Meat & Wools $250 million question for farmers

While Federated Farmers believes Meat & Wool New Zealand has refined its proposal to renew its compulsory levy, some sticking points remain.

“The Meat & Wool levy referendum means farmers are being asked a $250 million question,” says Federated Farmers Meat & Fibre Chairperson, Bruce Wills.

“This, after all, is the amount of farmer generated income Meat & Wool expects to receive up until any new levy mandate lapses.

“Federated Farmers is impressed by the way Meat & Wool has responded to the criticism that emerged from its earlier discussion document.

“It’s clear there’s been a lot of soul-searching that reflects how Meat & Wool has listened to the concerns of levy paying farmers.

“Federated Farmers is pleased with plans to dip into Meat Board reserves for $26 million dollars to boost Research & Development (R&D).

“This investment in R&D will take advantage of the Government’s Primary Growth Partnership (PGP) and becomes $52 million with dollar-for-dollar matching. This represents 10 percent of Meat & Wool’s forecast income, or around 20 percent if PGP funding is included.

“Yet some areas of contention remain for farmers ahead of the vote.

“There seems to be an absence of performance metrics in the referendum document. While there is a three percent annual productivity objective, there’s an absence of quantifiable targets or an expected return on programme investment.

“This is important given Meat & Wool plans to increase most levies in graduated steps.

“That said, it seems clear Meat & Wool is aligning its very future with the successful execution of the strategy it is putting to farmers.

“The levy ratchets up between 2010 and 2012, in the case of sheep meat and from 2010 to 2013, in the case of beef.

“The wool levy will actually fall from 2011, reflecting the much hoped for implementation of the wool industry network strategy.

“The area that continues to be contentious is market development.

“Meat & Wool have reduced the proposed annual spend by $4 million but while the cut to this area is welcome, many farmers will still ask why farmers are being asked to support processors.

“It is encouraging to see Meat & Wool take a carrot and stick approach to the meat industry, threatening further market development cuts if the processors don’t get in behind it.

“Yet, there’s a school of thought that believes market development spending by Meat & Wool New Zealand has acted as a crutch for the processors.

“The people element is important to the future of our industry but its future is best guaranteed by successful farm businesses that will boost levy income. We can only hope that by 2015, we’ll see dairy farmers converting to sheep and beef operations,” Mr Wills concluded.