The Biosecurity Response Levy for 2020/2021 dairy season
The Biosecurity Response Levy (M. bovis) rate for the 2020/2021 season will be 2.4 cents per kilogram of milksolids, a reduction from the 2019/2020 season (2.9 cents) rate.
The Biosecurity Response Levy is in place to fund the Mycoplasma bovis Programme and while DairyNZ is responsible for collecting it via the dairy companies, we pass it straight on to the Ministry for Primary Industries. It is separate from the DairyNZ milksolids levy which we invest on farmers’ behalf.
The Biosecurity Response Levy came into effect in September 2019, after consulting with farmers who told us they wanted DairyNZ to manage the levy on their behalf.
From September 2019 - March 2020, $43.5million was collected by DairyNZ and paid to MPI to cover the dairy share of the M. bovis Programme. The current repayment plan is tracking well and in line with the work completed to date. We are continuing to work on behalf of dairy farmers to ensure that all programme expenditure provides value for money.
With DairyNZ managing the Biosecurity Response Levy on your behalf gives dairy farmers a voice, and DairyNZ a seat on your behalf, at the decision-making table for biosecurity responses.
About the Biosecurity Response Levy
In February 2019, we consulted with farmers about the Biosecurity Response Levy which funds the dairy share of the Mycoplasma bovis Programme.
Farmers told us they wanted the levy to be managed by DairyNZ and supported the cap (maximum rate) being set at 3.9 cents per kilogram of milksolids per year.
The Biosecurity Response Levy rate is set each year and is communicated with farmers in writing at least 30 days prior to the effective date.
The levy is administered by milk supply companies. On a milk docket, it shows as ‘Biosecurity Response Levy’.
Frequently asked questions
Biosecurity Response Levy
How is the Biosecurity Response Levy paid by lower order sharemilkers who get a portion of the milk cheque?
A lower order sharemilker will pay the portion of the Biosecurity Response Levy, depending on their contract. For example, if the sharemilking agreement is set at 22%, that sharemilker will be paying 2.9c on 22% of the farms production (2.9c is the rate set for 1 September 2019 – 31 May 2020). Whereas a 50/50 sharemilker will pay 2.9c on 50% of the farms production.
How long will be the levy be in place?
The levy will be in place permanently, however will be set at a specific rate each year.
Is the biosecurity response levy separate to the DairyNZ Commodity levy?
Yes this is a separate levy, managed by DairyNZ and paid to MPI.
What assurance can you provide that the biosecurity levy will be put towards the genuine recovery and not used up in ‘admin’ expenses?
The money can only be spent on response and recovery of an incursion. We are paying back the response costs after they are accrued. The levy will drop down with the response costs. By DairyNZ managing the Biosecurity Response Levy, farmers get more assurance that it will be spent on response activity and we have a seat at the decision making table. We will let farmers know each year what the levy will be.
Where did the 3.9c kg/milksolids cap come from? How did you reach that figure?
We modelled various scenarios and believe 3.9 cents is the most appropriate considering the payback period for the M. bovis response and the risk of any new response in the immediate future.
Government Industry Agreement (GIA)
Why did DairyNZ sign us up to GIA in the first place?
There is always the risk of unwanted pests and diseases making their way to New Zealand and affecting dairy farming. The GIA commits industry and government to work together in partnership to improve readiness for future biosecurity events, and jointly respond to future outbreaks. By working together, we can be better prepared at stopping or immediately finding new arrivals, and as such reduce the damage from incursions, and have more certainty that we can eradicate.
DairyNZ has leveraged significant government funding in this partnership, with government funding 68% of the M bovis response. Government are not obligated to pay for biosecurity responses and using GIA we can get agreed contributions from Government tax payer money to fund both the M bovis and future biosecurity responses.
By signing up to GIA we have a seat at the decision-making table in setting biosecurity priorities. Non-GIA signatory beneficiaries are going to still be required to pay, but they won’t have any decision-making rights.
If you are a signatory to GIA and don’t agree with the direction of a response, do you still have to pay cost shares?
Yes, once a response starts you will have to pay if you benefit from the response, either through an agreement with other GIA partners that sign up to the response, or if you don’t sign up to an operational agreement MPI will still impose biosecurity levies to cover your share of the costs.
Could non-signatories to GIA walk away from a response and not have to pay anything?
There are currently 21 GIA signatories, and all the significant animal and horticulture sectors have joined. MPI has been developing the policy and regulatory framework needed so that non-GIA signatory beneficiaries will be paying their share, but they won’t have any decision-making rights. The bottom line is industry will need to contribute to biosecurity responses, either by an imposed levy or through negotiation of funding proportion through a GIA operational agreement. Industry stand to get a better deal through the GIA route.
Is the DairyNZ Board entering into commitments where there could be liability issues because we can’t pay? If we can’t pay does GIA fall over?
The DairyNZ Board has and will be prudent in only entering into commitments that can be funded. DairyNZ on your behalf decides what it will sign up for and whether we are beneficiaries of any response. We then negotiate with Government and other sector beneficiaries on fair and equitable cost shares specific to a response. The DairyNZ Board will make sure that liability is limited before we sign up to any commitment.