REGULATORY IMPACT STATEMENT

Amendments to Requirements for Determining and Recording Weights of Fish Packed and Frozen at Sea

Statement of the nature and magnitude of the problem and the need for Government action

Lack of standardised methodology for determining and recording weights

There is currently no regulated or Industry-agreed standard relating to the methodology for determining and recording the weights of fish landed by factory vessels. Issues surrounding the determination of the weight of fish packed and frozen at sea have been troublesome for several years. All parties concerned recognise that it is impossible to weigh every single container of fish landed by factory vessels.

The lack of an agreed standard relating to the methodology for determining and recording weights has contributed to fishing industry concerns about:
(i) The absence of a level playing field between operators; and
(ii) Uncertainty over the Ministry of Fisheries’ (MFish) approach to prosecution for perceived offences.

The current situation has also created difficulties for MFish regarding compliance and enforcement; the lack of a standard means that it is difficult to prove to the satisfaction of the Courts when an offence may have been committed.

Inability for MFish to identify containers

The current lack of appropriate labelling requirements for containers of frozen fish compounds the difficulty that MFish has in reconciling product with reporting. Most containers look alike regardless of contents, and several labelling fields that would allow MFish to ascertain the contents of a container without opening it are currently not required by law.

Technical problems

There are several technical problems that need to be addressed in order to improve the process surrounding the weighing of containers of frozen fish. These include: 

• Certain types of containers do not currently fall within the definition of a “container”. These containers would technically be exempted from the proposed labelling requirements. All containers need to be labelled to ensure consistency. 
•  Licensed fish receivers are currently not allowed to make weight deductions where additives such as polyphosphates have been added to certain types of fish product. They are already allowed to make such deductions for the weight of ice however, and the current situation is anomalous.
• Fishers are currently not required to keep records of packaging weights. Records of packaging weights are a key component of the process for MFish to determine the actual weights of containers of frozen fish.
• Two key recordkeeping documents (unloading dockets and purchase tax invoices) currently require the use of net weight. Net weight is not the weight used for catch balancing purposes and MFish believes actual weight should be required to ensure consistency with the catch balancing regime.
• The number of containers is only required to be recorded on purchase tax invoices when an unloading docket has not been completed. In many instances where an unloading docket has been completed however, the number of containers recorded is often an initial estimate. Requiring number of containers on purchase tax invoices, which are completed after all containers have been counted, would provide an opportunity for the more accurate number to be recorded.

Statement of the public policy objective

To ensure that there is a system for determining key details of and recording the weights of fish packed and frozen at sea that is transparent, effective, equitable and efficient.

Statement of feasible options (regulatory and/or non-regulatory) that may constitute viable means for achieving the desired objective and net benefit of the proposal

Status Quo

Lack of standardised methodology for determining and recording weights

MFish currently determines the actual weight of fish in containers by using a similar process to that which is proposed. The process has no official status however, and the continued absence of a standardised procedure for determining the weight of fish packed and frozen at sea will continue to cause uncertainty for both commercial fishers and MFish, and may threaten the integrity of the Quota Management System. Therefore, the status quo is not preferred

Inability for MFish to identify containers

Under current fisheries legislation the only containers of frozen fish that are required to be labelled are those that are transhipped (for example where a fishing vessel lands fish taken in New Zealand waters at a port outside New Zealand). The majority of fish is not transhipped. The current lack of appropriate labelling requirements will continue to cause difficulties for MFish in reconciling product with reporting without opening containers. Therefore the status quo is not preferred.

Technical problems

Without appropriate regulatory amendments the Fisheries (Recordkeeping) Regulations 1990 will: 

• Not include certain types of containers within the definition of “containers” thus exempting them from the proposed labelling requirements;
• Prevent licensed fish receivers will from make appropriate deductions where additives such as polyphosphates are added to certain types of fish product;
• Not require commercial fishers to keep records of packaging weights;
• Continue to require net weight, rather than actual weight, to be recorded on unloading dockets and purchase tax invoices; and
• Fail to require the number of containers to be recorded on both unloading dockets and purchase tax invoices

Therefore the status quo is not preferred.

Preferred Option - Amend the Fisheries (Commercial Fishing) Regulations 2001 and the Fisheries (Recordkeeping) Regulations 1990

Regulate for a standardised methodology for determining and recording weights

Amend the Fisheries (Commercial Fishing) Regulations to regulate for a standard procedure for MFish staff to use in determination of actual weight of fish landed.

The procedure to determine actual weight will involve taking an appropriately-sized sample from a product line, weighing all containers in the sample, and then deducting packaging weights and an allowance for glaze (an ice coating that prevents the fish product from drying out) or polyphosphate solutions (2% and 4% respectively) from the gross weight.

Create labelling requirements to allow containers to be easily identified

Amend the Fisheries (Commercial Fishing) Regulations to require all commercial fishers processing and/or packing and freezing fish at sea to mark the containers in which the fish are packed with:

• species identifier (common name or scientific name or species code);
• landed state;
• packing date;
• net weight; and
• vessel identifier (name or registration number under the Fisheries Act 1996 or number assigned by New Zealand Food Safety Authority to limited processing fishing vessels or vessels operating under a registered risk management programme pursuant to the Animal Products Act 1999)

An existing labelling regime is administered by the New Zealand Food Safety Authority (NZFSA). Under that regime the vessels that MFish wishes to target with the current proposals are already required to label containers with, amongst other parameters, scientific name, packing date, and the “official number of the premises which processed and/or packed the product” (being the number assigned by NZFSA to limited processing fishing vessels or vessels operating under a registered risk management programme pursuant to the Animal Products Act 1999). MFish wishes to replicate these requirements under its own regulations but does not intend that the parameters are duplicated.

Technical amendments

Amend the Fisheries (Recordkeeping) Regulations 1990 to:

• Require commercial fishers processing and/or packing and freezing fish at sea to keep records of packaging weights, and to produce these on demand to MFish;
• Ensure that “naked blocks” of frozen fish are defined as containers for the purpose of recordkeeping and labelling;
• Require actual weight rather than net weight to be recorded on unloading dockets (where practicable) and purchase tax invoices;
• Require carton number and type to be recorded on purchase tax invoices and unloading dockets;
• Introduce a definition of the term “product line”, considered to be a set of containers from the same landing, all containing the same net weight of fish and containing fish of the same species and landed state;
• Allow licensed fish receivers to deduct any allowance in weight made for added polyphosphate solutions when completing a purchase tax invoice.

The proposal relating to the standardised methodology for determining and recording weights is intended to apply only to MFish. It effectively sets a standard for Industry to follow. Industry will not be obliged to use the same methodology; however they would have to ensure that the weights that they report are not less than the weights that would result from using the standardised methodology.

All other proposals are intended to relate only to those fishing vessels that pack and/or process and freeze fish together at sea, commonly known as “factory” vessels. There are some vessels that freeze large individual fish such as tunas, ling and toothfish. MFish does not intend for the proposals to apply to this type of vessel as it is a simple task for MFish to identify and weigh individual fish. Difficulties arise when fish are processed and packed together.

The regulatory amendments would become effective on 1 October 2006.

Statement of the net benefits of the proposals, including total regulatory costs (administrative, compliance and economic costs) and benefits (including non-quantifiable benefits) of the proposals and other feasible options

Government

There would be no increase in the costs to government from any of these proposals. The proposal as a whole will simplify enforcement and will contribute to the Government’s objective for fisheries resources of addressing potential sustainability issues in the aquatic environment as well as providing for efficient outcomes for commercial fishers through government having better information on the amount and types of fish being extracted from New Zealand fisheries waters.

Commercial Fishers

Commercial fishers will benefit from having certainty regarding the Ministry’s approach to determining the weights of fish frozen and packed at sea. The proposals effectively set a standard, and vessel operators will be able to manage their fishing operations in line with that standard. Fishers will also benefit from knowing that there is a level playing field for all operators.

Licensed fish receivers will also benefit by being able to make deductions where additives such as polyphosphate solutions have been added to certain types of fish product.

There will be compliance costs to business resulting from these proposals primarily associated with the increase in product-labelling obligations. These costs will be detailed in the Business Compliance Cost Statement.

Environmental /Sustainability

These proposals will reinforce the integrity of the Quota Management System by ensuring that more accurate information is provided regarding the amount of fish being removed from a fishery. Having better information will assist with stock assessments and will help to ensure the health of the fisheries for on-going sustainable utilisation.

Statement of consultation undertaken

Stakeholders

An initial set of proposals (termed Initial Position Paper), based on the March 2005 report of the joint Ministry /Industry Working Group, was developed to give effect to the Working Group’s final report. The Initial Position Paper (IPP) was sent out for consultation in April 2005, primarily to members of the fishing industry. Industry subsequently indicated that they had significant concerns with aspects of the IPP, the key concern being the proposal for a fisher to be deemed to have made a false statement if reported weights were less than those calculated by MFish.

After discussion of the outstanding issues with Industry representatives a revised IPP that had addressed the key concerns was sent out for consultation in December 2005. This included removing the proposal for a fisher to be deemed to have made a false statement if reported weights were less than those calculated by MFish. The IPP was also available for review on the Ministry of Fisheries’ website.

After the release of the revised version Industry still had concerns with some of the proposals, however most concerns were of a technical nature. Industry remained concerned about aspects of the proposed product-labelling obligations. MFish attempted to mitigate those concerns in the Final Advice Paper by replicating requirements with existing requirements imposed by the New Zealand Food Safety Authority wherever possible.

Government

Consultation was also undertaken with Ministry of Justice, Ministry for the Environment, Ministry of Economic Development, Te Puni Kokiri, the Treasury, and Department of Conservation. No issues were raised during consultation.

BUSINESS COMPLIANCE COST STATEMENT

One-off costs to fishers associated with the proposals include:

• Set-up costs to ensure compliance with the increased product-labelling obligations

On-going costs to fishers associated with the proposals include: 

• Additional time spent labelling “naked blocks”, which were previously exempt from labelling requirements
• Keeping records of packaging weights in order to be able to produce them on demand
• Recording actual weight rather than net weight on unloading dockets and purchase tax invoices
• Additional time spent recording container number and type on purchase tax invoices as well as unloading dockets

The primary source of compliance costs will be associated with the increased product-labelling obligations for commercial fishers who pack and freeze fish at sea. An existing product-labelling regime administered by the New Zealand Food Safety Authority (NZFSA) under the Animal Products Act 1999 already requires vessel operators to label containers with up to 10 parameters. MFish proposes that containers be labelled with another five parameters, three of which are already required by existing NZFSA regulations. There will be a one-off cost to the operators of such vessels to amend their existing labelling systems to incorporate the additional two requirements, being landed state and net weight. MFish understands that most labels are computer-generated and expects that one-off costs will not be significant and that recurring costs will be minimal.

The parties most affected by the increased labelling obligations are the operators of fishing vessels that pack and freeze fish at sea. At present there are approximately 20 operators and up to 60 fishing vessels likely to be affected by the increased requirements.

It is not possible to quantify the cost of imposing additional product-labelling requirements. The existing labelling regime administered by NZFSA already requires vessel operators to label product in accordance with several notices and standards. Because of the significant existing requirements MFish believes that it will be straightforward for vessel operators to modify their systems to incorporate the small number of additional requirements. All fishing operators will face the same compliance costs regardless of size. Therefore smaller fishing vessels will see larger proportionate increases of total operating costs, compared to larger operators.

MFish has attempted to minimise costs by overlapping its labelling requirements with the regime operated by NZFSA wherever possible, and by giving vessel operators several options for specific requirements. Where there is overlap between MFish and NZFSA labelling requirements MFish will ensure that the regulations do not result in two labels having to be produced to show the same information.

MFish is preparing to write to stakeholders who provided comment on the regulatory proposals to inform them of the preferred option after a policy decision has been made. Specific information on the new requirements will be sent to factory trawler operators and relevant licensed fish receivers once Cabinet has made decisions on these proposals but before they take effect. This would minimise the costs of the preferred option.