The Path to 2020
The Path to 2020
DINZ 2015-2020 strategy:
- Premium positioning of NZ deer products
- Market development and diversification
- Sustainable on-farm value creation
- Cohesive and respected industry
DINZ plans its activities every six years. The previous work plans – from 2009 to 2014 – enjoyed many successes.
Unfortunately these were often obscured by an extremely weak Euro and a relatively weak US dollar. As a result, venison schedule prices were poor at a time when dairy prices were going through the roof. Meanwhile velvet enjoyed a 5-year run of strengthening demand and improving prices.
In response, many deer farmers reduced their hind numbers in favour of more velvet stags, sheep and cattle, or dairy grazers. For six years, the hind kill kept venison production fairly constant, but each year the breeding herd got smaller.
Now, with our 2015-2020 work plans underway, our industry is on the cusp of another cycle of change.
With dairy and lamb returns soft and venison prices recovering, many farmers appear to be rebuilding their breeding herds and continuing to increase velvetting stag numbers. This is reducing the venison kill and driving venison prices higher.
While these market changes provide a welcome backdrop for our activities, the major drivers of our plans have not changed:
- Building buyer preference for our products in traditional markets, at the same time as we develop new markets that want year-round supply and pay premium prices
- Increasing deer farming productivity to match increases in other livestock industries. Providing deer farmers and their staff with the knowledge, confidence and motivation to do this
- Catering for the deer difference in animal health and welfare, research and genetics, environmental standards, training and much else.
Funding for our work comes from levies on venison and velvet, plus co-funding from government for research. In addition, we are making a major investment in the Passion2Profit strategy that is being funded 50:50 by government and the deer industry.
To fund our share, we are relying very much on DINZ reserves, but these will not be enough. From October 2016 we are proposing a small increase in the venison levy.
DINZ Income and Expenditure, pdf download
A total annual investment of around $2 million a year in P2P is designed to transform the way we farm deer and market our venison. The goal: to make venison farming more profitable, so that more farmers are attracted to producing the world’s best meat.
Levies on velvet and venison enable DINZ to invest in activities that benefit everyone in the deer industry.
The money generated is also used to leverage additional funds from government for research and market development. This greatly increases the funds available.
For example, in 2015/16 a levy investment of $530,000 by DEEResearch will attract co-funding of nearly $1.5 million. A DINZ investment of $1 million in P2P will be matched dollar for dollar by the MPI Primary Growth Partnership.
Proposed levy increase
To fund our share of P2P and to continue the other work we do for deer farmers and those who process and market our products, we are proposing a small increase in the venison levy from October 2016.
From October 2016 DINZ proposes to increase the venison levy by 3 cents a kilogram. The increase, the first in 10 years, is needed because income from the venison levy is falling at the same time as expenditure on P2P is increasing.
Half the venison levy is paid by farmers and half by processors, so the increase will be 1.5 c/kg each, or 84 c/head on a 56 kg carcase.
The new venison levy of 22.69 c/kg is expected to generate $4.25 million in 2017, down to $3.8 m in 2020, reflecting a predicted ongoing decline in the deer kill. Of this, about $1 m a year will go to the Tb-free programme.
Without the increase, the income from the levy would fall to $3.7 m in 2017 and $3.3 m in 2020 and DINZ would be unable to fund its share of P2P. Even with the levy increase, DINZ is using around $4 million in reserves to help fund P2P. By the end of 2020, these reserves will be virtually exhausted.
In 2014/15 (not counting P2P) 32% of DINZ expenditure was on venison- or velvet-specific work, 35% on industry-good work, 22% on the Tb-free programme and 11% on DINZ overheads. These proportions vary slightly from year to year depending on circumstances.
Research, policy support and communications make up a big part of the funds devoted to industry-good. When it comes to supporting specific products, DINZ funds work that is specific to velvet from the velvet levy and work specific to venison from the venison levy.
Because velvet production is increasing and velvet is not directly included in P2P, there is no need for an increase in the velvet levy. The levy on velvet of 325 c/kg is paid by farmers. In 2015 it generated $1.9 million.
Growth in the velvet levy will enable DINZ to invest more in building demand in the healthy foods sector in Asia. The companies involved value the quality and integrity of NZ velvet and are our best prospect for building long-term demand for our growing velvet production.
DINZ has the power to set levies under the Deer Industry New Zealand Regulations 2004. It does this after consulting with levy payers, including the venison exporters and the NZDFA.
The path to 2020, PDF download