Levy Calculation Options - Per Kg
Summary of discussions:
- Original suggestion from Summerfruit NZ would be to set kg rates by fruit type and also market (NZ, Export and processed) which could be up to 18 separate rates, though this is unlikely.
- If had to switch to kg’s most growers preferred a flat rate per fruit type (crop) similar to current levy rates for percentage of sales value, regardless of market it was sold into. Exception process rate but again a flat rate for all fruit types.
- Per kg and current rate are reflective of your overall success and based on what you earn, should be linked to crop volume or value. What ends up in the box…
- Most growers preferred this method over the per hectare as would be easier to collect, less expensive to administer and in most cases, it is done for them by collection agents
- While preferred over hectare option, the majority of growers still preferred the current method. Particularly in the Hawkes Bay and Blenheim.
- Levy rate would be set months ahead at the AGM (May/June) based on retrospective volumes so wouldn’t be linked to inflation or value of fruit in the marketplace at the time of collection unlike current system. This may mean adjusting it more regularly at the AGM to reflect the marketplace.
- May provide a decision mechanism for growers when deciding whether to dump poor quality fruit in a market.
- Others suggested the issue of quality and dealing with poor quality fruit should be addressed in other ways. Also implementing a process rate might give growers a more viable return for selling their low-quality fruit.
- Many disagreed that the levy would feature in a growers decision around how the fruit is marketed.
- Would address the issue of first point of sale at export for vertically integrated growers who choose not to set up separate entities in their supply chain.
- Stops growers with high quality fruit who receive greater returns, being penalised when the levy is calculated on value. Kgs rate wouldn’t be affected by quality.
- Hawkes Bay growers felt that unexpected volumes, not quality, had a greater impact on returns.
- Would be some changes required in business processes for those operating fruit stalls as currently they may not record volumes just values.
- Some growers already pay levy calculated by kgs in their apple crops and don’t believe either kgs or percentage of value at first point of sale has a distinct benefit over the other. Both are easy to manage and calculate.
- While per kg was interesting, only a few growers saw a big enough advantage in this option to warrant a change from the existing method.