Consultation Round 1 Outcomes

thumbnail SF.LEVYWebCircleWe’ve now completed the first round of consultation meetings on the commodity levy order renewal.

There were good turnouts to the meetings in the Hawkes Bay, Cromwell, Alexandra and Roxburgh and growers used the opportunity to discuss topics including:

  • different ways to calculate the levy
  • the current maximum levy rate (which Summerfruit NZ proposes to retain)
  • the addition of a process levy rate and setting a cap on the maximum levy individual growers may pay in a levy year
  • process and organisational issues such as what happens if the levy referendum fails,  new industry member rights, aligning AGM voting rights to levy calculation method and suggestions for the independent industry review.

There was good robust discussion at all of the meetings, particularly on the levy collection method.  Due to what growers told us in the round one meetings, Summerfruit NZ is not recommending any change to the levy calculation method or the addition of a cap on levies.

The second round of meetings provides an opportunity to clarify any of the points raised across all of the round one meetings (especially relevant for those who were unable to attend) and to consider any new issues which may have occurred to growers since the first meetings.  

If you have had any further thoughts since the meetings and you wish to provide comments or feedback to be considered in round two please email it to andrea@summerfruitnz.co.nz by close of business Friday 13th September.

 

Process Rate:

  • Option to future proof industry for next 6 years.  Provides a more viable option to growers looking for returns on lower quality fruit rather than domestic market at full levy rate. 
  • Based on current processed volumes would mean up to $5,000 per year less levy income for the organisation so still small part of the industry.
  • Ambivalent response, no one would be against it, can understand why it might be of use in the future but no one actively supporting it either.
  • Very little discussion at any meeting, a couple of meetings no discussion.
  • No reaction to the proposed rate of 0.5%
  • We propose going ahead with this option to future proof any growth in this area.

 

Levy Calculation Method:

If considering one option we should also consider other possible options hence there was discussion of three possible new methods – per tree, per hectare, per kgs.

To see the full discussion notes click on the link from each method listed above.

  • Are we fixing something that’s not broken?  Are there any real benefits of changing? Are there any real issues with the current method of calculation?
    • Growers lack of awareness in what they are currently paying – that’s up to the grower to be proactive to understand their business.
    • Ability for Summerfruit NZ to budget more accurately on income but not currently causing any issues.
    • There is a perception that those with higher quality fruit are penalised.
  • Levy calculation method should link to voting rights, either change levy method to per hectare or change constitution to match levy collection (simpler method to change).  This may be an outcome of the industry review.
  • No system is perfect, levy is a tax and should be aligned to business success and grower returns. 
  • Changing the method will just mean winners and losers as in any system.  The same total levy income is needed no matter which method is used to calculate it so changing is simply shifting the balance between growers and fruit types.  Just rearranging the chairs around the same sized table.
  • Essential : that any calculation method should be fair and equitable, easy to calculate and manage, simple to submit or collect, not add to current industry costs/expenditure.
  • Changing levy calculation method shouldn’t be seen as the way to address quality issues within the industry.
  • A new calculation method wouldn’t align with Biosecurity levy which would be calculated by percentage of sales value (current levy calculation method).
    • Could look to amend Biosecurity levy but likely to take some  years due to MPIs current workload processing other industry groups biosecurity levy orders. 
  • Apples & Pears, avocados and citrus all use kgs calculation method, onions only vegetable group to use kgs, other vegetable groups and HortNZ use percentage of value at first point of sale.  Asparagus only group using hectares.
  • Question on whether this issue would be best dealt with as part of the industry review. in the unlikley event that the outcome of the review suggested that the levy did not fit the future direction of the industry, the levy could be relinquished before the six years were up, and another applied for..
  • If there was a change of the collection method there could be variability in income over next few years until any new system reaches final rates, some tweaking year on year.
  • Based on the robust grower discussions Summerfruit NZ is not proposing any change to the levy calculation rate.

 

Levy Cap:

  • A suggestion from a grower at an early consultation meeting. 
  • A cap is used by the wine industry who have growers who pay $500,000 in levy, their annual cap is set at maximum levy paid on 20 million litres of grape wine.
  • Growers could see the need in a much larger industry but the Summerfruit  industry is not there yet.
  • Most growers felt it was fairer and equitable if everyone pays the same, no matter their size.
  • Given the grower discussions and feedback, Summerfruit NZ is not proposing to include a levy cap at this time.