand Food Safety Authority
68-86 Jervois Quay
PO Box 2835
Wellington
NEW ZEALAND
Phone: +64 4 894 2500
Fax: +64 4 894 2501
Contact
NZFSA about this page