Should we have a Compulsory Commodity Levy (CCL)?

1
Securing the future for the NZ Peony Industry

• Should we have a Compulsory Commodity Levy (CCL)?

2
Why do we need a CCL?

• unify our industry
• enable a fast reaction to problems eg LBAM
• provide quality management and administration
• marketing support to promote NZ peonies
• RD programme with immediate, medium and long
  term goals

3
What does success look like??

• Unified industry
• Entry into export markets ensured
• Increasing volumes of high quality exports
• Maintain or increase per stem prices
• Reduced costs (eg transport)
• Increasing profitability from export and local
  sales
• Sustainable industry practices
• Care for the environment

4
What would the CCL be spent on?

• Under the regulations, NZPS may spend levy money
  for the following purposes related to peonies and
  peony growers.
• Quality assurance
• Education technology transfer
• Market promotion support
• Product research and development
• Industry information
• Day to day administration

5
Investment in RD

• Immediate term maintain market access improved
  productivity per plant
• Medium term new, safe fumigants sustainable
  pest and disease management improved storage and
  vase life, rapid propagation methods
• Long term new cultivars
• CCL funds will leverage other RD funding

6
RD immediate term

• Maintain market access ensure NZ Peony growers
  can respond to and meet future export compliance
  issues eg LBAM in 2008
• Improved productivity more stems per plant, via
  fertiliser field trials with growers

7
RD medium term

• Sustainable pest and disease management retain
  predators beneficial organisms
• Improved storage modified atmospheres, and
  additional cheaper transport options
• Disinfesting stems investigate the use of
  fumigants for disinfestation for export
• Faster propagation new research to enable rapid
  build up and distribution of new elite cultivars

8
RD Long term

• New cultivars work with NZ breeders
  researchers to select, breed and PVR protect
  elite new cultivars

9
Marketing support promotion

• How to sell more peonies?
• Proposed Market support
• Export Markets
• Domestic Markets
• Opportunities for promotion
• Who can help market peonies?
• Other needs for marketing funds

10
How to sell more peonies?

• Marketing
• Expanding existing markets
• Finding new markets
• New improved/unique varieties
• Improve flower quality, packaging, freight
• Improve supply longer season, higher volumes,
  more reliability of supply

11
Local Market opportunities for promotion

• Billboards/Posters Campaign
• National posters eg Peonies are coming
• Product placement
• Eg on TV programmes like Breakfast Show, or in
  films (Floramax specialist companies will
  arrange this for a fee)
• Joint Venture with Flowers Works Wonders
  (Floramax levy promotion scheme)
• Target Special Events eg 2011 Rugby world cup
• Runs from early September to the final on 23
  October

12
Export Market Development Promotion

• Expand existing markets work with exporters and
  Ministry of Foreign Affairs Trade (MFAT)
• Develop new markets eg Australia (MFAT and
  AsureQuality sources of advice)
• Target Special Events eg expos, trade fairs
• Eg 2010 World Expo in Shanghai
• NZ pavilion Cities of Nature Living between
  Land and Sky
• Runs from 1 May to 31 October 2010 - opportunity
  for Peonies on stand

13
Quality standards development

• Meeting GlobalGap requirements for market access
• Developing pest-control protocols for market
  access
• Developing improved standardised packaging,
  storage and coolchain movement of peonies

14
How would a CCL work?

• Levy set at agreed of gross sales or cents per
  stem from sale of peony stems (export and local)
• NZPS membership 30.00
• 150 members

15
Projected CCL income in 2010/2011
- example (assuming a levy at 1.5 of gross
sales)

• Levy on export stems
• 1.5 of 1.8 / stem x 1.2 million stems
  32,400
• Levy on local stems
• 1.5 of 1.20 / stem x 800,000 stems
  14,400
• Membership
• 150 at 30
  4,500
• TOTAL projected income
  51,300

16
Projected CCL income in 2010/2011
- example (assuming a levy at 2.5 cents per stem)

• Levy on export stems
• 2.5cents per stem x 1.2 million stems
  30,000
• Levy on local stems
• 2.5cents per stem x 800,000 stems
  20,000
• Membership
• 150 at 30
  4,500
• TOTAL projected income
  54,500

17
Projected CCL expenditure in 2010/2011 -
example only

• 1. Research development 22,000
• Sustainable Farming
• Fund etc
  30,000
• 2. Market promotion 5,000
• 3. Quality mgt/market access
  9,300
• 4. Day to day administration 15,000
• 
  Total 81,300
• 
  

18
FREQUENTLY ASKED QUESTIONS

• What commodity would be levied ? Peony Stems
• Who would pay the levy?- all growers who sell
  Peony stems
• How would the levy be paid?- at the first point
  of sale

19
FREQUENTLY ASKED QUESTIONS (cont)

• If voted in, how long would the CCL levy remain
  in place? for 6 years, when growers then vote
  on CCL again
• Is there a maximum levy - yes, a maximum levy is
  part of the proposal on which all growers vote,
  every 6 years.
• What is the maximum levy proposed for the next 6
  years 2.5 or 4 cents

20
FREQUENTLY ASKED QUESTIONS (cont)

• What is the proposed levy for the first year of
  the CCL 1.5/2.5 cents
• How is the actual levy set for the remaining 5
  years at the AGM each year for the following
  year at a level no greater than the maximum. In
  any year that the levy rate is not approved at
  the AGM of NZPS then the levy remains at the rate
  last set.

21
FREQUENTLY ASKED QUESTIONS (cont)

• How will the levy be calculated as the set
  levy rate x the value of all stems sold for
  each grower or cents x number of stems sold for
  each grower
• Can I have a say on how the CCL money is to be
  spent? absolutely yes, via formal discussion at
  each years AGM
• How will I be notified of the rate of the levy
  each year? at the AGM, by the NZPS and in The
  Gazette

22
FREQUENTLY ASKED QUESTIONS (cont)

• Are there any activities on which the levy could
  not be spent? - commercial or trading activity
• What would happen to the commercial information
  about me that is collected?- information about
  you will not be divulged in a form that
  identifies any individual grower. The total
  collected information will be used for
  statistical and research purposes but in a form
  which does not identify any individuals or
  individual trading entity.

23
Recommendations

• The NZPS Executive Committee strongly recommends
  that
• The Peony industry agrees to a CCL
• The CCL is collected from the 2010 harvest
  onwards

24
What is the alternative?

• Lack of unity within the NZ Peony industry
• Increased competition from other country
  exporters
• NZ Peonies lose their uniqueness
• Steadily falling prices per stem
• Costs keep rising
• Little or no profit
• No new growers
• Peony export sector will die out as growers age
  and retire

25
Conclusion

• The Peony industry still HAS a great future
• But we must unite as an industry
• And we must innovate
• RD programme is the key to our success
• CCL is vital to funding the RD programme
• No CCL No future Peony industry