NEW ZEALAND: ESTIMATES OF SUPPORT TO AGRICULTURE

Contact person: Yoon-Jong Kim

Email: yoon-jong.kim@oecd.org

Tel :

(33-1) 45 24 95 27

Fax :

(33-1) 45 24 18 90

DEFINITIONS AND SOURCES

Country Total Support Estimate (TSE) and derived indicators in Table 1 cover all agricultural production, i.e. all agricultural commodities produced in the country. Definitions of basic data sets refer to the specific name of the programmes. For the Producer Support Estimates (PSE) and Consumer Support Estimates (CSE), the description of policy measures indicates the commodities covered by the measures, as well as the method of allocation of the corresponding transfers among commodities. "MPS commodities", which vary across countries, are those for which market price support is explicitly calculated in Table 2.

Market Price Support (MPS) and Consumer Support Estimates (CSE) by commodity in Table 2 are calculated for the following commodities: wheat, maize, barley, oats, milk, beef and veal, pigmeat, poultry meat, sheep meat, wool, and eggs. Definitions are provided only for basic data sets from which all the other data sets in this table are derived, following the formula indicated in each commodity table. Specific sources are indicated in square brackets.

Producer Support Estimates (PSE) by commodity in Table 3 are calculated only for the commodities produced in the country within a common set of commodities (wheat, maize, barley, oats, rice, soybeans, sunflower, rapeseed, sugar, milk, beef and veal, pigmeat, poultry meat, sheep meat, wool, and eggs), provided that the value of production of that commodity exceeds 1 per cent of the total value of production in the country concerned. All data sets in the calculation of PSE by commodity come from Tables 1 and 2 where definitions are included.

Definitions of the indicators, criteria of classification of programmes included, and methods of calculation can be seen in OECD, Methodology for the measurement of support and use in policy evaluation http://www.oecd.org/agr/policy [].

Conversion factors:

Milk tonnes = thousand litres / 1.031

Eggs tonnes =  million dozen x 12 (eggs) x 58.5 (grams per egg)

Sheep tonnes = number exported live x 0.020

Wool cons. tonnes = clean wool consumed x 1.33

Crop years: 1 April 1986-31 March 1987 crop year is referred as "1986" and covers data denoted in the reference source as "1986/87". Note that, in contrast, when the New Zealand authorities use statistical year "1979", they are referring to "1978/79".

Marketing years: Vary according to livestock products. The following examples are referred to as "1986":

milk: 1 June 1986-31 May 1987;

beef and veal, pigmeat, poultrymeat, sheepmeat: 1 October 1986-30 September 1987;

wool: 1 July 1986-30 June 1987;

eggs: 1 April 1986-31 March 1987.

Abbreviations:

MAF New Zealand, Ministry of Agriculture and Fisheries

MISA Meat Income Stabilization Account

NZDS New Zealand Department of Statistics

NZMPB New Zealand Meat and Poultry Board

SONZA(F) Situation and Outlook for New Zealand Agriculture (and Forestry)

USDA United States Department of Agriculture

 

Table 1. NEW ZEALAND: Total Support Estimate

Definitions:

I. Total value of production (at farm gate): Total agricultural production valued at farm gate prices, i.e. value (at farm gate) of all agricultural commodities produced in the country [1].

1. Of which share of MPS commodities (%): Share of commodities for which MPS is explicitly calculated (in Table 2) in the total value of agricultural production.

II. Total value of consumption (at farm gate): Consumption of all commodities domestically produced valued at farm gate prices, and estimated by increasing the value of consumption (at farm gate) of the MPS commodities according to their share in the total value of agricultural production [(II.1) / (I.1) x100].

1. Of which MPS commodities: Sum of the value of consumption (at farm gate prices) of the MPS commodities as indicated in Table 2.

III.1 Producer Support Estimate (PSE): Associated with total agricultural production, i.e. for all commodities domestically produced [Sum of A to H; when negative, the amounts represent an implicit or explicit tax on producers].

A. Market Price Support: On quantities domestically produced (excluding for on-farm feed use -- excess feed cost) of all agricultural commodities, estimated by increasing the MPS for the MPS commodities according to their share in the total value of agricultural production [(A.1) / (I.1) x 100].

1. Of which MPS commodities: Sum of the MPS (net of price levies and excess feed cost) for the MPS commodities as calculated in Table 2.

B. Payments based on output

1. Based on unlimited output

Reserve bank interest concessions (up to 1986): Interest concession on the annual average balance of the Meat Income Stabilization Account (MISA) and of the New Zealand Dairy Board’s account, used for its price smoothing scheme (the Dairy Industry Reserve Account) at the Reserve Bank of New Zealand; calculated as the difference between the interest charged (received) on the account when in deficit (surplus) and the interest that would have been charged (received) had a market rate of interest been applied. Hence, when the annual average balance was negative, a positive number (subsidy) was entered in the table and when positive, a negative number (tax) was entered. This scheme was removed in 1986.

2. Based on limited output

One-off transitional payment: Of NZ$ 25/tonne announced after the harvest and granted to all wheat sold for the 1986/87 harvest.

C. Payments based on area planted/animal numbers

1. Based on unlimited area or animal numbers

Livestock incentive scheme (LIS): Budgetary expenditure on payments per additional qualifying livestock unit, allocated to cattle and sheep.

2. Based on limited area or animal numbers

D. Payments based on historical entitlements

1. Based on historical plantings/animal numbers or production

2. Based on historical support programmes

Producer board debt write-off: Budgetary expenditure on debt write-off by sheepmeat and beef producer boards.

E. Payments based on input use

1. Based on use of variable inputs

Fuel payment: Value of the exemption on the proportion of the Motor Spirits Duty paid to the National Roads Fund, allocated 50 per cent to cereal production and 50 per cent to livestock according to their share in the value of production of this group of commodities.

Fertiliser payment: Budgetary expenditure to the fertiliser industry to cover costs associated with reduced prices paid by farmers, terminated on 30 June 1986; allocated to  all commodities according to their share in the value of production.

Labour payment: Budgetary expenditure covering part of wages for a maximum period of twenty-six weeks for workers employed under the Job Opportunity Scheme, terminated in 1986; allocated to sheepmeat, wool, beef and milk.

Water payments: Budgetary expenditure for the operation and maintenance of the Crown’s Management of Irrigation Schemes, allocated to all crops based on irrigated area, and to milk and sheep according to the share of irrigated area of grass and lucerne.

2. Based on use of on-farm services

Extension: Budgetary expenditure on the Advisory and Services Division of MAF allocated to all commodities according to their share in the total value of production.

Extension activities: Budgetary expenditure on technical advice on soil conservation and other environmental issues. Estimated as 25 per cent of the total expenditure on Regional Council programmes (other 50 per cent referring to Land Clearance and Earthworks Control and Land Use Control programmes is included under K. Inspection services and the remaining 25 per cent referring to Soil Conservation Cost-Share programmes under L. Infrastructure.) [Not included in the current database].

Animal health division (disease control) (up to 1989/90): Budgetary expenditure on programmes to safeguard the health of New Zealand’s agricultural animal population, namely export quality assurance for live animals, promotion on animal health and the reduction of production limiting diseases, disease surveillance and disease eradication. Allocated to livestock according to share in production.

Agricultural pest control: (up to 1989/90) Budgetary expenditures for rabbits control and grants to pest destruction boards for carrying out pest eradication as well as operating costs of the Agricultural Destruction Council (terminated in 1992/93). Allocated to all commodities according to their share in the total value of production.

Noxious weeds eradication: (up to 1989/90) Budgetary expenditure on the control of noxious seeds, including payments for employment of Noxious Plants Officers, for the Nassella Tussock Boards, for the eradication of Australian Sedge and the noxious plant control scheme. The scheme was discontinued in February 1985 but payments continued to be made through 1991/92. Allocated to all commodities according to their share in the total value of production.

Pest management: Budgetary expenditure covering the control of agricultural pests (brush-tailed possum and rabbits) via protection of vegetation, soil quality and livestock health as well as protection of native flora and fauna. Allocated to all commodities according to their share in the total value of production.

3. Based on use of fixed inputs

Capital grants: Budgetary expenditure under the Livestock Incentive Scheme (LIS) and the Land Development and Encouragement Loan Scheme (LDELS) on payments to farmers as "an incentive to the improvement of reverted or under-utilized land". Allocated to commodities according to their shares in LIS and LDEL loans.

Interest concessions: Provided by the Rural Banking and Finance Corporation, the Department of Maori Affairs and the Department of Lands and Survey. Total value calculated as the difference between the market rate and the subsidized rate paid by the farmers, multiplied by the value of outstanding loans to purchase fixed inputs. Not applicable since 1990/91. Allocated to beef and sheepmeat according to their relative values of production. [Not included in the current database].

Climatic disaster relief scheme: Budgetary expenditure on interest concessions by the Rural Banking and Finance Corporation on loans to farmers for restoring boundary fences and stock water supplies due to adverse climatic conditions and payments related to hail damage for horticultural crops. Allocated to livestock products, crops and horticulture according to their share in total value of production.

F. Payments based on input constraints

1. Based on constraints on variable inputs

2. Based on constraints on fixed inputs

Soil conservation cost--share programmes: Budgetary expenditure granting 50 per cent to 70 per cent cost-sharing for conservation practices undertaken by farmers. Estimated as 25 per cent of the total expenditure on Regional Council programmes (other 50 per cent referring to Land Clearance and Earthworks Control and Land Use Control programmes under Inspection services and remaining 25 per cent referring to Extension Activities.) [Not included in the current database].

3. Based on constraints on a set of inputs

G. Payments based on overall farming income

1. Based on farm income level

2. Based on established minimum income

H. Miscellaneous payments

1. National payments

2. Sub-national payments

III.2 Percentage PSE [(III.1) / ((I) + (Sum of B to H)) x 100]

III.3 Producer NPC: For all agricultural commodities the Producer NPC is estimated as a weighted average of the producer NPC calculated for the individual MPS commodities and shown in Table 2. For each commodity Producer NPC = [domestic price received by producers (at the farm gate) + unit payments based on output] / border price (also at the farm gate).

III.4 Producer NAC [1 / (100 - (III.2)) x 100]

IV. General Services Support Estimate (GSSE): Total budgetary expenditure to support general services provided to agriculture [Sum of I to O] .

I. Research and development

Budgetary expenditure by the Ministry of Agriculture and Fisheries, the Department of Scientific and Industrial Research and the Department of Lands and Survey up to 1988/89. From 1990 onward, budgetary expenditure provided through the Public Good Science Fund (PGSF), administered by the Foundation of Science, Research and Technology (FORST).

J. Agricultural schools

Budgetary expenditure on agricultural education by Industry Training Organizations. [No data available up to 1995].

K. Inspection services

Meat and dairy inspection programme: Budgetary expenditure for the control of hygiene standards and grading; replaced, in 1990, by a Quality Assurance programme for inspection, laboratory analysis, audit and certification; plus costs of seed certification for wheat and coarse grains.

Agricultural quarantine service: Budgetary expenditure on the control of agricultural products’ entry into the country.

Soil conservation activities: Budgetary expenditure on Land Clearance and Earthworks Control programmes on soil quality, native vegetation, air quality and reducing frisk of fire control; and Land Use Controls for restricting expansion of potentially damaging activities. Estimated as 50 per cent of the total expenditure on Regional Council programmes (25 per cent included under Extension Activities in E.2. Payments based on use of on-farm services and the remaining 25 per cent included under Soil Conservation Cost-Share programmes in L. Infrastructure.)

L. Infrastructure

Community irrigation schemes: (since 1990/91) Budgetary expenditures under the community irrigation scheme covering the operation and maintenance of the Crown’s existing irrigation schemes until they are sold to private buyers, the cost of the sale of irrigation assets.

Flood control and land drainage: budgetary expenditure to support initial construction of flood protection and land drainage schemes.

M. Marketing and promotion

N. Public stockholding

O. Miscellaneous

1. National expenditure

2. Sub-national expenditure

V.1 Consumer Support Estimate (CSE): Associated with agricultural production, i.e. for the quantities of commodities domestically produced, excluding the quantities used on-farm as feed -- excess feed cost. [Sum of P to S; when negative, the amounts represent an implicit tax on consumers].

P. Transfers to producers from consumers: Associated with market price support on all domestically produced commodities, estimated by increasing the transfers calculated for the MPS commodities according to their share in the total value of production [(P.1) / (I.1) x 100].

1. Of which MPS commodities: Sum of the values of transfers from consumers to producers associated with market price support for the MPS commodities as calculated in Table 2.

Q. Other transfers from consumers: Transfers to the budget associated with market price support on the quantities imported of domestically produced commodities, estimated by increasing the transfers calculated for the MPS commodities according to their share in the total value of production [(Q.1) / (I.1) x 100].

1. Of which MPS commodities: Sum of the transfers to the budget associated with market price support on the quantities imported of the MPS commodities as calculated in Table 2.

R. Transfers to consumers from taxpayers

S. Excess Feed Cost: Associated with market price support on quantities domestically produced and used on-farm as feed as calculated in Table 2.

V.2 Percentage CSE [(V.1) / ((II) - (R)) x 100]

V.3 Consumer NPC: For all agricultural commodities the Consumer NPC is estimated as a weighted average of the consumer NPC calculated for the individual MPS commodities and shown in Table 2. For each commodity Consumer NPC = domestic price paid by consumers (at the farm gate)/ border price (also at the farm gate).

V.4 Consumer NAC [(1 / (100 -(V.2)) x 100]

VI. Total Support Estimate [(III.1) + (IV) + (R)] and [(T) + (U) - (V)]

T. Transfers from consumers [(P)+(Q)]

U. Transfers from taxpayers [(III.1)-(P)+(IV)+(R)]

V. Budget revenues [(Q)]

 

Table 3. Producer Support Estimate by commodity

 

Definitions and Sources: see Tables 1 and 2 above.