Calculating programme costs
The New Zealand animal products industry has been split into a number of sectors by MPI. These sectors are based on products or processing types. For example, meat, venison, wild game, dairy, poultry, fish, shellfish, ostrich and emu, honey and bee products, eggs, stores, animal feeds, dual operator butchers, hides and skins, rendering, and other secondary processors.
For each of these sectors, total costs are calculated by adding:
- the costs of the estimated time spent by MPI staff on each sector
- the actual cost of specific programmes or services for each sector – for example, the cost of a residue monitoring programme
- a proportion of MPI overhead costs – for example, rent, electricity and corporate services such as finance and human resources
- a proportion of the cost of setting generic standards and activities which apply to all animal product sectors.
Apportioning costs to operators
Once programme costs for each sector have been calculated, they are recovered from programme users or beneficiaries. The APA requires that the charges are calculated in proportion to the use or benefit received by each animal product operator.
In practice, levies are charged in one of 2 ways:
- a proportional levy - according to the size of an operation and its processing throughput
- as a fixed annual fee.
MPI considers the most equitable measure of use and benefit to be in proportion to an operator's size or processing throughput. This means the costs of a programme’s regulation is spread in proportion to business size.
Fixed annual fees
Fixed annual fees are used when it is considered to be more appropriate and efficient because:
- it may be difficult and costly to find a common unit measurement and collection system for proportional charging
- the cost of establishing and administering a levy system would outweigh the benefits for sectors – for example, where only a very small amount of revenue is to be recovered.