Should levy funds be used for country of origin marketing or be targeted at farm gate issues? Allan Barber reviews the choices ahead of the Beef+LambNZ referendum

By Allan Barber

Next year sheep and beef farmers will have their five yearly referendum under the Commodity Levies Act when they get to vote on whether they wish to continue funding Beef+Lamb New Zealand as their industry good body.

It was a fairly close run thing last time and actually resulted in the motion to continue with wool promotion being defeated, although this is now back on the agenda.

However there is obviously some nervousness about the likely outcome of the next referendum, although this may be unfounded if farmer returns continue to be positive.

One element of B+LNZ’s activity which tends to provoke debate among farmers is the use of funds for overseas promotion.

Within the last 20 years, and especially more recently, there has been an agreement within the meat industry that promotion should be jointly funded by MIA members and B+LNZ.

But it appears there is a feeling at farmer level expenditure of this nature should not continue to be funded as it currently is and funds spent by B+LNZ should be directed behind the farm gate.

This will undoubtedly become a key issue to resolve satisfactorily before the referendum.

B+LNZ has consulted all the individual companies on establishing a separate joint marketing entity which would represent farmers and all MIA processor and exporter members under a similar structure to the Beef and Lamb New Zealand domestic promotional body.

This structure sets a precedent for a jointly funded marketing organisation with its own board and management which in this case will be able to apply for third party support from government agencies such as MFAT and MBIE.

After the last referendum there was talk of the domestic Beef and Lamb organisation taking over the international marketing as well because of its skills and expertise in this area. But that no longer appears to be on the agenda.

The issue with the latest marketing proposal is whether it will be remotely possible to obtain agreement of all MIA members to contribute funds for the purpose of country of origin promotion and, if so, how much. Of the larger meat companies, Silver Fern Farms’ CEO Keith Cooper indicated a strong preference for company brand promotion; other companies are in favour of generic New Zealand promotion in specific markets.

Rather than glossy marketing in traditional markets, he would be prepared to consider some funding for educational promotion in emerging markets. However he questioned how much should be spent in this way and said he was not interested in another quango to administer it.

This is a long running philosophical debate – some farmers are unwilling to keep spending their levies on what they believe should be meat exporters’ responsibility, while others see it as an essential part of their business; and within the MIA membership there is a divergence of views between those that favour country of origin marketing and those in favour of supporting their individual company brand.

It is possible to see merit in each of these points of view, although the least justifiable position would appear to be for farmers to believe they should take no responsibility at all for the generic promotion of their beef and lamb.

The success of New Zealand Lamb in mainly European markets is testament to the importance of country of origin marketing.

The alternative of no New Zealand Inc brand activity, especially if it can attract government support in addition to industry funding, would seem to be a case of the red meat sector shooting itself in the foot.

A compromise solution which satisfies both farmers and companies, while enabling the larger companies to afford support for their company brands would appear to be in the best interests of all the parties.

But B+LNZ has to make sure it gets a yes vote in the referendum next year, while the prospect of all MIA members agreeing on an industry marketing strategy is reasonably far-fetched.

It will be good if everybody involved could work positively for the general good of the sector.

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Allan Barber is a commentator on agribusiness, especially the meat industry, and lives in the Matakana Wine Country where he runs a boutique B&B with his wife. You can contact him by email at allan@barberstrategic.co.nz or read his blog here ».