Scottish Government

DRAFT REGULATORY IMPACT ASSESSMENT

Title of the regulatory proposal

1. Regulations to implement increases in statutory fees for seed certification, seed testing and enforcement in Scotland 2002/03

2. Purpose and intended effect of the proposal

   Identify the issue and objective

3. Seed certification is a Community requirement to ensure that farmers and growers receive seeds of a known minimum quality. This is achieved in Scotland through marketing regulations which ensure that seeds of the main agricultural and vegetable species can be marketed only after being examined and certified as meeting specified minimum EC standards and as being derived from crops which have also met specific standards.
4. Expenditure is subject to 100% recovery of costs. The purpose of the Regulations is to introduce revised fees with effect from summer 2002 to enable SASA to reduce the deficit in amount recovered by fees involved in the enforcement and administration of the seed certification system.

5. Risk Assessment

6. Without an increase in fees SASA would no longer be able to operate the system to the same level. Failure to operate the seed certification system adequately could lead to a reduction in the standard of seed marketed in the UK, which could impact on farmers. Furthermore, the Government could face a challenge from the EC for failing to effectively enforce European legislation on the marketing of seed if, in an attempt to reduce costs, it fails to sustain the requirements of the EC Directives.

7. Options

   Identify options

8. Two options have been identified:

9. Option 1: keep the seed fees at 1999/2000 levels, but this would mean that the current service could no longer be maintained at the current level; or

   Option 2: increase the seed fees by 7.5%

   Issues of equity and fairness

10. Seed certification is an EC requirement that ensures that farmers and growers receive seeds of a minimum known quality. The majority of costs are paid by applicants who benefit from the ability to market their produce on the basis of assured quality.

11. Benefits

    Identify the benefits

12. By increasing seed fees SASA will be able to continue its present level of seed certification and enforcement work. This provides the minimum framework within which the seeds industry can operate effectively whilst ensuring that purchasers of seeds are afforded consumer protection.

13. Compliance costs for businesses, charities and voluntary organisations

14. The compliance costs covered by these Regulations relate to matters arising under the seeds registration, licensing and enforcement regulations and to matters arising under the marketing regulations for cereal seeds, fodder plant seeds, oil and fibre plant seeds, beet seeds and vegetable seeds.

15. Business sectors affected

16. Seed traders and Licensed Seed Testing Stations will be directly affected but some element of the increase may be passed on to growers.

17. Compliance costs for a typical business

    A 'typical' licensed seed testing station

18. There are currently 5 Licensed Seed Testing Stations in Scotland whose throughputs of samples tested for statutory purposes vary from station to station. LSTSs are free to set their own charges for the statutory and non-statutory services they provide but they are required to pay an annual licence fee in addition to a throughput fee for each statutory sample tested. The following example relates to a middle-sized LSTS.

19. TESTING STATION A	Assumption of samples tested	Current fee rate ( £8.75)	Proposed new fee rate (£9.75)
    Cereal seeds	340	£2,975	£3,315
    Fodder Plant seeds	1	£8.75	£9.75
    Beet seeds	0	£0	£0
    Oil and Fibre Plant seeds	1	£8.75	£9.75
    Vegetable seeds	0	0	£0
    Sub Total	342	£2,992.50	£3,334.50
    Annual Licence Fee	-	£2,033	£1800
    Total Compliance Cost	-	£5,025.50	£5,134.50

    Station	Recurrent Costs			Non-Recurrent Costs	+/- %
    	Existing Rates	New Rates	Existing and New Rates
    A	£5,025.50	£5,134.50	£0	+2.1

    
    
    

    The proposed decrease in the annual licence fee, together with the increase in throughput fees, would increase the costs of this LSTS by £109 per annum.

    A 'typical' seed merchant

20. It is difficult to identify a 'typical' business in the seed sector as companies differ in terms of the crop species in which they deal, their overall size, and the activities in which they are engaged. Representative profiles for large, medium and small seed companies are shown below

21. Company	Recurrent Costs			Non-Recurrent Costs
    	Existing Rates	Proposed New Rates (7.5% increase)	Existing and Reduced Rates
    A	£15,779.10	£16,962.50	£0
    B	£2,608.00	£2,803.60	£0
    C	£522.00	£561.20	£0

    
    
    
22. A more detailed breakdown of these assumptions and statutory fee costs is attached at Appendix 1.

23. Total compliance cost

24. A total compliance cost is not available, as SASA does not collect financial data relating to production costs in the seed sector. However, in so far as the cost of statutory fees represents about 2% of the overall cost of seed, the proposed increases will add a further 0.1% to overall costs.
25. To break even a 30 % increase would need to be applied whereas a 7.5% increase would leave a shortfall of £ 58k.

26. Impact on small business

27. The effect of the proposed increase on small businesses will be proportionate to their throughput except for the annual licence fee for seed testing stations where the decrease amounts to £233 per annum.

28. Other costs

29. There will be no additional costs to citizens, the environment or Government.

30. Results of the consultation

31. To be added when consultations are complete

32. Recommendations

33. To be added when consultations are complete

34. Enforcement, sanctions, monitoring and review

35. The Scottish Agricultural Science Agency carries out the collection of fees for seed certification and seed testing in Scotland. The income levels and fee rates are monitored and reviewed annually.

Contact Brian Cockwell

SEERAD, Plants and Environment Policy Division

Room 125, Pentland House,

47 Robb's Loan, Edinburgh, EH14 1TY

Telephone 0131 244 4451

Fax 0131 244 6539/6509

Email brian.cockwell@scotland.gsi.gov.uk

APPENDIX 1 7.5% Increase

PROFILE OF SEED MERCHANTS IN SCOTLAND

Merchant AThe representative data used below makes the following assumptions:

Throughput:

397 Cereal Seed Lots were entered for Certification 1352 Hectares of Crops were entered for Certification

Using the assumptions above, the existing statutory fees give the following costs:

Merchant B

The representative data used below makes the following assumptions:

Throughput:

21 Cereal Seed Lots and 10 Herbage Seed Lots were entered for Certification

154 Hectares of Cereal Crops and 80 Hectares of Herbage were entered for Certification

Using the assumptions above, the existing statutory fees give the following costs:

Merchant C

The representative data used below makes the following assumptions:

Throughput:

10 Cereal Seed Lots were entered for Certification 58 Hectares of Crops were entered for Certification

Using the assumptions above, the existing statutory fees give the following costs:

* Revised fee levels are based on a uniform increase of 7.5% applied to all fees rounded to the nearest 10 pence.