Cost share for M. bovis finalised

The Boards of DairyNZ and Beef + Lamb New Zealand (B+LNZ) have agreed on how each industry’s share of the cost of the Mycoplasma bovis (M. bovis) phased eradication programme will be split.

As announced in May, 68 per cent of the costs are funded by Government and the remaining 32 per cent is split between dairy and beef farmers.

Of the 32 per cent of costs, the dairy sector will meet 94 per cent of the costs of the programme, and beef 6 per cent.

The funding split was reached after a challenging, but constructive, process between DairyNZ and B+LNZ.

Both parties were very aware of the impact on their farmers, so sought the assistance of an independent panel to provide recommendations consistent with the principles of the Government Industry Agreement on Biosecurity Readiness and Response (GIA).

The Boards of DairyNZ and B+LNZ support the panel’s view that the funding split represents a reasonable allocation for the costs of the M. bovis response, considering the relative economic size of the two sectors, the risk of infection and the potential clinical impacts weighted by the farmgate revenue for milk and beef of M. bovis on the respective sectors.

DairyNZ chairman Jim van der Poel says a robust process was followed and “although we are disappointed that the costs of system changes was not factored in, we also understand the difficulties of doing this, and accept the recommendations and need to move forward.

“We are very grateful for the public support and the support of the Government with this eradication effort.

“If we hadn’t moved to eradication, the alternative — to do nothing and let this disease spread throughout our stock — would have been a serious challenge and the costs higher, estimated at $1.3 billion. This was the better outcome.

“We argued strongly that the cost split should also include the costs that would be associated with changes to farming systems in both sectors if M. bovis was not controlled and eradicated. However, the panel felt it was too difficult to determine these costs and settled on likely clinical impacts instead.

“Having said that, we did enter this process agreeing that we and Beef + Lamb New Zealand would abide by the recommendations of the independent panel and we also acknowledge the need to move forward.

“DairyNZ and Beef + Lamb New Zealand agree that due to the way the panel reached its recommendation, and the unique circumstances of the M. bovis response, dairy cull cows will not be subject to the M. bovis beef levy.

The dairy sector would fund approximately $272 million for the tenyear eradication programme.

“How we fund that cost is subject to a separate biosecurity levy consultation with our farmers, which farmers will receive information about in early 2019,” says Jim.

B+LNZ’s chairman Andrew Morrison says the announcement gives beef cattle farmers some measure of certainty of what the costs of the phased eradication response will be.

“Our farmers are supportive of the phased eradication response, but one of their areas of concern is not knowing what the cost of their individual contributions to the response would be which will be $17.4 million over the 10 years of the response,” says Andrew.

“Though the final total cost of the phased eradication programme is dependent on a number of factors, having a split agreed by industries means we can now calculate possible levy rates and start consulting with farmers about the practicalities of meeting the beef sector’s share of costs of the response.” DairyNZ and B+LNZ will consult with farmers in the coming months on how the levies could work.

“Our dairy farmers will hear from us soon on a consultation for a levy to recoup this cost and we encourage all dairy farmers to tell us what they think. We also need to acknowledge the support from the Government and the public for eradication — this has been heartening,” says Jim.

“The encouraging signs from spring bulk milk testing are showing that eradication looks very achievable.” For beef cattle, the contribution will be collected through a separate biosecurity levy at the point of slaughter, in accordance with the proposal B+LNZ put to farmers last year about joining GIA.

The respective boards of DairyNZ and B+LNZ have also agreed to release the details of the recommendation given by the Independent Panel so that farmers can better understand the rationale behind the split.

■ Check www.dairynz.co.nz/mbovis or beeflambnz.com/mycoplasma-bovis for the independent panel’s report and more information.