23 October 2014
Department of Agriculture
Agvet Chemicals Policy
Sustainability and Biosecurity Policy Division
GPO Box 858
CANBERRA ACT 2601
Submission toFirst Principles Review of Cost Recovery at the
Australian Pesticides & Veterinary Medicines Authority
1. About AUSVEG
AUSVEG is the National Peak Industry Body representing the interests of Australian vegetable and potato growers. We represent growers around Australia and assist them by ensuring the National Vegetable Levy and the National Potato Levy are invested in research and development (R&D) that best meets the needs of the industry.
AUSVEG also makes representations on behalf of vegetable and potato growers to ensure their interests and concerns are effectively communicated to all levels of government, in the public sphere, and throughout relevant areas of the private sector.
2. Queries
For more information regarding this submission please contact AUSVEG Manager- Government and Parliamentary Relations, Mr Andrew White, on (03) 9882 0277 or at .
Yours sincerely
Richard J Mulcahy
Chief Executive Officer
3. Preamble
AUSVEG welcomes the opportunity to provide a response to the finalreport completed by Protiviti on behalf of the Department of Agriculture regarding theFirst Principles of Cost Recovery reviewof the Australian Pesticides & Veterinary Medicines Authority.
AUSVEG has examined the final report and would like to request some clarification on the terms used while providing feedback on other areas, primarily related to the funding of Minor Use permits.
4. Response to Minor Use Cost Recovery Recommendations
4.1) Minor Use Cost Recovery
Throughout the Cost Recovery review, the Department of Agriculture has received numerous submissions outlining the overall impact and importance of the Minor Use program within Australia.
AUSVEG appreciates that the review has taken the across-horticulture industry submission regarding Minor Use on board and that much of the feedback provided has been taken into account. The awareness that Minor Use permits are not a private good and are intended to address market failure, being issued where the applicant is a representative body for a group of users, acknowledges how Minor Use permits are used. Furthermore, the recognition that a low cost will continue to encourage users to obtain Minor Use permits to fill market failings demonstrates an understanding of the importance of this program, particularly given the varied and dynamic nature of horticultural production in different parts of Australia and the various pest and disease threats facing producers.
As is clear from the horticulture industry submission in February this year, it is important thatMinor Use permits remainfunded at current levels as per the current system. AUSVEG supports the recommendation in the review that Minor Use permits will remain subsidised and will not becomesubject to full cost-recovery.We are pleased that the review has taken into consideration many of the concerns of industry.
However, whilst there has been an acknowledgement that Minor Use permits will be primarily funded by the annual flat levy paid for all registered products, the level of subsidisation is still unclear.For example:
“The application fee should be set at a level that balances the ability for the APVMA to recover a portion of the cost of assessment upfront while not acting as a significant disincentive for users to seek a minor use permit for off-label use of an agvet chemical.”
AUSVEG considers this statement to be ambiguous, providing little clear direction on future funding levels. Specifically, the phrase “significant disincentive” provides very little information on the possible range to which the costing may be modified, or what has been recommended for cost recovery in the future. AUSVEG re-iterates its position that the fee structure for Minor Use permits (i.e. $350 per application) must be maintained to ensure that thousands of growers around the country continue to have access to the crop protection solutions they need. As outlined in the previous across-horticulture submission, the relatively small size of the Australian market and the high level of crop segmentation provide evidence of the need to maintain current costs structures.
4.2) Clarification of terms
The report repeatedly recognises the need for access to Minor Use permits, butit is unclear as to what future level of subsidisation is recommended. Should these recommendations for cost recovery proceed further, clarification will be needed.
The vegetable industry’s greatest concern is that the $350 cost for submitting a Minor Use permit will increase, causing significant damage to the industry and inhibiting access to vital crop protection solutions used to tackle destructive pests and diseases. As recognised in the review, Minor Use permits are not a private good and are intended to address market failure, meaning that they assist industry as a whole to remain competitive. AUSVEG believes it is imperative that the level of funding for Minor Use permits remains at the current level, as any increase wouldcreate a significant disincentive for potential applications.
Recommendations
1)As previously contended, given the quantum of fees proposed under a fully cost recovered funding model for Minor Use permits, any increase in fees would be damaging to horticultural productivity and impact negatively on the sustainability of Australian horticulture. It is therefore argued that a consistent set fee, at the currently charged level, should be maintained.
2)The consultant’s report to the Department of Agriculture should specifically highlight the importance of maintaining Minor Use permit application fees at the current level to protect access to vital horticultural crop protection solutions.
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