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DIRECTOR-GENERAL'S OVERVIEW

The Ministry of Agriculture and Forestry formally came into existence on 1 March 1998 as a result of the merger of the former Ministries of Agriculture and Forestry. This "annual" report therefore relates to the four month period from 1 March to 30 June 1998.

This initial period was one of intense activity for the Ministry, with the integration of groups from the two parent ministries into cohesive new units a top priority. In general, the integration of MAF and MOF staff into new teams has proceeded very smoothly with minimal disruption to output. I would like to pay tribute to the staff, many of whom have worked very long hours indeed to make the transition so successful and to minimise the disruption. Some work remains to be done, but in areas such as regional accommodation, final outcomes will be dependent on decisions regarding the degree of co-operation that can be maintained with the State Owned Enterprises (SOEs) to be formed from MAF Quality Management (MQM) on 1 November 1998.

Plans for the development of the Ministry have proceeded during the period. Considerable effort has gone into developing for the new entity a strategic plan, which will be completed in the new financial year. Detailed planning for the establishment of the two SOEs from MQM proceeded, with full sets of business plans for all MQM services being provided to the Establishment Boards of the SOEs, a heavy time involvement of senior MQM personnel in providing additional information to the Boards, and the establishment of a Corporatisation Steering Group within MAF. Major effort also went into an inter-departmental group preparing a report for Ministers on the future of food administration in New Zealand. Final decisions on this report, expected in December 1998, are likely to have a significant impact on the future structure of the Ministry.
Highlights of the work carried out in the period by the MAF Policy Group, in conjunction with other groups as appropriate, included:

• considerable work to resolve dairy access issues including involvement in WTO dispute resolution cases against the EU and Canada
• pursuing trade liberalisation agendas through WTO/APEC
• making submissions to the US on the need to have the injunction on imports of timber products from New Zealand lifted
• supporting the Minister in his attendance at the OECD Agriculture Committee and (successfully) the candidature of the Director-General as the Chair of that Committee
• introducing a large number of foreign Ministers, officials and visitors to the benefits New Zealand has derived from its agricultural and broader economic policy reforms

• completion of onshore deregulation of the kiwifruit industry
• repeal of Section 27 of the Dairy Board Act
• preparation of the MAF Restructuring Bill (dealing with MQM corporatisation)
• scoping of issues relating to the proposed deregulation of the producer boards
• progress of the review of the New Zealand Horticultural Export Authority
• progress on various issues related to consistency in cost recovery regimes

• considerable resolution of the issues following on from the introduction of RCD to New Zealand
• advancement of the proposal for recovery of the cost of passenger clearance at ports and airports
• completion of the approval process for the Tb Pest Management Strategy
• substantial implementation of policy development on the new Animal Welfare Bill
• substantial policy development work on the Animal Products Bill
• substantial progression of proposals for changes in Food Safety Administration

• completion of the review of the Northland forestry project, and the substantial advancement of the review of the East Coast project
• input was provided to the road and Resource Management Act reform projects
• substantial advancement on the issues of the logging of indigenous forests on SILNA land, and by Timberlands West Coast

Most of the developmental work in the Regulatory Authority has focused on technical issues related to trade in agriculture and forestry products.

Progressing New Zealand's philosophies in international multilateral forums with a view to influencing policies for the benefit of our producers has continued to be a priority. New Zealand has been represented by Regulatory Authority staff at a variety of standard-setting forums, including OIE, Codex and IPPC, and MAF representatives have participated as speakers and chaired a number of key meetings.

New United States regulations covering meat processing (the "Mega Regs") require the introduction of Hazard Analysis Critical Control Point (HACCP) methodology to all premises exporting to the United States by January 1999. The Meat and Seafood group within MAF Reg worked closely with industry through the period to progress an extensive work programme to design and implement, as appropriate, a suitable HACCP strategy by the required date.

After intensive discussions between appropriate officials, Cabinet approved in early May the signing by MAF of a Russia/New Zealand Veterinary Agreement. The Agreement aims to facilitate co-operation between New Zealand and the Russian Federation in the field of veterinary medicine in order to minimise the risk of diseases being spread as a result of trade between the two countries. Continued access to the Russian market is a high priority, with exports to Russia, mostly agricultural, increasing recently to over $400 million.

Growing consumer concerns internationally over food safety are resulting in increasing requirements for monitoring, with importers seeking to push these costs back onto producers. MAF Reg has worked closely with New Zealand industry to provide extensive technical and negotiating support in resisting excessive demands that have the potential to cost millions of dollars, with no appreciable gains in terms of food safety for consumers.

The development of systems and regimes to facilitate the introduction of the Agricultural Chemicals and Veterinary Medicines Act 1997 (ACVM) has proceeded during the period, including development of a cost recovery mechanism.

Work has also continued with ERMA NZ to establish relationships and responsibilities, and to clarify technical issues and operational processes in regard to the implementation of the new organism provisions of the Hazardous Substances and New Organisms Act.

The national pest management strategy for bovine tuberculosis has been completed to come into effect on 1 July 1998. It is the first national strategy to be implemented under the Biosecurity Act 1993.

Responsibility for Tb control now lies with the Animal Health Board Inc. The appointment of approximately 760 authorised and accredited persons to implement the strategy has also been completed.

A pest management strategy for American foulbrood is nearing completion for implementation from 1 October 1998, when the existing conditions for American foulbrood control expire.

Surveys of the 19,000 elm trees in Auckland have continued and, with only one infected tree removed this season, it appears that the Dutch elm disease eradication programme is going well.

The contract management capability of MAF Reg has been substantially enhanced, and all contracts with MQM are being reviewed before the launch of the SOEs on 1 November.

Further development of information systems has been ongoing, with the successful completion of the electronic certification system, the development of an information system to support the meeting of statutory obligations under the ACVM Act, and ongoing development of the PAQUIS and IMSIS systems.

For the Forest Management Group, the highlight of the period under review was the completion in June of the intensive trapping and surveillance programme to determine the success or otherwise of the 1996/97 spraying programme to eradicate Orgyia thyellina (white spotted tussock moth) from Auckland. No residual population was detected and, on the basis of scientific advice, it was declared that Orgyia thyellina had been eradicated from the east Auckland area.

A review of the Forest Health business was commenced with a view to determining its future location, i.e. with the Ministry, one of the new SOEs or a CRI. The annual survey programme was completed on time.

The Crown Lease Forest business was only marginally affected by the Asian crisis in the reporting period, and $16.1M gross revenue was earned on log sales from the Crown lease forests.

Negotiations continued on the sale of the Crown's interest in three lease forests to the Maori lessors.

The review of the Northland pre-commercial forestry facilitation project was presented to Cabinet, and a decision was made to end the project at 30 June. The review of the East Coast forestry scheme was largely completed during the period, for presentation early in the new financial year.

The movement of the Quarantine Service and the Verification Agency back into the core of the new Ministry from MQM, to create the new Operations Group, was completed successfully, and new contracting relationships with MAF Reg were quickly established.

The integration of the two Border Services proceeded smoothly, with cross-training of Agriculture and Forestry staff commencing immediately at the beginning of March to allow the Ministry to achieve its required efficiencies. The rate of interception of biosecurity risk material suggests that the new Border Service is working well. There are, however, still some remuneration issues to be resolved.

The split of the Verification Agency from within the Meat Group within MQM created the risk of substantial replication of overheads which would have to be borne by industry. To minimise this possibility, the Verification Agency was set up with a very flat structure, all support positions were immediately reviewed, and there will be a full review of all off-front-line positions when the meat SOE is corporatised in November.

The setting up of the National Centre for Disease Investigation was delayed while the Establishment Board of the non-meat SOE considered the viability of their laboratory network. This was essential, as the MAF laboratory would have to take up the balance of the functions necessary for regulatory approvals if there were no other New Zealand supplier of the services. The Ministry did not wish to set up services from which it would wish to exit if an alternative supplier could be found.

All of the groups supplying corporate support services to the Ministry have been under intense pressures throughout the period under review. The new Ministry was launched on 1 March 1998 resourced to all intents and purposes as if it were in a stable, steady, static environment. In fact, there were many issues stemming from the merger still to be worked through, and planning for the establishment of the two SOEs, and their separation from the Ministry had to be put in train.

Information Management has been a major issue for the Ministry with the merger requiring the integration of two largely incompatible computer systems. The first steps were taken towards the implementation of the Information Management Strategic Plan, which had been commissioned by the Transition Team that planned the merger. The first steps were taken towards the planned out-sourcing of a number of information technology activities, and work to minimise risks associated with the Year 2000 problem was intensified. Careful co-ordination of the Strategic Plan and the Year 2000 project is required to ensure that costs are minimised. Until complete compatibility of systems is achieved, there will continue to be some loss of productivity as documents have to be translated from one format to another as part of internal communication.

The necessity to produce "annual" reports for the former Ministries of Agriculture and Forestry, together with audited financial statements for the period 1 July 1997 to 28 February 1998, as well as the documents for the new Ministry for the period 1 March to 30 June 1998 added to the overall workload. In addition, there were such activities as merging the accounts of the two parent ministries, changing the invoicing systems for the cost recovery activities of the Verification Agency and Border Services when they were incorporated into the core Ministry, preparing the accounts of the Animal Health Board for establishment of the Animal Health Board Inc as a completely stand-alone agency on 1 July 1998, preparing new human resource strategies, and preparing the remainder of MQM for corporatisation.

Overall, it has been a period of intense activity for all groups within the Ministry. From my perspective, the merger has gone extremely well in terms of the new Ministry being able to deliver services of high quality within acceptable time frames. On the other hand, the lack of additional resources to handle the additional tasks associated with a prolonged sequence of restructurings has proved to be a problem, with some staff having to put in extremely long hours of high intensity work. Signs of the pressures being endured are showing up in terms of cases of occupational over-use syndrome and other stress related illnesses.

Towards the end of the period, it became apparent that budgeting errors in the merger process have left some activities in the Ministry under-funded for the 1998/99 year. It is my hope that these problems can be resolved early in the new financial year, so that the period of under-resourcing it not too prolonged.

In the meantime, I would again like to pay tribute to the staff for the dedication they have shown in providing the extra effort required to get the new Ministry of Agriculture and Forestry off to a good start.

Bruce Ross
Director-General

Contact for Enquiries

Strategy and Performance Group
Ministry of Agriculture and Forestry
Pastoral House
25 The Terrace
PO Box 2526, Wellington

Tel: +64 4 894 0100
Fax: +64 4 894 0738 Contact this person