New Zealand's 12,000 dairy farmers are facing a new levy on the milk they sell, as they look to cover their share of the Mycoplasma bovis eradication bill.
Farmers paying their share of the Mycoplasma bovis eradication bill might soon do so through a milk levy. Photo: RNZ / Richard Tindiller
After the decision in May 2018 to eradicate the cattle disease M bovis, the government estimated the total expected response cost over 10 years to be $870 million.
The cost of the eradication programme is being shared between the industry and the crown, with the government agreeing to pay $591m, the dairy sector $262m and the beef sector $17.4m.
The industry group, DairyNZ, is now consulting with its farmer members on a proposal that would see its $262 million share of the bill collected through a milk levy, set at a maximum of 3.9 cents per kilogram of milksolids.
"We think it'll be at that [3.9 cent] rate probably for the first couple of years, and then things will tail off significantly," said DairyNZ chief executive Tim Mackle.
This rate would mean an average farm milking 430 cows would pay about $6000 a year, Mr Mackle said.
"So that's a pretty significant amount of money for farmers and we have to be mindful of that," he said.
"There will be a level of concern, we're anticipating, out there... but at the same time, if we don't put this levy in place then the government will seek to actually collect the money themselves from farmers directly, and that means they will also set the rate and the payback period themselves," he said.
DairyNZ chairman Jim van der Poel said dairy farmers were strongly encouraged to give their feedback on the proposal.
"We understand that the financial contribution to the M bovis response, via the levy, will be challenging for some farmers. However, we believe it was the right decision to eradicate rather than let the disease spread through our stock. Letting M bovis spread would have been a more serious challenge and much higher and longer lasting costs," said Mr van der Poel.
Farmers have until 28 February to give their feedback to DairyNZ.