5 Dec 2018

Dairy industry unhappy with M Bovis cost split

1:53 pm on 5 December 2018

Dairy NZ is disappointed dairy farmers have to pay almost all of the private sector costs of fighting the cattle disease, Mycoplasma bovis.

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Photo: RNZ / Richard Tindiller

When the government started a 10-year Mycoplasma bovis eradication programme in May, it pledged to bear 68 percent of the estimated $886 million cost itself.

It said the other 32 percent would be split between the beef and dairy industries.

The industry groups DairyNZ and Beef + Lamb New Zealand have been negotiating ever since and have now agreed that the dairy sector will pay 94 percent of the private sector obligation, while the beef sector will pay 6 percent.

In a joint statement, the two industry groups said the process, which took more than six months, had been challenging but constructive.

They said the spilt was decided after help from an independent panel using several criteria: the relative economic size of the two sectors, the risk of infection and the economic impacts based on the price the two sectors get for their products.

This meant the dairy sector would get an estimated bill of $272m - with dairy farmers now having to decide on a levy to recoup this cost.

Dairy NZ chief executive Tim Mackle told RNZ it was disappointed with where the split had landed in the end.

"It is higher than where we feel it should be," he said.

"We believe there are benefits to an eradication programme to both sectors, from avoiding major changes in their [farming] systems and that the panel really needed to take account for that... [but] they found that very difficult to put numbers on," he said.

He said the levy on dairy farmers for the first two or three years of eradication programme alone would end up costing each dairy farm in New Zealand about four thousand dollars.

B+LNZ chair Andrew Morrison said the announcement gave beef cattle farmers some measure of certainty of what the costs of the phased eradication response will be.

"Our farmers are supportive of the phased eradication response, but one of their areas of concern is not knowing what the cost of their individual contributions to the response would be which will be $17.4m over the 10 years of the response," said Mr Morrison.

He said for beef cattle, the contribution would be collected through a biosecurity levy at the point of slaughter.

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