Dairy Farmers Investing In Industry Good

Dairy Farmers Investing In Industry Good

Dairy InSight closed formalities around the Commodity Levies (Milksolids) Order today. Having received the final tick from Government in March, the Dairy InSight Board fixed the actual rate of the levy in April and the dairy farmers’ industry good levy rate notice was gazetted yesterday.

“I am delighted that the formal approval process has now come to an end. We have had excellent support from dairy farmers, and through our consultation we have been given a clear understanding of where dairy farmers want their $39 million for industry good activities to be spent,” says Dairy InSight’s Chief Executive, Peter Bodeker.

Dairy InSight is responsible for co-ordinating and funding all industry good activities on behalf of dairy farmers following last year’s 67% in-favour vote, when dairy farmers voted for industry good funds to be managed by an independent farmer-owned organisation. Dairy InSight is continuing the work that was previously undertaken by the Dairy Board. In the interim, funding for 2002-2003 has been provided directly by the Fonterra, Tatua and Westland dairy companies.

Dairy InSight has now concluded its setting up period and this month’s board elections will see the first ‘farmer-elected’ board members voted into office. In the interim the outgoing board, which has been responsible for the establishment of Dairy InSight, has agreed to the investment programme for 2003/2004 and confirmed the levy rate at 3.4 cents/kilogram of milksolids (plus GST).

“It has been a big task with $62 million worth of applications received for the $39 million of investment,” says Peter Bodeker. “Priorities have been based on consultation with farmers – and dairy farmers will get the high levels of transparency and accountability that has been promised.”

“In coming weeks we will be releasing information on where the investments in industry good will be made, and eventually detailed information on projects and their milestones will be posted on our website.”

Under the new system dairy companies that purchase milksolids from dairy farmers, or brokers who purchase milksolids from dairy farmers for direct or indirect supply to a dairy company, will be responsible for collecting the industry good levy payments from dairy farmers and for reporting the total amount, plus GST, that has been deducted.

Dairy farmers will need to ensure they keep their milk supply documentation to claim back the GST. The levy is ‘ordinarily deductible’ for income tax purposes and the GST on the levy can be claimed back from the Inland Revenue Department at 12.5%. The IRD has approved the use of the dairy companies' payment documents (Fonterra's 'Supplier Deduction Statement', Westland's 'Remittance Advice', and Tatua's 'Monthly Milk Supply Invoice") as sufficient to support a claim for the GST on the levy in their Goods and Services Tax returns.

The levy applies from 1 June 2003. However, the first monthly payment isn’t due until 20 July, in line with the monthly-in-arrears payment system of the above mentioned dairy companies.

Dairy farmers and dairy companies/brokers requiring further information should contact Dairy InSight on tel: 0800 446 744 or by fax: 04 460 8187 or email mailto: mailto:info@dairyinsight.co.nz.