Dairy farmers paid $66 million in levies last year, and there's much more to come. Photo / File
Dairy farmers paid $66 million in levies last year, and there's much more to come. Photo / File
New Zealand farmers paid close to $100 million in levies last year and still face a new biosecurity charge totalling $280m to help eradicate the cattle disease M.bovis.
The levies are paid to just three primary sector organisations - DairyNZ, Beef+Lamb NZ and the Foundation for Arable Research (FAR). And while farmers get to vote on a proposed levy amount every few years, paying those dues is not up for discussion thanks to the Commodities Levies Act.
The nearly $100m annual levy bill comprised $66.2m to DairyNZ, nearly $26m to Beef+Lamb and $4.6m to FAR. Dairy farmers because they send cows for slaughter pay twice.
Dairy farmer levies are collected by their processing companies based on kilograms of milksolids produced a year. Beef and sheep farmers' contributions are based on per head of animals slaughtered a season, and arable farmers' to FAR on seeds volume.
Federated Farmers dairy chairman Chris Lewis has done his sums and thinks farmers have paid close to $1 billion in levies in the past 10 years.
He told a recent Feds conference that while he's a supporter of levy bodies, farmers should question the value and direction of the industry groups, and whether they give value for farmers' money.
He said some farmers are asking if the three organisations should be scrapped and replaced by one pastoral farming entity to achieve cost efficiencies and remove some of the sector policy tension and politics which can play out between the organisations.
With farmer's balance sheets under assault from rising working costs as well as compliance costs and potential environmental taxes, "farmers' money is limited and must be used wisely", he said.
Far from going on the defensive, the sector group leaders are encouraging the debate.
Whether $100m is too much is "a fair question", said DairyNZ chairman Jim van der Poel.
Federated Farmers dairy chairman Chris Lewis. Photo / Supplied
He believes New Zealand's 11,500 dairy farmers are getting value for money - but it's harder to see how it's being spent since a complex DairyNZ was formed from the merger of a science, research, technology-transfer body and a policy-making advocate organisation.
DairyNZ had total income of $83m last year, made up of levies and government research grant funding. It employs 270 staff.
With farmers' budgets tight, Van der Poel is expecting rigorous debate next year when a another levy vote is due.
"The more engaged (farmers are) the better."
DairyNZ's directors like to be challenged to debate how and where farmer money is being spent, he said. The organisation invites two leading dairy farmers every year to independently report to levy payers on DairyNZ's key performance indicators and spending.
Fonterra chairman John Monaghan said as a dairy farmer he pays two levies. Like all farmers, he is looking for accountability and results without duplication.
"It's critical that DairyNZ leads the Dairy Tomorrow strategy." Monaghan said farmers had to be "taskmasters" over their levies.
Beef+Lamb chairman Andrew Morrison said "every debate is worth having".
"All of these three organisations work surprisingly closely in relation to research consortiums, pastoral greenhouse gas research, pastoral genomics and the likes. In the science space there won't be doubling up.
"The core of the question is whether they are getting value for money under the current system."
Compared to the UK levies model which he has studied, Morrison likes the New Zealand commodities levy model for linking the performance of an levy organisation and its governance with the levy payers.
In the UK the agriculture minister appointed the directors and then sets the levy, he said.
Beef+Lamb's total income last year including $25.8m of levies was $38m. It employs 92 fulltime equivalent staff.
Morrison agreed there could be "tension" between the policies of the different bodies, and some degree of politics was human nature as people looked out for their own organisations.
