Primary Industries

M.bovis cost passes $200m

The battle against a cattle disease has now cost taxpayers more than $200 million – and the industry has yet to chip in.

Tip a 1000-piece jigsaw puzzle onto a table, then take 250 pieces and throw them, and the box, out the window.

“That’s what tracing’s like,” says Geoff Gwyn, the Ministry for Primary Industries’ (MPI) programme director for eradicating the cattle disease Mycoplasma bovis. “It’s a complex thing to do based on imperfect information, often. But I think we are definitely running it down.”

Gwyn’s comments are an ambitious attempt to have it both ways, with a biosecurity incursion that will, on initial estimates, cost the country the thick end of $1 billion .

On one hand, Gwyn admits that NAIT, the partly Government-owned tracing system using ear tags to follow livestock movements, isn’t up to the job. It’s clunky, doesn’t work well in some areas, and isn’t being used by some farmers .

But, somehow, despite that, and the twists and turns of the response – with promising signs last year followed by, in April, a surge in restrictions of animal movements – Gwyn wants the public to believe things are in hand.

He takes comfort from the results from last year’s bulk milk testing and calf survey, and a pilot testing of animals coming into Canterbury’s Five Star feedlot from 750 farms. “The only evidence we have points to a single incursion in late 2015, early 2016. All of those things give me confidence that eradication is still on the table.”

“Even though it’s called a contingency, that is kind of nebulous because the reality is to be 90 percent sure of getting your outcomes that’s funding you’re going to use.” – Geoff Gwyn

More than a year since the Government decided – in a world-first – to try and eradicate the disease , the cost has now passed $200 million, including $10 million drawn from a budgeted contingency.

(The cattle disease has serious health effects on infected animals, such as untreatable mastitis, abortions, and pneumonia in infected calves, but is not a health risk to humans.)

The budget for the first two financial years is $440 million.

By the end of April, the end of the first year, $154 million had been spent on operational costs and setting up the programme. A further $65.4 million was paid in compensation. Up to last Wednesday, a further $13.1 million of compensation had been paid. Given operational costs last year ran at just over $9 million a month, the programme’s total must be nearing $250 million, if it hasn’t already passed that figure.

An Official Information Act response to Newsroom reveals the last financial year’s four biggest expenses are on-farm services contracts ($66.5 million), the national control centre ($22.8 million), farm feed ($21.1 million), and laboratory tests ($17.8 million). (The pace of lab results has been a particular concern.)

The eradication programme has 400 staff, including contractors, spread across four regional offices. April’s “surge” led to 30 temporary staff being employed ahead of so-called “moving day” and winter movements.

Gwyn says he’s very comfortable with the spending to date. “We always knew that the first two years would be the heavy lifting. So you’d expect the bulk of the funding to be expended, including contingency, within that first two years.

“I think we’re well placed. I certainly don’t perceive we have any challenges around funding.”

An $88 million contingency fund was established in the initial, 10-year $886 million budget. “Even though it’s called a contingency, that is kind of nebulous because the reality is to be 90 percent sure of getting your outcomes, that’s funding you’re going to use,” Gwyn says. “We’re expecting to use all of it.”

Some of the $10 million already drawn is being used to try and develop a reliable diagnostic test for individual animals. Another portion is being used for “softer science”, Gwyn says – to find out the operation’s effect on farmers, and whether MPI still had the support of the public and farmers. “You could crassly call it surveys.”

(The initial scientific spend, announced in May last year, was $30 million over two years.)

About 400 people are employed in four regional offices as part of MPI’s M.bovis response. Photo: Getty Images

Taxpayers will pick up roughly $590 million of the 10-year M.bovis eradication bill. The rest will be paid by industry, with dairy farmers picking up the bulk of it, totalling about $260 million. So far they haven’t paid a cent.

DairyNZ chief executive Tim Mackle says the country’s 12,000 dairy farmers were consulted on a levy (a maximum of 3.9 cents per kilogram of milk solids, depending on the season’s volume). That would raise as much as $70 million a year – costing a 430-cow farm about $6000 a year.

“That levy is not put in place yet,” Mackle says. “But we’re hoping in the next two or three months that we’ll have everything done that needs to be done from a legal perspective with MPI.

“We’ve got to work with dairy companies to collect the money as well. There’s quite a bit still to do.”

Mackle says the eradication programme’s money hasn’t always been spent in the right places – “how many times do you have to clean something?” But he says MPI’s management has improved. He credits an industry-backed compensation assistance scheme for helping to speed up processing times.

“To some farmers and families affected by this disease and eradiction process, it’s been extremely difficult. And compensation is one of those issues for sure. Some are still grappling with that.”

After the first year the eradication is pretty much on target. “I’ve got no major alarm bells about costs at this stage,” Mackle says. But he warns that situation could change quickly. Should costs suddenly escalate or if there were a spike in the number of infected properties, that might cause a re-think.

“I’ve only had three cases come to me and all of them seem to be well in-hand with MPI.” – Donna Favel

Farmer welfare has been a huge concern.

Newshub reported last month that two rural support workers quit over the inadequate support provided to farmers during the M.bovis response. Former Rural Support Trust coordinator Angela Cushnie worried about the long-term effect: “We now have farmers who are no longer interested in farming, and that crosses down to the next generation.”

Federated Farmers president Katie Milne told Stuff last month MPI was “not coping” with the eradication plan of the disease. Newsroom couldn’t reach Milne for comment yesterday.

Ashburton Mayor Donna Favel chairs a local advisory group to try and help farmers with difficult cases. She tells Newsroom there was a gap in support for farmers, as MPI was focused on eradicating the disease and Rural Support Trusts weren’t set up to deal with long, sustained responses like a biosecurity issue.

(MPI’s spending on “farm recovery and welfare” was only $1.8 million in the last financial year.)

However, Favel’s group has had little to do. “I’ve only had three cases come to me and all of them seem to be well in-hand with MPI,” she says. “From what I’m seeing and hearing, MPI seem to have improved their processes.”

Gwyn, of MPI, says people “entering this process” now are getting a far smoother ride than they were six-to-12 months ago. “But if you ask me is it perfect? The answer’s no. And can we do it better? The answer’s yes. And we’ll continue to strive to do it better.

“The reality is disease eradication programmes are never going to be a nice experience for people. But we can make it as easy as possible. That’s the aim.”

MPI’s latest update, up to last Wednesday, says there are 173 properties confirmed to be infected by M.bovis, 134 of which have been cleared of the disease, with 104,583 animals culled. Eighteen of the 39 “active” properties are in Canterbury.

Notices of direction have been issued restricting animal movements on 229 properties, thought to have received cattle from infected farms, while another 592 properties thought to be at risk are being tested.