Concerns over full cost recovery for export certification and regulatory services

A move to full cost recovery for export certification and regulatory services could have serious consequences for Tasmania’s agricultural exporters.

Appearing before Senate estimates in Canberra last Tuesday, Department of Agriculture, Fisheries and Forestry secretary Victoria Anderson said the move to 100 per cent cost recovery had been decided and would proceed from July 1 despite industry concern.

She acknowledged that “some businesses may reconsider their place in the trade”.

The federal government says the change is necessary because the cost of delivering export regulatory functions has exceeded revenue in 16 of the past 20 years. 

Since 2023–24, export arrangements have received $138 million in government supplementation as DAFF moves toward a fully user-pays framework.

However, Tasmania is particularly exposed, with food, agriculture and seafood accounting for a substantial share of the state’s $6.16 billion in goods and services exports in 2023–24. 

Agri-food exports alone are worth close to $1 billion annually, led by seafood, dairy, meat and premium horticulture. 

TasFarmers CEO Nathan Calman said it’s concerning that the government is planning to introduce full cost recovery changes without doing any business case modelling around the potential impacts.

He said the timeframe is too short for industry to raise concerns when it doesn’t understand the impacts on particular operations.

“While cost recovery as a principal is well supported, there’s lots of other export industries that receive very generous government support, particularly within our regions - we wouldn’t want to see agricultural production unduly impacted over other industries just because the true impact of modelling of the change hadn’t really been considered,” Mr Calman said.

Unlike Western Australia and Queensland, where minerals and energy dominate export earnings, Tasmania’s export mix is heavily weighted toward products requiring federal inspection and certification.

Mr Calman said that what he doesn’t want to see is any extra costs at the export point being pushed out to farmers and expected to be absorbed by them.

“Ultimately the purchasing country should have to absorb the extra cost through the supply chain, but in an open market environment things are competitive and often any sort of cost increase has to be absorbed prior to the export going to market.

“Without the government being transparent and doing the modelling before they implement a change the unintended consequences could be significant - potentially there are impacted businesses that don’t understand the ramifications.”

Officials confirmed DAFF has not undertaken economic modelling on how fee increases may affect individual farm businesses, exporters or specific overseas markets, and has no plans to do so before July 1.

The acknowledgement that “thin margins” could push some operators out of exporting has heightened concern, particularly among smaller processors and niche exporters already facing rising freight, energy and compliance costs.

In red meat, where processors are the exporters and pay DAFF certification fees, sustained increases are likely to be absorbed somewhere along the supply chain. 

For Tasmania’s beef industry, much of which supplies export-accredited processors on the mainland, additional regulatory costs could influence livestock grid prices over time if margins remain tight. 

National farm groups have warned higher compliance costs are likely to be passed through supply chains in the absence of efficiency gains.

Other sectors face projected increases of about 58 per cent for dairy, 38 per cent for meat and 33 per cent for horticulture, with seafood and egg export charges potentially rising by up to 77 per cent. 

Peak bodies including the Australian Meat Industry Council and the National Farmers’ Federation argue higher regulatory costs risk weakening competitiveness if not matched by service improvements.

Tasmania’s broader seafood sector is also exposed. High-value fisheries such as southern rock lobster, with an annual landed value of about $90 million and strong demand in premium export markets including China, form an important part of the state’s agri-food trade. 

While Tasmanian seafood bodies have not yet publicly detailed their position, national peak organisations stress fully cost-recovered services must be delivered efficiently to avoid unnecessary pressure on producers.

The new arrangements begin on July 1, marking the start of a phased transition rather than an immediate shift to 100 per cent user-pays charges. Most export arrangements will transition over three years from 2026–27 to 2028–29, with the broader framework reaching full cost recovery by 2029–30. Live export arrangements will return to full cost recovery over two years.

Under the phased approach, $49 million in government supplementation will support most arrangements from 2026–27 through to 2028–29 as charges rise.

“Obviously industry is not going to welcome these sorts of moves, we totally understand that and that is why we are talking to them quite carefully,” Ms Anderson told the hearing.

“Margins are thin in some of these businesses. We understand this will be a matter for businesses as to whether the margins are sufficient to continue to participate in exports.

“There is a phase-in… but I am afraid the move to 100 per cent full cost recovery is a decision that has been made.”

Ms Anderson noted agricultural exports reached $84 billion in 2024–25, adding that “a range of industries are not doing too badly at the moment”.

However, departmental material released last month warned higher charges could affect the viability of some export businesses. Draft cost recovery implementation statements for 2026–27 are under consultation.

The department maintains the phase-in provides adjustment time, but the policy direction will not change. As Ms Anderson told senators, whether exporters remain in the trade once higher charges take effect will ultimately be “a matter for businesses”.