Cattle disease will force budget blowout
By Richard Harman (author)
The Government appears to be looking at the prospect of defeat in the battle to deal with the cattle disease, Mycoplasma Bovis.
And as the disease spreads it looks as though the disease will threaten the Government’s budget with a bill of well over $100 million to compensate affected farmers.
Two facts emerged yesterday which have changed the situation.
It appears the disease has been present in the country a lot longer than the Ministry for Primary Industries initially thought.
A Federated Farmers email to its members last night said it was thought it arrived here in 2015.
Because of the length of time it has been here, it may have spread much more widely than was originally thought.
That looked to be the case yesterday with news that it had reached the heart of the New Zealand dairy industry, Cambridge in the Waikato.
At the same time, Trade Minister, David Parker in comments yesterday appeared to suggest that the original infection, on a property in North Otago, may have come from something imported by e-commerce, possibly from China.
Meanwhile, the politics around how the outbreak of the disease is being managed seemed to be becoming more bitter as Labour and National clashed over whether National had fallen down on bio-security when it was in Government and how much compensation the Government was offering farmers.
But the big question yesterday was whether the outbreak had become so pervasive that it might not be possible to eradicate it.
“We are not giving up on all of the options around eradication, “the Prime Minister, Jacinda Ardern, told her weekly press conference.
“But we are assessing all of the information as it comes to light.”
The Federated Farmers email said the Government was considering four options.
“In recent weeks industry and the Ministry for Primary industries (MPI) have been evaluating and costing four options with respect to the ongoing response including two control and eradication options, one long-term management option and a ‘walk away’ option,” the email said.
“That estimates the cost to New Zealand from living with Mycoplasma bovis.
“A decision has not been made yet.”
The email says that though Federated Farmers has advice from Australia that it is possible to live with the disease (it poses no threat to human health) --- the costs might be high if herds were hard hit with it in the future when there might not be compensation available.
However, the task of eradication will pose formidable challenges now that it is known how long it has been here and how far it has spread.
“It is thought that Mycoplasma bovis was introduced into New Zealand as early as at least late 2015 and that there have been significant animal movements from the source property across the whole of New Zealand, making containment difficult.
“What is unclear is the percentage of those animals carrying the disease and if they passed it on to others.”
Artern was quick to blame National yesterday for their lack of support for bio-security.
Though she wasn’t specific, the biosecurity budget for biosecurity incursion response and long-term pest management was cut by 20 percent in the last National budget from $39.3 million to $31.1 million.
However, there was also put in place an agreement between the industry and government last year which saw the industry contribute some of the bio-security costs in return for agreed levels of compensation should there be an outbreak of any serious animal health disease.
That agreement is now the subject of a dispute between the Government and the industry.
Ardern, yesterday, appeared to focus only on the budget cut.
"This, from my perspective, is this Government having to pick up the pieces of significant neglect and underinvestment," she said.
“Quite frankly from what I have seen it is shameful.”
However, the situation may be even more complex than that.
Officially, no one knows how the disease arrived here, but there are suspicions.
MPI has said there were six possible routes here from overseas: the importation of bull semen, cow embryos, vaccines, feed, machinery, or live animals.
Police back in March raided three properties and executed search warrants in connection with the disease.
MPI’s manager of compliance investigations, Gary Orr, said the searches related to "potential breaches of legislation".
The breaches could be of the Biosecurity Act in regards to importing genetic material.
Genetic material includes semen, embryos or drugs.
Trade Minister, David Parker, speaking yesterday about the China Free Trade agreement upgrade which is due to happen shortly said an area of concern that would be discussed was e-commerce and border security compliance.
That comment appeared to confirm the suspicion that the raids were looking for genetic material possibly imported from China that may have contained the disease.
However last night a spokesman for Parker said the Minister didn’t know it arrived.
“But we do need to do better to avoid incursions.
"And patterns of commerce with multiple small importers perhaps bringing in small quantities pose a new challenge.”
For the affected farmers who have had to destroy their stock, the disease has been a heavy blow.
“We know that the emotional and financial costs of seeking to contain the disease (costs of movement controls and cost of depopulation) are significant,” the Federated Farmers email said.
“We know there is huge personal, financial, and emotional cost from the effects and uncertainties being loaded onto many farmers involved now.”
The email says that since 2011 MPI has been seeking to establish a working partnership with industry for improving New Zealand’s biosecurity. The partnership is called GIA (Government Industry Agreements for Biosecurity readiness and response).
As part of the GIA involving livestock, there was a detailed written agreement from MPI on key arrangements for how livestock diseases, and forage pest and disease responses, would be handled and funded under GIA.
“Under GIA industry (dairy and beef farmers) would fund 12.8%, 19.2%, 19.2%, 25.6%, 25.6% and 32% of the total Mycoplasma Bovis response costs over the next six years respectively.
“These costs shares are based on Cabinet agreed criteria and a funding matrix agreed to between MPI and the Livestock Sector Council on 1 June 2017 (more than a month before Mycoplasma bovis was first found).
“The industry was therefore dismayed that funding shares were back on the table at a much higher figure, as this was thought to have been settled before the outbreak.”
Nevertheless, the email says Dairy NZ and Beef and Lamb NZ have already made an offer to pay more in the first year than agreed under the GIA.
But farmers are worried that the Government may force them to pay a much higher sum than that agreed under the GIA.
National’s Primary Industries spokesman, Nathan Guy, claimed at the weekend that the cattle industry was preparing for a showdown with the Minister where he would pressure them to fund well over and above the agreed cost share outlined in the existing Government Industry Agreement (GIA).
"It's clear the Minister hasn't yet got Budget funding confirmed because his mates around the Cabinet table are looking to him to heavy the industry for upwards of 40 percent of the costs," said Guy.
At the beginning of March Cabinet approved an additional $85 million for MPI operating costs and compensation to deal with the disease.
Plainly the Government fears that the outbreak may be much more extensive than was thought even in March and that therefore the budget for compensation could easily escalate.
Having to find possibly well over a hundred million dollars to compensate farmers will not be an easy decision for a Labour Government.