Meat Industry LeviesTuesday, May 20, 2003
Since the industrial revolution farmer producers have had to contend with the tyranny of market imperfections imposed by urban market structures which favoured the fewer traders at the expense of the many producers.
Over time producer groups have been formed and modified with the objective of maximising “industry good” from their collective activities. Initially these activities were funded by voluntary contributions and subsequently by statutory levy.
That there has been benefit from the activities of primary producer boards during the course of their lifetime cannot be disputed. The significance of the role played by the Meat Wool and Dairy boards in developing a profitable pastoral industry is evidenced by the continuing importance of those industries to the national economy.
The current proposals for restructuring of Meat New Zealand appears to be getting bogged down in how closely its operations should integrate with the daily marketing operations of meat processors, exporters and marketers.
The easy part for producers is agreeing that levies should continue to be collected for and be managed by the boards; the hard part has been deciding how those resources should be allocated for maximum producer benefit.
Farmers are agreed that there are three core components to “industry good” activities; research and development, market development and trade access. The confusion and distrust arises where levies are applied to fund the activities of traders and marketers. In effect a producer subsidy of day to day market activities.
It is understandable the beneficiaries of producer largess of the past are reluctant to be denied access to it in the future. But that is nature of welfare payments – they become indispensable in the mind of the recipient.
The decision facing meat producers is where the line should be drawn between expenditure which purchases an enduring “industry good” and sales and marketing expenditure that by its nature and immediacy of realisation should be recovered from the market in the normal course of trading.
Producers will be aware that meat buyers and processors are skilled in the art of persuasion but in this instance producers should not be persuaded that levies be gifted into a meat traders marketing budget.