Repeat budget blowouts set to impact exporters

Vital trade paperwork giving our plant and timber exports access to overseas markets is about to get much more expensive, and the only unknown at this stage is if the hit will be short and sharp, or slow and gradual.

Apple exporters could pay up to $1 million more this coming year.

MPI is the best part of three million dollars in the red for issuing phytosanitary certificates over the past two financial years alone, and wants to make up that loss in 13 months, starting straight away.

That would mean the cost of getting plant products certified for sale overseas – including big-ticket export earners like kiwifruit – would more than double from $38.29 to $109.25 per certificate from 1 December.

In 2024/25, MPI issued nearly 61,000 phytosanitary certificates for plant products, the vast majority of which are fruit, vegetables, seed, grains and nuts.

The proposed immediate increase in certificate fees would cost kiwifruit exporters $751,000 and apple exporters over $1 million for the 13 months ending 31 December 2026, according to MPI. After that, plant product certificate fees would drop closer to $60 each.

The ministry released its cost recovery plan 6 October, giving respondents three weeks to feed back on a single point – whether the plan is deployed over 13 months, or three years, as is the normal policy.

At current fee rates and expenditure, the phytosanitary service will run at a loss of $7.276 million by 2027/28, the ministry says.

It has already transferred $2.818 million of deficit accumulated by the system before 30 June 2023 to NZ taxpayers via the Crown under the then Labour Government.

Nonetheless, MPI still spent $1.5 million more on phytosanitary certification than it earned for 2023/24, and closed its books for the service on an accumulated loss of $2.731 million for 2024/25.

MPI blames the continual shortfalls on less revenue caused by a temporary drop in certificate volumes in the four years to June 2024, plus rising service costs.

It says costs have risen because of inflation, and enhanced certification processes to meet the needs of trading partners. It also says increased market access activity has contributed to cost increases, as have system investments.

These investments include the 2019 launch of an electronic interface that just three years later was described in MPI tender documents as one of five ‘aging systems’ to be replaced with a completely new cloud-based technology package.

Between the years ending 2021 and 2025, MPI’s expenditure on total plant and forestry export certification rose 36 per cent from $2.424 million to $3.301 million, or approximately seven per cent a year.

It says expenditure will rise a further 15.9 per cent to $3.826 million by 2027/28, most of which is related to MPI personnel. The service had 13.36 full-time equivalent employees in 2021/22, compared with 15.28 in 2024/25.

Personnel and overhead costs for 2025/26 are forecast to be $322,000 higher than 2024/25, a rise of 18 per cent in 12 months.

“The increasing personnel and overhead cost is due to increased effort required by MPI staff to maintain current levels of servicing,” it says.