Proposed ‘Biosecurity Protection Levy’ to be imposed on Australian farmers and other primary producers

By Joe Lederman (FoodLegal Managing Principal) and John Thisgaard (FoodLegal Co-Principal)

On 9 May 2023, the Australian Federal Government announced it would introduce a ‘Biosecurity Protection Levy’ (BPL) payable by Australian farmers and primary producers. In September 2023, the Australian Department of Agriculture, Fisheries and Forestry released a draft of the proposed BPL.

This article explores the likely impacts, and questions whether farmers actually are the persons deriving all the so-called additional benefits that the Federal Government asserts are derived from the programs to be funded by the levy.

Is this really a legitimate case for government to utilise the ‘user-pay’ principle to add extra costs on farmers and food production?

Is this not another illustration of a debt-laden government feeding the price inflation genie by imposing extra taxes on production, compounded by the Reserve Bank of Australia adding to the bills by imposing higher borrowing costs on the private sector and economic production? The answers appear to be self-evident.

Features of the proposed BPL

The Australian Federal Government announcement on 9 May 2023 said that the introduction of a Biosecurity Protection Levy (BPL) was necessary to ‘raise additional funds to enhance Australia’s Biosecurity measures’. The Government asserts that the levy will ensure that ‘the industries that benefit most from Australia’s Biosecurity system contribute to the full cost of Biosecurity’.

The proposed BPL will impose a levy on Australian producers of agricultural, forestry and fishery products. The proposed BPL aims to collect approximately $50 million per year, which will cover 6% of the Commonwealth’s projected Biosecurity funding for 2024-2025. The remainder of Australia’s biosecurity funding comes from fees and charges on importers, as well as general taxation revenue.

The proposed Biosecurity Protection Levy would apply from 1 July 2024 and would include:

· New charges for importers of low-value imports

· New charges on domestic producers regardless of their export status.

The Australian Department of Agriculture, Fisheries and Forestry (DAFF) has released a consultation paper on the BPL and is accepting submissions from industry with respect to the proposed design of the BPL until 13 October 2023.

What does this mean for primary producers?

Many primary producers are already required to pay agricultural levies to DAFF as part of an arrangement between industry and DAFF to collectively pool and distribute funds for purposes including research and development, marketing and residue testing. These existing levies are imposed under federal legislation including the Primary Industries (Customs) Charges Act 1999 and Primary Industries Levies and Charges Collection Act 1991.

The BPL would apply separately from and in addition to the other levies collected under the above arrangements. The Government says the funds paid under the BPL would be collected by DAFF and ‘used exclusively for biosecurity management’.

The proposed BPL will apply at a rate equivalent to 10% of the 2020-2021 agricultural levies paid by industry. DAFF has provided its own estimates of the costs for primary producers, but industry representatives have not had definitive input into these government calculations:

· A grass-fed cattle producer will pay an extra 50c per head of cattle.

· Egg producers will pay an extra 3.25c per chick.

· Honey producers will pay an extra 0.46c per kg of honey.

· Cotton producers will pay an extra 22.5c per 227kg bale of cotton.

DAFF is seeking comments on the following issues:

· Which businesses would be defined as a ‘producer’ for the purposes of the BPL. Daff currently anticipates that the BPL will generally apply to primary producers that are already required to pay agricultural levies under existing legislation, regardless of whether these producers export product.

· The levy rate, noting that some commodities are not subject to existing agricultural levies but producers of these commodities may still be required to pay the BPL.

· Whether there should be any thresholds or exemptions.

· How (and how often) the levy should be collected. DAFF has suggested an annual collection.

· Information that would be helpful for industry to understand whether the levy is proportionate to biosecurity benefits.

Australia’s biosecurity programs

As identified above, the money raised by the proposed BPL is intended to directly fund Australia’s biosecurity programs. Australian biosecurity measures are intended to minimise the risk of threats to the Australian ecosystem and are primarily governed under the federal Biosecurity Act and associated regulations. They include the following programs:

· Imported foods are subject to import biosecurity conditions located on the BICON website. Import conditions are set according to product type and the level of biosecurity risk it presents, and can include:

o A requirement to obtain an import permit;

o Documentation requirements such as a Health Certificate, Manufacturer’s Declaration or other Certificate issued by a relevant government authority of the exporting country;

o Processing requirements (e.g. a requirement that products be heat treated); and

o Prohibitions and restrictions on the importation of certain types of foods from specified countries (e.g. dairy products cannot be imported from a country that is not recognised as being free from Foot and Mouth Disease and Lumpy Skin Disease).

· Other imported items (e.g. plant material or live animals) are subject to biosecurity controls which can include inspection, treatment and quarantine.

· DAFF monitors biosecurity threats within Australia and oversees the Australian Government Biosecurity and Agricultural Response Plan to respond to an emergency outbreak.

Australian States and Territories also each implement their own local biosecurity programs and frameworks. Money raised through the BPL will not be used to fund these programs.

Potential implications arising from the BPL

If adopted in its proposed form, the BPL would introduce a new cost on Australian primary producers, regardless of whether they also import or export product from Australia. Aside from existing agricultural levies, primary producers already invest significant amounts into minimising biosecurity risks for their own properties and products (e.g. through pest control and farm management).

The biosecurity measures summarised above benefit all of Australia, and not all of their outcomes benefit primary producers, especially where producers are not also importing product into Australia. Although the levy would be imposed on primary producers, the government appears to be overstating the likely benefits for primary producers.

The additional cost of the BPL will create further food inflation. Moreover, the BPL may be likely to make Australian produce more expensive and less competitive, both within Australia and in international markets.

If the collection of the levy cannot be incorporated into existing levy collections this would present a significant administrative burden for primary producers.

If biosecurity is intended to protect the Australian flora and fauna and humans from exotic diseases, it seems there is a disconnect if the cost is to be imposed largely on Australian farmers and food production.

This is general information rather than legal advice and is current as of 10 Oct 2023. We therefore recommend you seek legal advice for your particular circumstances if you want to rely on advice or information to be a basis for any commercial decision-making by you or your business.

FoodLegal