Agricultural Compounds and Veterinary Medicines Amendment Bill

on behalf of the Associate Minister for Primary Industries: I move, That the Agricultural Compounds and Veterinary Medicines Amendment Bill be now read a first time. I nominate the Primary Production Committee to consider this bill. Before explaining this bill in more depth, I want firstly to acknowledge the stakeholders who have been involved in developing this very important bill and thank them for their patience. Getting this bill into Parliament has taken some time, due to the complex nature of the legislation and the subject matter. To remain internationally competitive, the New Zealand agricultural industry requires access to the latest agricultural products to manage the pests of plants and animals, to increase productivity, and to ensure the health of our farm animals.

The Agricultural Compounds and Veterinary Medicines Amendment Bill aims to remove barriers to agricultural compounds being registered in New Zealand by extending data protection for innovative trade name products and conferring data protection on non-innovative trade name products.

All agricultural compounds used in New Zealand must be registered under the Agricultural Compounds and Veterinary Medicines Act 1997. When suppliers of agricultural products apply to register a product in New Zealand, their application must be supported with data on the product’s safety and efficacy. For example, an application to register a pesticide for use on food-producing crops would need to be accompanied by information on how the product complies with New Zealand’s maximum residue limits.

Data protection is important because developing data is expensive, and the New Zealand market, particularly for our small horticultural sectors, is relatively small. This makes the business case for investing and developing data marginal in many instances. Data protection is valued by business because it confers an advantage on an applicant by forcing later applicants to develop their own data or wait until the protection expires. In this way, it prevents subsequent applicants from piggybacking on the costly research of the original applicant.

We need the right level of data protection to encourage overseas suppliers to invest in registering new products and uses in New Zealand. The Agricultural Compounds and Veterinary Medicines Act currently offers much narrower protection than other countries like Australia, the US, the EU, and Canada have. For many years, industry representatives in some of our key horticultural sectors like pipfruit and citrus have advocated for longer and broader data protection. Without these products, their productivity will suffer, they may fall behind their international competitors, and, in the worst case, their viability may be threatened.

A Government review found examples of products available in other jurisdictions, but not in New Zealand. After considering these positions, the Government decided that modest extensions to data protection provisions are warranted. We do not want to inhibit competition and prevent businesses from accessing reasonably priced agricultural compounds.

For innovative products, the bill extends data protection from the current 5 years to a maximum of 8 years. In addition, the bill introduces a new category of data protection for non-innovative products. Three years of data protection will be provided for information provided in support of applications to register non-innovative products, including reformulations and new uses of existing products. The bill also makes minor consequential amendments to the Hazardous Substances and New Organisms Act 1996 and a definition in the Medicines Act 1981 to keep data protection provisions across these statutes properly aligned.

In conclusion, the Agricultural Compounds and Veterinary Medicines Amendment Bill is important for the suppliers of crop protection and animal health products, and the industries that rely on these products for their livelihoods. I believe the bill strikes the right balance between incentivising the registration of products that our sectors need and encouraging competition in the agricultural product market place, but I remain interested in stakeholder views on whether we have got the balance right. I encourage those with an interest in this area to contribute to the select committee process that will now follow. I commend this bill to the House.

Tēnā koe, Mr Assistant Speaker. E ngā mema o te Whare nei, tēnā tātou katoa. I am honoured to lead Labour’s contribution to this bill we are debating tonight, in place of the very experienced and very knowledgable Hon Damien O’Connor, who, no doubt, will be undertaking his own agricultural compounds and veterinary medicines of sorts as co-captain of the New Zealand Parliamentary Rugby Team representing us on the other side of the world. So I wish them and the All Blacks the very, very best.

What does this bill do? This bill extends the period of protection for confidential information given in support of an application to register an innovative trade name product from 5 to 8 years, by allowing 1 year of additional protection for each new use added to the registration. It also expands the scope of data protection coverage to include confidential information provided in support of applications to register non-innovative trade name products and uses for 3 years. This means that suppliers of agricultural and veterinary medicines would have their products protected for longer in addition to their 20-year patents.

There is argument in the international literature about whether longer patent times incentivise more innovation or not. It will create a strong incentive to produce a new product, but it also reduces the pool of ideas to design new products. As it extends the effective monopoly on these products for a further 3 years, it can mean higher costs for farmers.

In standing here and offering Labour’s position on this bill, I think it is important that I share with the House the consideration that we had in terms of getting to the point of supporting this bill. We consider that 300 companies have approximately 3,000 products registered for sale under the Act. These companies are likely to be in support of the changes. But, on the flip side, there were very low interest levels in consultations, with only 29 submissions. Although those who use the system were in favour, generic product manufacturers and Federated Farmers were not so supportive. On the pro side, supporting this bill, this could increase the access to new innovative products.

The regulatory impact statement indicates that the lack of new-use data protection may be putting off several pest control applications, like contorta pine, white fly in glasshouse tomatoes, and western flower thrip. On the flip side, this gives a monopoly to producers that will raise costs on farmers at a time when they are under significant strain. In submissions, Federated Farmers sought to narrow data protection and shorten protection periods to support competition and low costs. On the pro side, again, Labour generally opposes bills at first reading only in principle, and we feel it is important that we send this bill to the select committee because it will help shape and strengthen it and address some of those concerns we have outlined.

Labour has taken a position on the Trans-Pacific Partnership agreement. We oppose the undermining of Pharmac. This includes opposing data protection extension for medicinal products. It could be considered inconsistent with our position to then support this agricultural data protection extension.

Finally, our last consideration was that the issue was first raised and consultation undertaken by the fifth Labour Government in 2006. Therefore, Labour will support this bill’s referral to the select committee, but we want to see a better analysis of the costs and benefits from officials and reassurance from the sector that this is going to be for its benefit. As I said, the bill will extend data protection for new uses of innovative products and for non-innovative products by up to 3 years. This is in addition to the 5 years of data protection innovative products have access to and their 20-year patents.

There is the potential for these measures to increase access to innovative new products, as I outlined earlier, for several pest control applications: contorta pine, white fly in glasshouse tomatoes, and western flower thrip. However, extending data protection means a longer period of effective monopoly for some products. That could lead to higher prices for farmers at a time when many are struggling due to falling dairy prices. In the consultation that was run on these measures, although those who used the Act were broadly in favour of extending data protection, generic product manufacturers and Federated Farmers sought narrow data protection and shortened protection periods to support competition and low costs. At a time when dairy prices are crashing, several regions’ economies are shrinking, and half of Silver Fern Farms is being sold to a subsidiary of China’s Bright Food, we want to see more comprehensive action from the Government to support economic development in the regions.

I want to turn to the background. It is important to acknowledge where this is all derived from. I want to acknowledge the Government working group that was established in 2008 to review the data protection regime. The Government of the day commissioned Covec Ltd, an independent economic research organisation, to examine the effects of New Zealand’s current data protection rules on the market. I have got the report here. I am not going to read all of it, but I just want to highlight a couple of the points to impress on members the point as to where this particular bill comes from.

In terms of what the issue was, the report: “seeks to evaluate whether the present rules regarding data protection are consistent with maximising the net benefits to the agricultural compound and veterinary medicines industry in particular, and the agricultural sector and New Zealand more generally. To this extent, this report seeks to inform policy makers on whether there is a need for change to the regulatory environment relating to data protection so as to maximise these net benefits.” Further on, the report talks about negative impacts, and I do want to take the time to just highlight them briefly: “Although the current rules facilitate vigorous competition and can lower prices for end-users, the absence of data protection can also deter suppliers from: developing and registering new products using existing chemistry; registering existing products for new uses; or providing data for reassessments.”

Overall, the report, the evidence, and the analysis outlined suggests that any increase in net benefits to New Zealand from increasing data protection are likely to be greatest in relation to new-use registrations. There may also be benefits from providing data protection for reformulations, although this is less clear. Whether the net impact of an extension of data protection for reassessment will be positive is perhaps even more uncertain, although there may be policy approaches—for example, cost-sharing—that could address any anti-competitive impact that may arise from such a change. There do not appear to be any significant issues arising from the 5-year data protection period provided for the registration of new innovative agricultural compounds and veterinary medicines. Therefore, Labour stands to support this bill in its first reading and its referral to the select committee. Kia ora tātou.

The Agricultural Compounds and Veterinary Medicines Amendment Bill is kind of music to the ears of the Primary Production Committee. It is the first bill we have had in this term of Parliament, and I have to say that it is a bit of a relief because there is certainly some truth in the old adage that idle hands do the devil’s work.

💬 Richard Prosser: Oh, Mr Chair!

And so to have Richard Prosser’s hands busy will be a very good thing for us, and Steffan Browning’s even more so.

One of the challenges we face in an isolated, small country with a comparatively small market is attracting the very best of international products. It has been apparent for a long time in New Zealand, and particularly apparent in the agricultural sector. One of the challenges we have because of the small market is that we have a very limited ability to attract the very best products from around the world to New Zealand to establish themselves in the market place unless we give them the opportunity to get some advantage from being here. Very good examples in the past have been the ivermectin products that came into the country and Roundup. Those are two examples of products that have come into the country under the current regime and that have established themselves and gone on and been, obviously, reproduced and copied in many forms as a result of it.

The bill will help encourage the entry of more of these products into our market place, and, as the world-leading, food-producing nation we are, we need access to the very best products we can attract at the most competitive prices we can get them. Of course, if we cannot attract the very best products, we have got a significant challenge, and that is what this bill sets out to address. It gives us the opportunity, right across the agriculture and horticulture sector, particularly—and other areas as well, but particularly those two areas—to attract products to New Zealand and get them tested, registered, and utilised in our primary production sector, which will make a massive difference to our ability to produce.

I was a bit taken by the use of the term “innovative chemicals”. I find, and as you will read in the definition in the bill, that innovative chemicals are, in fact, new ones that are being introduced to the country. They have a bit of an advantage in this process, in that they get a longer protection term than chemicals—I do not like the word “chemicals”, but I guess that is the word I am using—that come into the country and have already been used in other products. They are the non-innovative chemicals. They have been used elsewhere in the world and proven, as well. So that is an interesting definition that we are using there.

Both sides of the industries are concerned that the current data protection level is not sufficient and is inhibiting registration of the latest technologies, as I have said. I think the Government review found evidence of that, and, consequently, we have got this bill following on from it. We do not want—as the last speaker, Meka Whaitiri, talked about—to stifle competition because, I think, there is a balance between stifling competition and giving us the ability to use the very best of products in this country. So the bill is designed to encourage businesses to register new products and to register more uses for products that already exist. This is quite common where products come into the country, are utilised for the specific reason they are designed for, trialled in other areas, and found to work much better than was expected, so it is pretty important that we are able to extend those product uses, and, consequently, the companies that extend those product uses get extra protection around that for another year or two.

So I think this is a very good bill. I think it will make a difference, and it is ironic that a small piece of legislation like this can have such an impact, or potentially such an impact, on the New Zealand agricultural sector—so it is really important for us. One would hope that all parties will support this bill in its first reading as we will be encouraging all stakeholders to share their views with us. I found that having preconceived ideas is perhaps not always the most productive way to make change. There will be controls on residues set out in parts of this bill, and there will be other items of interests, I think, to all sorts of sectors in the New Zealand economy. I think that the process we will go through with the select committee and the submissions that come to it will cover many and varied areas of the use of agricultural chemicals and the like. I look forward to having this bill before the Primary Production Committee and I would encourage all interested parties to submit on it when the time comes. Thank you.

It is a pleasure to take a call on this bill. I would like to congratulate the chair of the Primary Production Committee, Ian McKelvie, who has just taken his seat, for finally getting some work to do. I think it is an indictment on this Government, actually, that this is the first piece of legislation that we have seen in this space in this term of Parliament. This is, of course, from a party in Government that purports to be the party of farmers, and it is finally taking its first piece of legislation to the Primary Production Committee. So I would like to congratulate that chair on finally getting some work through to his committee and on seeing some legislation. Maybe you could speak to the Leader of the House about upping the work rate of the legislative programme in your area—not your area, Mr Assistant Speaker; that member’s area.

As my colleague Meka Whaitiri outlined very clearly, Labour’s position is that we are supporting this bill going to the select committee, firstly, because we would like to see the select committee do some work and, secondly, because we actually think that there is a really important function that has to occur here in terms of the submission process. There are clearly some very important questions that need to be addressed in the process of the select committee’s examination of this legislation. We have had a good outline from speakers who have spoken about the function of this bill—about innovative and non-innovative products, about extending time periods, and about the balance that needs to be drawn between providing protection and the incentive to innovate for agrichemical companies and between the need to maintain competitiveness and not price some of these products out of the market for farmers.

What we are talking about here is the kind of evidence that is required when protection is sought—the kind of evidence that needs to be filed. This is always a balance for any company that is innovating, whether it is for a patent or for a plant variety right. There is a level of detail that needs to be filed, and the person who is doing the filing has to have confidence that they can still protect their advantage and their investment through the fact that there is a strong business case for them to do this. So this is always vitally important. We know that in New Zealand’s agribusiness industry, having the ability to protect the intellectual property that we invest in is vitally important—again, whether that is through plant variety rights or through bringing in new uses or new products that can be used in our agricultural sector.

I think that there has been some very good commentary on the bill. One of the issues is around new uses, and I think that the previous speaker, Ian McKelvie, has talked about this and about how sometimes it can be that for a particular product, when an innovative use for that product has come up because it crosses over—whether that is in the human consumption chain or the animal consumption chain—the kinds of regulations around how you use it and its use differ. There are different regulatory standards that have to be met. I think the kind of testing and evidence that needs to be submitted around new use is a very important question, and one that the select committee will need to spend some time on.

A very good example of this was provided by Mark Ross, the chief executive of Agcarm, who used the example of fodder beet planting, which grew from virtually nothing to around 50,000 hectares last year. This fodder beet was classified as a different crop from fodder brassica, which had been the traditional use of this. Companies needed to do more efficacy and residue trials to register products for fodder beet. This cost more than $100,000 a product because this was for a new use—it was a fodder beet, rather than a fodder brassica.

Fodder beet growers need chemicals to be registered for fodder beet—that just makes sense—otherwise they face having to use products that are registered for forage brassicas off label. This raises real risks around crop residues and residues in meat or milk, and real questions that do need to be addresses and examined. As for the cost of this—if you have a look at a recalled formulation, it might cost $300,000 to reformulate a product for a new use, but it may cost $500,000 for the efficacy trials around getting the evidence required for filing. So these are all important questions that are going to have to be considered by the select committee when it comes to the bill.

In her contribution, my colleague Meka Whaitiri spoke about the very low number of submissions that had been included to date in the preliminary work that has led up to this legislation coming to the floor of this House, and I would like to see a greater number of submitters. I would like to hear from a greater number of research organisations in our agribusiness sector to find out where the balance lies for them, as researchers who are looking for the development of innovative products. Does the advantage lie in allowing farmers access to off-protection, moderately priced farm products, or does it lie in our having the ability to protect that for longer? What is best in terms of our ability to innovate in the agribusiness sector? I think that this is a very important consideration, which the committee will need to have when it comes to consider this bill.

One of the other questions that I would like the committee to explore is, of course, the interface with the Hazardous Substances and New Organisms Act, as to why it is that whenever we are looking at consequential amendments to that Act, we need to proceed with caution, and we need to ensure that the protections that we need are, indeed, in place and that we are not, either inadvertently or by design, opening the door for consequential amendments to things that really might not be desirable to New Zealand. So I think these are real questions at any time, and I note that in this legislation there are going to be consequential amendments to that Act.

I think one of the key questions that was raised in some of the submissions that have already been heard to date was about when Federated Farmers brought up this very much increasing monopoly time period and the offset with the access to these chemicals, and they asked why it is that we cannot just say that consulting with the agribusiness sector is about consulting with the agri-chemicals sector. It needs to be across the supply chain, it needs to be across the sector, and it needs to understand the different parts of it because, of course, there are going to be people who will benefit from these changes. There are people who will do very well because they will get extra periods of monopoly granted under this legislation, but what is the cost of that? Those are all considerations that need to be considered.

I think that there are important considerations and questions that we need to ask. I, for one, am very interested in the question about new use and the innovation that we can do as a country, both to combat some of our greatest environmental problems and to improve the way in which we can potentially use existing products for new uses. For example, what products are already on the market that could be used to reduce nitrate runoff so that we could actually see an improvement in our waterways? In a similar vein, if you are doing stuff to mitigate the nitrate runoff, what products are already there that might actually have the added benefit of decreasing nitrous oxide and, therefore, decreasing our contribution to greenhouse gases? So I think, given the amount of emphasis that, by design, New Zealand has to put into considering how it is that research and development is going to help find our way out of producing 50 percent of our greenhouse gas emissions as a nation, we need to make sure that we have got a regulatory regime that makes it possible for us to innovate.

We need to be able to innovate right across our agribusiness sector, but we also have to be working always to ensure that we have the right protections in place—that we have the right protections in place for our environment; that we have the right protections in place for the rest of the sector—and that this is not about the unnecessary gifting of a monopoly to only the part of the supply chain that will benefit. We have to ensure that we have those right across the way. So I think the select committee has a hard job ahead of it and a lot of work to do in terms of making sure that we do have these questions answered adequately. It is a job, I am sure, that it is looking forward to and relishing, with its first piece of legislation in this term of Parliament. Thank you.

Debate interrupted.

The House adjourned at 10 p.m.