These frequently asked questions were updated as new questions were received.
Why do we have a commodity levy?
Summerfruit NZ is an incorporated society and exists to support producers, exporters and others associated with our industry – whether they are small or large, regardless of location or length of time in the industry. Our strength is in our ability to work together as a group.
Therefore, we have a levy to enable Summerfruit NZ to work for the good of the industry, rather than for the benefit of individual growers or exporters.
This includes spending on activities that help us grow and protect our industry, such as:
- crop protection
- grower representation
- market access
- information sharing.
Who pays the levy?
All those who grow summerfruit for commercial purposes pay the levy, even if they are not a member of Summerfruit NZ.
The only exception to this is growers who sell their fruit to Heinz Wattie’s on contract for processing. This group is exempt from the levy.
Why are Heinz Wattie’s suppliers exempt?
Heinz Wattie’s charges its suppliers a research and development levy, and it would be unfair to deduct a second levy. Summerfruit NZ and Heinz Wattie's frequently conduct joint research and share the outcomes.
What is the money used for?
The levy is deducted by collection agents and paid to Summerfruit NZ. Levy payments make up more than 70% of our total income.
It is used to pay for activities that support the industry (including research, market access, export and compliance, crop protection, biosecurity, communications with members, liaison with government, etc) and for the running of the Summerfruit NZ itself.
Why do we need a new levy order?
The Commodity Levies (Summerfruit) Order 2014 expires in August next year. A new levy order needs to be in place before the start of the 2020-21 summerfruit season.
Who gets to vote on the levy order renewal?
All growers who grow apricots, cherries, nectarines, peaches, plums and any hybrids of those crops, are entitled to vote on the levy renewal.
Why does it take so long to get a new levy order?
The legislation requires us to follow a very specific, multi-step process.
- We must consult levy payers and then ballot them to ensure we have their support.
- Our commodity levy application then goes to MPI for review.
- From there the new order is drafted and, subject to Cabinet and Executive Council approval, the levy order receives the Governor-General's signature and is gazetted.
The process takes six to eight months from the time the application is submitted to MPI, until gazetting. Extra time is allocated next year due to the 2020 election.
Our goal is to conduct the referendum in mid-October this year so that we can submit the application to MPI early next year. That would mean that we could complete all of the steps before the start of the 2020-21 summerfruit season.
What if we don’t get a new order in time?
If the new levy order is not in place by the start of the 2020-21 season, Summerfruit NZ could operate from reserves. However, there are not sufficient reserves to function for an entire year. We’d also question if it would be a wise practice to completely deplete the industries reserves?
So, if we couldn’t function for a year – which is what it would happen if the 2020-21 target was missed – then services would cease.
Isn’t Summerfruit NZ conducting an independent review? Shouldn’t that be completed first?
Summerfruit NZ has committed to conducting an independent industry review. This is a big, complex piece of work that we want to get right. We think it would be just too complex and demanding on our resources to conduct both the review and commodity levy renewal at the same time. Advice from an independent reviewer is that it would be difficult to have meaningful engagement with growers when we were also consulting with them on the levy renewal.
Therefore we plan to start the industry review once the commodity levy renewal consultation process is completed.
Why can’t this levy renewal wait until after the independent industry review?
The current levy order expires in August 2020 and can’t be extended. You can find MPI’s advice on this below. It always takes at least a year to get a new levy order in place. If we don’t start immediately, we cannot be confident of having the new order in place for the 2020-21 season.
MPI could not accept an application for extension to the current levy order as the following requirements could not be met:
- For the Governor-General to extend the order the application for extension should have been submitted to the Minister at least six months ago, and that would have given sufficient time for the Minister to consider the application and recommend extension to the Governor-General. The extension of the order would have to be signed off by the Governor-General 12 months before the expiry of the current order.
- In order to complete an application to the Minister for extension Summerfruit NZ would need to have met the requirements of Section 5 of the Act. Section 5 requires full consultation and a support referendum with a competently devised ballot paper which covers all matters specified in the levy order (section 6), the same process as required to complete a commodity levy renewal.
- This process is no less onerous and requires similar timeframes as is required to complete a commodity levy renewal which makes it impossible to submit an application to the Minister by 31 August 2019.
- There is no alternative process that can be used to complete an application for extension of a levy order.
What happens next?
We are planning two consultation rounds with growers. The first stage of consultation covers changes that are being proposed. This is also where we listen to what the industry has to say about the levy order.
We’ll then have a second round of consultation to discuss anything that came out of the first round.
Is there anything new proposed for the new levy?
Summerfruit NZ is only proposing a number of small changes to keep the levy relevant. These changes reflect developments over the last six years (including biosecurity issues and new developments in processed products).
We also listened to what the industry had to say about the levy order. For example, at the AGM a grower asked if the current method for calculating the levy (as a percent at the first point of sale) was the best way. For instance would it be better to pay the levy as a flat rate per hectare? Or perhaps based on kilos?
One grower made a strong case for adoption of the hectare approach to levy collection (with only one other orchard supporting that suggestion), while another grower supported a change to a per kilogram calculation method (with no support from others for this suggestion).
There were pros and cons for all options. In the end, the consultation feedback was so consistent that our job was made easy for us. There was near unanimous support from growers we have engaged with for the levy calculation method to remain the same as it is now.
There will be no change to the current maximum levy rates or the levy calculation method but Summerfruit NZ is proposing a new process levy rate (excluding summerfruit sold to Heinz Watties) with a maximum at 0.5%
How can I find out more about this or get my questions answered?
We have sent out information on the levy renewal over the last few weeks. Including booklets which explain what the commodity levy is and the levy renewal currently underway. There have also been two rounds of consultation meetings where growers talked to us about their thoughts on the levy.
And of course there is the information on the Summerfruit NZ website and in Prunings. Keep an eye on the website as new details are added there regularly.
You can also talk to the Summerfruit NZ team who are working on the renewal. Or you can phone or email us if you prefer.
What has the current levy been used for?
Why do cherry growers have the same voting rights in the referendum when they pay a lower levy rate on their fruit?
The Commodity Levies Act directs us to use the same calculation method for weighting votes in our levy referendum as we use for collecting levies. For summerfruit this means we use a percentage of sales value to calculate the levy and we use the total sales value to weight the votes.
We are not able to apply additional weighting reflecting different levy rates paid on our five fruits.
More information is available here.