18 Mar 2022 Red meat sector’s resilience highlighted at New Zealand Meat Board Annual Meeting
Media release
Red meat sector’s resilience in face of headwinds highlighted at New Zealand Meat Board Annual Meeting
The New Zealand Meat Board (NZMB) now oversees $2.3 billion of red meat exports to the quota markets of the European Union, United Kingdom and United States, meaning tariff savings of $839 million a year for the sector, farmers were told at the Board’s Annual Meeting this week.
Andrew Morrison, chairman of the NZMB, said the Board’s effective quota management role continues to help underpin the sector’s success as it marks 100 years since the first board meeting convened in March 1922.
“The NZMB now manages two new quotas following the withdrawal of the UK from the EU in 2020, UK Sheepmeat and Goatmeat and UK High Quality Beef. This is in addition to the existing EU Sheepmeat and Goatmeat, EU High Quality Beef and the United States Beef and Veal quotas.
“However, the Board’s duties will grow further with NZMB taking on responsibility for the administration of the transitional Free Trade Agreement quotas between the UK and New Zealand once the deal is ratified by both countries.”
New Zealand trade has been resilient in the face of the UK’s exit from the UK, says Mr Morrison, who hosted the online meeting on Tuesday 15 March alongside NZMB CEO Sam McIvor.
“The UK and EU proceeded with their plan to split the quota between the two markets. Negotiations around the quota splits with both the UK and the EU27 are ongoing.
“However, we anticipate that a nominally greater share than the originally proposed quota split will be allocated to the EU27 to reflect the market access outcomes of the New Zealand-UK FTA. We are working closely with the New Zealand Government to ensure negotiation outcomes are implemented alongside the UK FTA outcomes.
“It is critically important that we keep quota administration in New Zealand to maintain the quality of our quota access and give certainty to companies in export planning.”
The NZMB also has responsibility for $82.2m of farmer reserves with $61m of a contingency fund including $2.7m for quota market contingencies and a remaining $21m of general reserves.
“This provides crucial funding to assist in a major industry crisis to re-open export markets, maintain prudent level of net assets to avoid jeopardising quota markets and the integrity of quota management systems, and deliver funding for industry-good activities such as genetics,” says Mr Morrison.
Sam McIvor, chief executive of the NZMB, said the board performed well in the face of disruption caused by COVID-19.
“The NZMB was prepared, we pivoted quickly to work remotely and benefited from an intensive programme of staff support, resourcing and resilience tools.”
The Board also carried out a review of the cost of operating the NZMB to ensure the fees are sufficient to meet the delivery requirements, he said.
A statutory audit of NZMB’s quota management systems by the Ministry for Primary Industries (MPI) concluded the NZMB complied with the Meat Board Act.
“The NZMB has once again provided world-class service to our industry and proved it is a trusted custodian of industry reserves.”
The Board is recommending it invests up to $1 million a year in the ground-breaking Informing New Zealand Beef (INZB) genetics programme, which is focused on increasing the uptake of the use of genetics in the beef industry.
“The decision would see the NZMB joining MPI and Beef + Lamb New Zealand (B+LNZ) in supporting the seven-year Sustainable Food & Fibre Futures (SFF Futures) partnership, which aims to boost the sector’s profits by $460m over the next 25 years.”
The NZMB is currently working through feedback from farmers on the proposal.
The Board reported a surplus of $5.8 million from reserves and quota management. Quota management activities recorded a deficit of $331,000 with quota management reserves drawn upon as the NZMB worked through BREXIT issues.
A surplus of $6.1 million was reported from reserves management, which includes investment gains of $5.9 million. The investment fund returned 10.2% after fees and taxes compared to 2.91% in the 2020 year.
After fees, tax and inflation, the actual return on the investment fund was 5.3%, which exceeds the NZMB’s medium term target of 3.3%.
The NZMB’s balance sheet remains strong with net assets of $82.2 million, said Mr McIvor.
Two resolutions were passed at the Annual Meeting.
The director fees pool for producer and industry directors will be increased to $147,500 per annum from $144,200. KPMG has also been appointed as New Zealand Meat Board’s auditor for the year ending 30 September 2022.