SFMCA EADRA Horse Levy Media Release

10 Sep 2010
By J Spragg

Media Release

Proposed EADRA Horse Levy is Unworkable and Inequitable

The owners of Australia’s 800,000 horses could be forced to accept an unworkable and inequitable system of collecting levies to pay for the country's response to exotic horse disease outbreaks.

Under the proposal being promoted by a working group, assisted by Animal Health Australia, there is a call for levies to be placed on manufactured horse feed and horse wormers. The levy will apply under plans for the horse industry to be protected by the Emergency Animal Disease Response Agreement (EADRA).

This proposal is in the face of strong objection to the levy being provided by the manufacturers of horse feeds and wormers. These objections have been presented in submissions to the Senate Inquiry into the Australian Horse Industry and an Emergency Animal Disease Response Agreement.

The Stock Feed Manufacturers’ Council of Australia (SFMCA) makes the following points in relation to the levy being applied to manufactured horse feeds:
• Levy collection would be from the manufacturers of horse feeds and horse wormers when sold to wholesalers and/or distributors. This is an indirect collection method that we believe does not comply with the Primary Industries (Excise) Levies Act 1999.
• The levy would not be transparent to the horse owner and the horse industry would have no recognition of when it was applied to feed and wormers.
• Levy collection will not be equitable in its application to all horse owners. Those owners buying manufactured feed and worming their horses will pay the levy. Horse owners not buying manufactured feed and not worming their horses will pay no levy.
• The added cost to feed and wormers will be high. Based upon recovering an amount equivalent to that spent on the recent equine influenza outbreak, this would increase the cost of feed by $40/tonne and wormers by $4-8/treatment dose.
• The levy would remain in place for 10 years following the disease outbreak.
• The levy is anti-competitive as it will only apply to manufactured feed and not to the sale of chaff, grain and unprocessed raw materials.
• Horse owners can easily avoid paying the levy by not buying manufactured feed and not worming their horses. Owners will also switch to using non horse feeds and wormers.
• The negative effects on animal health of the levy proposal have been inadequately considered. Should the Federal Government and Animal Health Australia agree to adopt the levy proposal, the increased cost has the potential to shift some horse owners to use non equine worm treatments and to use rations that may not be specifically designed for horses or poorly formulated ‘home mix’ rations.
• Many of the largest horse owners including racing stables and horse studs mix their own feeds, thus they will avoid paying the levy. There will be an inequitable position where owners buying manufactured feed will be paying more than their fair share of the levy.
• Owners with smaller land area, who rely upon buying feed, will pay more in levies than owners on larger properties with pasture grazing.
• Less than 50% of Australian horses are fed manufactured feeds, these horse owners would subsidise other horse owners.
• There will be levy collection leakage as some manufacturers and horse owners will work to avoid paying the levies.

It is of note that within the submissions to the Senate Inquiry, the following groups have not agreed with the use of manufactured feed or wormers as the levy collection method:

Australian Racing Board & Thoroughbred Breeders Australia
A “levy on foal registrations remains the most suitable basis for a disease levy” and “That a levy on registrations is the most equitable and the most administratively feasible levy mechanism”.
The SFMCA agrees that there are more equitable and feasible methods of levy collection rather than applying it to feed and wormers.

Racing and Wagering Western Australia
“RWWA believes that the levy amount should be the same for all horse shoes, food and wormers, regardless of the type and quality”.
The SFMCA agrees that if feed is levied, it should be all horse feed and ingredients sold, not just manufactured horse feeds.

Australian Horse Industry Council
“There is an increasing belief by horse owners that all horses should be micro chipped and the details put on an appropriate register as required in Victoria. There are currently 4 registries available” and “Once micro chipping and registration was sufficiently widespread across the horse industry it would be logical to use this as a levy mechanism”.
Western Australian Horse Council
“One advantage of mandatory registration of horses would be the ability to create a database of horses, and their locations, which would be of assistance in the event of a disease outbreak”.
The SFMCA agrees that horse identification and its use in levy collection is a preferred option and the horse industry, Federal and State governments and Animal Health Australia should be implementing this option.

Harness Racing Australia
“Levies on products such as manufactured horse feed, horse wormers and horseshoes have been suggested by some horse industry organisations. At this time HRA does not have sufficient or reliable information to assess the breadth of horse industry coverage of these suggested levy mechanisms and their collection costs per unit. HRA is concerned that levy "leakage" will potentially occur if these mechanisms are adopted” and “HRA's preferred levy mechanism is a levy on registrations.”
The SFMCA agrees that there has been inadequate information to make a levy collection decision and that there will be leakage in levy collection from feed and wormers. The SFMCA also agrees with levy collection on registrations.

John Spragg, Executive Officer of the SFMCA believes the introduction of the EADRA levy on manufactured horse feeds will result in loss of sales for feed suppliers.

“This is an inequitable levy, which in effect will be tax on horse feed manufacturers” Mr Spragg said. “While feed mills will be required to submit the levy to the government, there will be no requirement for levy collection on chaff, grains and other raw materials that are sold through resellers to the horse industry.”

As the levy proposal only includes manufactured horse feed rather than all horse feed the SFMCA believes this is anti-competitive and may be in breach of trade practices regulations. Mr Spragg has said “that it is illogical to apply the levy based upon whether feed sold to horses has or has not been manufactured; this is a levy on manufacturers and produce stores, not a levy on the horse industry”.

Mr Spragg commented that “horse feed and wormer manufacturers sell products to wholesalers and resellers, these are the clients that will have to pay the levy. The horse owner is well removed from where in the supply chain the levy will be applied.”

Mr Spragg states “that the horse industry must take responsibility for collection of the EADRA levy, rather than trying to push this responsibility up the supply chain to manufacturers. The levy must be applied through direct collection from horse owners. As horse feeds are largely based upon grains, it can be argued that the proposed levy on horse feed is in effect a levy on the feed and grains industry rather than a levy on the horse industry.”

ENDS
For further information:
John Spragg
Executive Officer
Stock Feed Manufacturers’ Council of Australia
Tel 03 9769 7170
Mobile: 0402 831 843
www.sfmca.com.au

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