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Making a difference over the next three years

Meat & Wool New Zealand

Growing the Future Conference March 17th 2005 Chateau on the Park, Christchurch

Chief Executive Mark Jeffries

Making a difference over the next three years

Value through performance Making the levy go further The plan ahead

Introduction

Meat & Wool New Zealand was mandated through the 2003 Farmers¡¦ Choice Referendum to collect farmer levies on beef, sheepmeat, goatmeat and wool to undertake industry good activities.

Research and Development, Market Development and Trade Access, Skills and Education, and a range of other activities are funded to support meat and wool farmers and industry.

Following the various legislative and structural changes completed in 2004, Meat & Wool New Zealand has been establishing its credentials as an authoritative, relevant and collaborative organisation to lead many initiatives on behalf of its farmer levy payers. Value through performance

By its nature, Industry Good activities often lack visible commercial outcomes. If they did, you would question why the market place did not pick up the activity rather than using levy funds.

This means that some of the normal measurements available to judge performance (profit, ROI, EBIT, sales, etc) don¡¦t often apply to an organisation like Meat & Wool New Zealand. Instead, we need to approach the measurement and delivery of value back to farmers in several ways. Over the next three years, Meat & Wool New Zealand will demonstrate to farmers and industry the value of its activities through a number of programmes. On-farm

Our new regional co-ordinators will provide a fresh approach to interaction with levy payers. These people will combine economic service data collection and reporting, with extension responsibilities. This will drive a regional presence which integrates our numerous local events with an analytical and reporting process that is more relevant to regional conditions and local business influences. We will be avoiding duplication of effort and delivering to the needs of each region.

For example, regional Monitor Farms and FITT projects will be publicised and presented as an integrated locally-based programme of activities. Regional newsletters will feature local information and provide economic reporting dealing with matters relevant to the area. We will supplement this local information with updates on national and international activities involving Meat & Wool New Zealand.

We will strive to improve co-operation with the many networks operating in the regions. These include service providers such as veterinarians, farm consultants and stock agents, monitor farm community groups, regional sheep and beef councils, Federated Farmers, schools, wool merchants, and the list goes on.

Meat & Wool New Zealand will produce tools, and information, and promote forums for farmers that attract rural professionals to participate and use the outcomes from levies. Three examples of this already include the Central Progeny Test project, Monitor Farms and the new ForageMaster Workshops.

Throughout the 22 ForageMaster workshops held over the past eight weeks, stock agents, vets, seed companies and fertilizer companies discussed with the farmers in the audience common problems and solutions. This is exactly where we want Meat & Wool New Zealand to be ¡V producing practical and relevant outcomes.

In the ForageMaster Workshops, the software developed by AgResearch with your Meat & Wool New Zealand levies, acts as a catalyst for farmers to analytically approach decisions around choice of forage together with general information on how to make the best of the local conditions on their enterprise. Most of the messages aren¡¦t new. We have repackaged a number of concepts and research outcomes for farmers who can take away a tool that¡¦s easy to use and directly applicable to their own operations.

We want more of this.

Using the ForageMaster concept of packaging information into a practical on-farm tool, and providing expert advice in a workshop forum can be considered for a number of on-farm activities ¡V e.g. lambing, employment, drench usage, breeding.

Meat & Wool New Zealand will seek farmers¡¦ views over the next few months on ideas and priorities for us to develop this concept. Our current view is to establish a priority set of tools to develop over the next three years. Then we will use this process to establish a variety of R&D and extension programmes to support this focus. Off-farm
Meat & Wool New Zealand works with other companies to support several off-farm activities to ensure the levy spend is delivering practical and valuable outcomes.

We have Advisory Groups involving meat processors to oversee our R&D portfolio for meat quality and processing. Another industry group oversees our investments into Wool processing and environmental impacts.

We must continue to strive for market-driven R&D objectives. We will continue to seek farmer input alongside participation and resources from commercial players in the supply chain ¡V whether that be in R&D, meat market development, international wool technical services or trade policy and market access.

For Meat & Wool New Zealand to deliver on outcomes of true benefit to the levy-payers we must demonstrate the relevance of our activities in the supply chain and feed this news back to farmers.

Meat & Wool New Zealand is uniquely placed to bridge commercial initiatives and government policy in a range of activities. One of the most important is in the arena of trade policy and market access. We have lifted levels of co-operation with other sector representatives to promote a common industry view to government in such areas as Free Trade Agreements and WTO negotiations. Making the levy go further

In 2004 we targeted collaboration as a major opportunity to achieve our objectives on behalf of farmers and industry. By partnering with others we sought to ¡§stretch our levy funds¡¨using resources of others alongside our own to develop new programmes and achieve outcomes faster and more cost-effectively.

Across our total activities this year, $32.5million of levy funds have been matched by another $99million in cash and resources from government, industry, and offshore collaborations.

Your organisation is responsible for managing or participating in programs worth over $132m per annum for the benefit of New Zealand¡¦s meat and wool industries.

Examples include the Meat and Livestock Australia agreement on meat quality and electronic systems for enhanced meat processing, the Australian Wool Innovation agreement on wool harvesting, and the Australian Co-operative Research Centre for Beef Genetic Technologies.

The consortia model brings New Zealand government funds alongside industry contributions. Meat & Wool New Zealand is involved in millions of dollars of investment each year on farmers¡¦ behalf to generate outcomes, some of them long-term. We currently have medium-term and blue-sky programmes in sheep genomics (Ovita), grass and clover genomics (Pastoral Genomics), functional foods from meat (Meat Biologics), and green-house gas mitigation research (Pastoral Greenhouse Gases Research Consortium).

This funding leverage is critical to ensuring that we have sufficient capability to achieve our objectives, many of which are expensive, and many have considerable technical risk associated with a successful outcome. We routinely review these projects to ensure focus and delivery for New Zealand farmers. The plan ahead

Meat & Wool New Zealand has identified several priorities to potentially receive additional resources. Over the next four months, we will seek farmer and industry views on our ideas to reassess the balance of our total portfolio of activities. By July we will have conducted a number of forums to encourage levy-payers to have their say on what is important to them.

In the meantime, Meat & Wool New Zealand has conducted several consultation meetings over the last four months to develop a preliminary list of priorities.

Skills and Education

In 2004/05 levy funds have been directed to AgITO where we receive government leverage of approximately 3:1. The AgITO organises training in areas of wool handling and harvesting (1030 students), and for sheep/beef trainees studying for a National Certificate in Agriculture (946 students).

We have identified in conjunction with a new Meat & Wool New Zealand Skills & Education Mentor Group that many gaps exist in this area. Also, our involvement with a pan-sector project involving the Sustainable Farming Fund has also highlighted deficiencies in the programmes for New Zealand agriculture and horticulture.

In the next three years Meat &Wool New Zealand together with other organisations intends to focus on several key S&E areas: „h Careers Promotion o Ensuring opportunities in agriculture are recognised „h Schools Curriculum o To promote an awareness of agriculture „h Farmer Training o Supporting people through their careers „h Leadership training o Encouraging farmers to participate in New Zealand¡¦s leading export earning industry Market Development

Meat & Wool New Zealand convenes the Meat Promotion Group which comprises the major New Zealand meat exporters. Together with meat marketing executives from these companies, Meat & Wool New Zealand develops focused meat promotion strategies to retain and enhance market returns for New Zealand beef and lamb in key export markets.

The major initiatives over the last few years have been our UK campaign focusing on the New Zealand Lamb leg, the promotion of New Zealand Beef in North Asia and continuation of the ¡§Red Meat Feel Good¡¨ New Zealand promotional activity.

New Zealand meat companies are suggesting that more resources from Meat & Wool New Zealand in South Korea, Taiwan, and Japan are important at this time to build demand for New Zealand Beef in these markets on the back of market share growth achieved in 2004/05 due to the absence of North American beef imports.

Over the next three years, Meat & Wool New Zealand will continue to assist New Zealand beef exporters with their new commercial relationships through our promotional activities. If Meat & Wool New Zealand does increase its spend in this area, these new programmes will be funded 50:50 by the meat companies. China

China buys more than 20% of New Zealand wool exports. China has become the global centre for wool processing and manufacture. China also has the largest sheep flock in the world. To support our NZ$1billion wool industry, we must understand the dynamics of the Chinese industry and enhance our relationships with scourers, spinners and manufacturers to ensure New Zealand wool retains its premium status, while promoting greater demand for wool against competing fibres.

China is an important destination for several New Zealand sheepmeat and beef cuts. With an ever-increasing middle-class, demand for beef and lamb will climb. New Zealand meat exporters are exploring opportunities for new markets for different products.

Meat & Wool New Zealand plans to resource a comprehensive market intelligence project to support our meat and wool industries. Alongside other organisations, we will continue to assist and encourage New Zealand Government agencies to achieve the best outcomes from the current FTA negotiations for New Zealand meat and wool.

We currently support an office in Beijing for Wool Interiors. These people provide important technical support to Chinese carpet manufacturers. We intend to discuss with Australian Wool Innovation opportunities to share intelligence and other resources to ensure we have a cost-effective presence with that industry in this important market.

Meat & Wool New Zealand covers a significant breadth of activities. As well as the issues raised in this paper, priority for resourcing over the next three years will be given to:

- Biosecurity
- Animal Identification
- Food Safety
- Market Access (including WTO and FTA negotiations)
- Environmental management

Meat & Wool New Zealand has identified these issues as being key drivers in the next few years to the ongoing prosperity of the meat and wool sectors.

Over the next few months we will seek to consolidate our priorities based on discussions with farmers and industry. In September we will decide on the budget for Meat & Wool New Zealand for 2005/06 and the levy rates to apply.

We look forward to your participation in this process.

ENDS

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