What is a commodity levy?
A commodity levy is a way for an industry to legally collect funds from its members. Widely used in the primary sector, levies are used by industries to invest in their own issues; the key issues that matter to them. The collective good is a significant aspect of a commodity levy. The old days when an industry could rely on a voluntary levy are way behind us – there are just too many issues that industries now need to be involved in to rely on something so unreliable.
Government has for a long time expected an industry to be acting on its own behalf. The Commodity Levies Act 1990 was created for this reason.
In October 2019, the summerfruit industry voted on the renewal of its levy with 84% of the votes in favour of renewing the levy order for a further six years.
Summerfruit NZ subsequently applied to the Minister of Agriculture for a new levy order to become an Order in Council and the resulting Commodities Levies (Summerfruit) Order 2020 came into force on 18 August 2020.
Commodity levies – the basics
- A levy is imposed on summerfruit grown by commercial growers for commercial purposes.
- Commercial growers are primarily responsible for paying the levy.
- A grower may either pay the levy directly to Summerfruit NZ or use a collection agent such as a processor, marketer or exporter to pay the levy on their behalf.
- A commodity levy order lasts six years.
You can find a copy of all commodity levy orders online at www.legislation.govt.nz. Search for ‘commodity levy’ and select the order from the drop-down menu.
The levy rate
There is a cap on the levy rate that can be collected. In the current summerfruit levy order, the levy can be collected on:
- apricots, nectarines, peaches, plums and hybrids thereof* up to a maximum of 1.75% of the sales value
- cherries up to a maximum of 1.0% of the sales value
- summerfruit sold for processing (excluding summerfruit sold to Heinz Wattie’s Ltd for processing) up to a maximum of 0.5% of the sales value.
The term ‘up to’ is important as it means that any rate below this can be collected. It also means that the industry can’t collect more than 1.0% on cherries, 1.75% on the other summerfruit and 0.5% on processed summerfruit (excluding fruit sold to Heinz Wattie's).
The current levy rates (as set at the most recent Summerfruit NZ AGM) are:
- 1.5% for apricots, nectarines, peaches, plums and hybrids thereof*
- 0.75% for cherries
- 0.5% for processed summerfruit (excluding fruit sold to Heinz Wattie's).
* The term ‘hybrids thereof’ includes any crosses within the prunus species such as peacherines, pluots or apriums.
What can the levy be used for?
According to the order the levy can be spent on:
- product development
- research, including market research
- market development
- protection or improvement of plant health
- biosecurity activities
- development and implementation of quality assurance programmes
- education, information, or training
- grower representation
- day-to-day administration of Summerfruit NZ.
Are there any restraints?
The legislation places a number of requirements on Summerfruit NZ in regards to the levy.
- The levy can’t be used for commercial or trading activities.
- The levy rate must be confirmed at the AGM each year.
- The industry organisation must have a financial audit every year.
- The audited accounts must be presented to growers at the AGM each year.
- A report must be submitted to the Minister each year setting out how the levy has been spent in the last year.