Farmers told to get serious with marketing

By PHILIPPA STEVENSON agricultural editor

A study of farmer-funded meat marketing has harshly criticised New Zealand's efforts as inconsequential.

Former Australian Meat and Livestock Commission chief executive Dr Bruce Standen said yesterday that the meat industry's only option for future product promotion was "to get serious or get out."

He told producers at the Meat New Zealand annual meeting there was considerable evidence to show targeted, well-conducted market development programmes promoting country-of-origin attributes of beef and lamb were worthwhile. But the New Zealand dollar's devaluation and cuts to Meat NZ promotional spending meant weaker marketing programmes which were ineffective. "Even with consolidation into a few priority programmes, the level of overall expenditure is hardly enough to be effective," he said.

Meat NZ's allocation of $9 million for beef and lamb promotion this year was too inconsequential in a global context.

Dr Standen urged farmers and meat processors to work together. "Any debate about whether company brand promotion can or should replace country-of-origin, generic promotion is an empty, unproductive argument. They are not substitutes. They work when they are mutually supportive," he said.

Dr Standen's hard-hitting review, commissioned by Meat NZ, also lambasted the producer organisation for funding on-farm research at the expense of off-farm technology development. Farm profits were substantially increased for both beef and lamb producers by off-farm productivity improvements, he said. A 5 per cent increase in processor efficiency could deliver a $17.5 million improvement in beef farm profits, and $20 million for lamb producers. But a 5 per cent on-farm productivity improvement would deliver only an extra $4 million to lamb producers. It was likely to cause world prices to fall because of greater production from New Zealand, the world's largest sheep meat exporter. Beef producers would do better - getting an extra $51 million - because New Zealand's low beef exports had little influence on world prices.

Dr Standen was one of several speakers at the Rotorua meeting to advocate for more resources for Meat NZ, to which farmers have contributed 30 per cent less in levies over the past decade.

Producers now contribute about $1075 per farm to the board in levies on stock slaughtered, or on average 0.6 per cent of the farm-gate value of each animal going to the meatworks.

Meat NZ processor director Graeme Harrison, managing director of meat company Anzco, stressed other challenges faced by an industry up against giant companies such as America's ConAgra, the world's largest meat company.

ConAgra's turnover of $US12.9 billion is six times that of the entire New Zealand industry. But it would be just one of the companies New Zealand would have to compete against if the country's favoured access arrangements to the European and US markets were challenged in the future, Mr Harrison said. If New Zealand lost out to Australia or South America, companies here would have to globalise or risk being swallowed up by others, he said.

Agriculture Minister Jim Sutton urged farmers to boost their support of both Meat NZ, and the Wool Board or risk "betraying our future by not being bold and proactive enough."

Spending less is not the only way of balancing the books. "Determining to increase income is more faithful to the Kiwi tradition," Mr Sutton said.

The farmer levy paid to Meat NZ is determined by its directors, and must be approved by the Agriculture Minister. Any change would be made in time for the start of the new season which begins on October 1.

Meat NZ has $107 million of reserves but, under direction from farmers to live within its income, has drawn on these less in recent years. At the present rate of spending, reserves will be $117 million by 2004.