Potato Cyst Nematode: Increase in Charges

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A decision made on 5 August 2011:

Decision Reference: MD-PE-2011-0075
Decision Summary Title:		Increase in Charges for Potato Cyst Nematode (PCN) and Soil Nutrient (NPK) Sampling and Analysis		Date of Decision Summary:	30 June 2011
Decision Summary Author:		Entomologist & Laboratory Manager		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?		Written		Person Giving Oral Report:	S.Meadows
Written Report Title:		Increase in Charges for Potato Cyst Nematode (PCN) and Soil Nutrient (NPK) Sampling and Analysis		Date of Written Report:	19 May 2011
Written Report Author:		Entomologist & Laboratory Manager		Written Report : Public or Exempt?	Public
Subject: Increase in Charges for Potato Cyst Nematode (PCN) and Soil Nutrient (NPK) Sampling and Analysis
Decision(s): The Minister decided, in accordance with Article 5(6)(a) of the Plant Health (Jersey) Law 2003 and subject to the prior endorsement of the Minister for Treasury and Resources, to increase charges to be made under the Law for the provision of yield related soil analysis as per the amounts specified in the appended report. He further agreed that the Law Draftsman should be instructed to prepare the necessary draft Order to achieve the same.
Reason(s) for Decision: To increase fee income to 100% cost recovery for a heavily subsidised yet purely yield related service following a change in the provision of this service.
Resource Implications: There are no resource implications.
Action required: Drafting instructions to be submitted to the Law Draftsman. The Finance Director to request the Treasurer of the States (acting under delegated authority) to approve the increases.
Signature: Deputy R Duhamel			Position: Minister
Date Signed:	Ass Dir Initials		Date of Decision (If different from Date Signed):
	CEO Initials

Potato Cyst Nematode: Increase in Charges

Report to the Minister for Planning and Environment

Increase in Charges for Potato Cyst Nematode (PCN) and Soil Nutrient (NPK) Sampling and Analysis

Summary

1.1 It is recommended that the Minister changes the basis under which Potato Cyst Nematode (PCN) and Soil Nutrient Sampling and Analysis services are provided by the Department’s Plant Health Laboratory to customers.

1.2 Currently these services are provided at subsidised rates, representing a maximum of 20% cost recovery.

1.3 It is proposed to move to a system of full cost recovery in line with Policy PR 23 of the Rural Economy Strategy and Financial Direction 4.1 “Increases in States Fees and Charges”

1.4 Provision exists within Plant Health (Jersey) Law (2003) to allow for increases in charging by Order under the legislation

2.0 Rationale

1.5 The service is non-statutory and subsidised. As such, the service delivers significant commercial/private gain to the customer.

1.6 The service involves the taking of a soil sample by laboratory staff. The sample is analysed to determine the degree of infestation of PCN - a damaging soil pest of potatoes that can seriously affect yield. The results allow growers to decide whether the use of soil incorporated pesticides is warranted, in order to reduce crop loss and optimise yield and profit.

1.7 A staff member key to the provision of the service has retired and the Plant Health Laboratory does not have the capacity to continue to conduct this service in-house,. In order to reduce operational costs, it is not anticipated this post will be replaced so if we are to continue providing this service it must be outsourced and at full cost recovery. Transitional arrangements to support the industry to the end of the current season will be required.

1.8 It is proposed to move to a system where samples are still taken by Laboratory staff, but the analysis of samples is outsourced to a UK Lab at full cost recovery. The key benefit of this approach is that bulk rate discount can be negotiated by the laboratory on behalf of all growers.

3.0 Current charges

A. Sampling for PCN and/or NPK £2.90

B. Analysis for PCN £1.75

C. Analysis for NPK £4.86

4.0 Proposed Charges

A. Sampling for PCN and/or NPK £15.00 per field.

B. Analysis for PCN £11.00 per analysis.

C. Analysis for NPK £5.50 per analysis.

5.0 Comparisons

The figures for;

Sampling for PCN and/or NPK are based on staff cost for the operation.
A range of UK Labs were invited to tender for the work, and of seven respondents, one has been selected on the basis of expertise, reputation, reporting time and cost.
Analysis for NPK is based on a known cost, already charged at full cost recovery, with allowance for annual price increase.

6.0 Comment

6.1 It is logical that as this service is for the good of a single individual or business, rather than for the public good, it should not be subsidised.

6.2 Application of the soil applied pesticide is expensive, so it is not anticipated that increasing cost of sampling and analysis will result in additional pesticide application.

7.0 Budget impact

7.1 There will be no budgetary impact, as analysis costs incurred by the Department will be re-charged to users.

8.0 Recommendation

8.1 It is recommended that the Minister:

(1) adopts this new strategy for charges for soil sampling and analysis.

(2) instructs the Department to prepare an Order under the Plant Health (Jersey) Law (2003), Article 5, paragraph(6) (a).

(3) instructs the Acting Finance Director to request the approval of the Minister for Treasury and Resources for these increases

Report prepared by Head of Plant Health

Approved by Director, Environmental Management and Rural Economy

June 2011