There is to be no joint beef and lamb marketing entity between red meat farmers and processors, it has been decided. Responsibility for red meat promotion will now lie with the processors.
Beef + Lamb NZ (B+LNZ) had proposed a collaborative 50:50 funded market development entity for its next commodity levy cycle from 2016-2022, focusing on country of origin promotion. The model was based on talks with meat companies over the past two years.
The review was valuable but, in the end, commercial considerations resulted in meat processors and exporters deciding not to make the proposed 50 percent contribution to the proposed $8 million programme, says MIA chair, Bill Falconer.
According to Falconer, the proposal was put forward by B+LNZ in order to reduce the funding by farmers under their Commodity Levy. Traditionally, B+LNZ and its producer board predecessors have undertaken the generic marketing of beef and lamb, which latterly has been funded by Beef + Lamb New Zealand through its commodity levy from farmers, he explains. Industry marketers (processors and exporters) have invested in their own promotional programmes and customer specific activity.
Falconer says that processors already invest more than $8 million in their own brand promotions and this will increase as new markets are developed.
“Considerable time was spent usefully exploring the possible content and cost of a country of origin programme. However, a solution could not be identified justifying processors
assuming 50 percent of the cost over and above the marketing investments they are
committed to making and growing. Processors investment will continue to be directed to the product and consumer branded activities they develop with their distributors and retailer partners in existing and developing markets,” he says.
B+LNZ chair disappointed
B+LNZ chairman James Parsons says his organisation had had a lot of dialogue and constructive discussions with processors, considering how market development could be funded and delivered in the future.
“Naturally, after all the hard work, it’s disappointing that we weren’t able to get agreement. However, we respect processors preference for their own commercially-focused marketing given they are the ones who sell the product. What became apparent over the two years of one-on-one meetings and workshops with meat companies was the wide ranging views on how we should promote New Zealand’s sheepmeat and beef.”
Parsons said, while a joint marketing entity was not landed, importantly the processors have acknowledged that by choosing not to be involved in joint market promotion with B+LNZ, they are accepting responsibility for red meat promotion and additional investment will be needed by them.
“We know from our own independent research that farmers place a lot of value on the promotion of beef and sheepmeat in our international markets. Pleasingly, a number of processors I’ve talked with one-on-one have told me they will accept responsibility for this work through their own commercially focused activities. That’s a positive outcome.
“The B+LNZ board and senior management team is now taking a deep breath and considering next steps before we shape up our final proposition to put to farmers for the 2016-2022 commodity levy cycle. We are a grassroots farmer organisation governed by farmers, so our fundamental rule of thumb when directing farmers’ investment is that it must deliver value back behind the farm gate.”