corporate plan for meat promotion wales (hcc) 2018-2021 · 2019-06-12 · swot analysis 12 delivery...

Hybu Cig Cymru

Meat Promotion Wales

Hybu Cig Cymru


Corporate Plan for Meat Promotion Wales (HCC) 2018-2021

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Contents Page

Executive Summary 2 About HCC 4 Introduction 5 Current status of the Welsh Red Meat Sector 7 SWOT Analysis 12 Delivery Mechanisms (2018-2021) 16 Finance 28 Monitoring and evaluation 31 Annex 1 - Graphical presentation of financial summary 32

Hybu Cig Cymru

Hybu Cig Cymru


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Executive Summary The Strategic Action Plan for the Welsh Red Meat Industry (2020 Vision) sets out the strategic direction for HCC, to work towards “a profitable, efficient, sustainable and innovative Welsh red meat industry which benefits the people of Wales, which is resilient to political and environmental change, and is capable of responding competitively to ever changing market trends”. However, the impact of the UK’s decision to leave the EU (Brexit) and its impact on future trade relationships with the EU on the Welsh red meat industry is uncertain. The negotiations regarding the terms for Brexit have commenced and unless this process is extended, the UK is scheduled to leave on 29 March 2019. Given the reliance of the Welsh red meat sector on the EU for more than 90 per cent of its red meat export trade, the consequences could however be profound. Therefore the HCC Board feel it is timely to revisit the priorities of the Strategic Action Plan, to ensure they are focused on supporting the long term aspirations for the sector and to help sustain a viable red meat industry in Wales post-Brexit. The HCC ‘Vision to 2025’ sets out the focused strategic direction for HCC and identifies the investment priorities which will contribute to the profitability, sustainability and global competitiveness of the red meat and livestock industry. Nine priority areas form the foundation of HCC’s vision.

2025 Vision - Priorities

Positioning red meat from Wales as a premium product

EU trade opportunities developed for Welsh red meat

Domestic (GB) consumption of red meat from Wales maximized

New consumers for Welsh red meat sought in established markets

A greater percentage of Welsh red meat exports outside the EU

Development of a competitive Welsh red meat industry

Reduction in the impact of Welsh red meat production and processing on the climate, the environment and waste

Contingency planning in terms of future trade, production and processing post-Brexit

Effective communication throughout the industry to ensure unity of purpose

In line with the Strategic Action Plan and HCC’s vision to 2025, this Corporate Plan (2018-2021) identifies six delivery mechanisms for the next three years, sets out key performance indicators and outlines expected outcomes.

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HCC Delivery Mechanisms (2018-2021)

Develop export markets for Welsh red meat

Develop home markets for Welsh red meat

Develop red meat brands and products to create and sustain a strong and competitive brand position

Collate and disseminate market intelligence and research at Wales, UK and global level

Support relevant programmes of R&D activities

Facilitate and encourage supply chain efficiency

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About HCC Purpose and Mission HCC is the industry-led levy body organisation responsible for the development, promotion and marketing of red meat from Wales. HCC collaborates with all sectors of the red meat industry – from farmers to retailers – and works to build the industry and develop profitable markets for PGI Welsh Lamb, PGI Welsh Beef and pork from Wales. In the UK and in many important markets worldwide, HCC works with processors to strengthen business opportunities and undertakes regular promotional programmes. Across the whole supply chain, HCC undertakes research and development, shares information and supports training, to ensure the Welsh red meat industry is in a position to improve quality, increase cost-effectiveness and add value to Welsh red meat products. Funding The principle source of income of HCC is derived from Welsh Red Meat Levy which is jointly paid by producers and slaughterers/exporters, raised on all cattle, sheep and pigs slaughtered in Wales (which are fit for human consumption) or exported live. Board of Directors HCC is wholly owned by Welsh Ministers and appointments to the HCC Board are made by the Welsh Ministers in accordance with the provisions of the Government of Wales Act 2006. The HCC Board comprises 11 non-executive directors (including the Chairperson). The current HCC Board took office in April 2017 for a three-year period (membership can be viewed at www.hccmpw.org.uk/about_hcc/hcc_board). The HCC Board is representative of farmer and processor levy payers and others who possess skills relevant to the future development of the organisation. In addition to the Board, a range of Committees exist to carry out development and advisory work on an ongoing basis.

http://www.hccmpw.org.uk/about_hcc/hcc_board

http://www.hccmpw.org.uk/about_hcc/hcc_board

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Introduction The Strategic Action Plan for the Welsh Red Meat Industry (2020 Vision) was prepared by HCC in close consultation with the Welsh red meat supply-chain and the Welsh Government. The Action Plan identifies the priorities, objectives, targets and actions for the Welsh red meat industry that will help to address key challenges and bring about a positive impact on the employment and the growth of the rural economy in Wales. The Action Plan is intended to provide a pathway forwards whilst being flexible enough to allow the Welsh red meat industry to respond to changing circumstances in a timely and appropriate manner. It seeks to be ambitious, yet realistic. It is outcome driven and, as such, specific financial targets for 2020 are included in order to provide a clear and focused measure of success. The vision for the Strategic Action Plan is “a profitable, efficient, sustainable and innovative industry which benefits the people of Wales; a red meat industry which is resilient to political and environmental change and capable of responding competitively to ever changing market trends”. It identifies two strategic priorities:

Increase demand for Welsh red meat products (thereby increasing sales and returns); and

Improve production efficiency (thereby increasing quality supply) whilst maintaining the environment and landscape of Wales.

HCC Vision In light of the uncertainly brought about the UK’s decision to leave the EU (Brexit), the HCC Board felt it was appropriate to revisit the priorities of the Strategic Action Plan, to ensure they were focused on supporting the long term aspirations for the sector and to help sustain a viable red meat industry in Wales post-Brexit. The negotiations regarding the terms for Brexit have commenced and unless this process is extended, the UK is scheduled to leave on 29 March 2019. The HCC Vision to 2025 considers the strategic risks in terms of trade, production and processing of red meat from Wales, not least of which is the substantial contribution that agricultural support currently makes towards profitability. It also considers possible longer-term opportunities. However, uncertainty regarding trade arrangements for the UK and the future status of the workforce in Wales (which includes highly skilled migrant workers) means that it is still very difficult to predict and to direct activity for a Welsh red meat sector that is currently reliant upon the EU for more than 90 per cent of its red meat export trade. The impact of Brexit has not changed the aspirations of the Strategic Action Plan but it does present significant challenges for the Welsh red meat sector in terms of how the vision is achieved.

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HCC’s vision provides strategic direction for the red meat sector through to 2025. It sets out a direction for how the HCC Board believe that Welsh Red Meat Levy monies should be focused in order for HCC to undertake its statutory functions in a way that will bring maximum benefit on behalf of the whole sector in a post-Brexit economy. Given the scale of the Welsh red meat industry (and the Welsh sheep sector in particular) and the continuing need for export markets to balance demand in the domestic (UK) market to maximise producer returns, the following nine priority areas form the foundation of HCC’s vision.

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Effective communication throughout the industry to ensure unity of purpose

In line with HCC’s vision to 2025, this Corporate Plan now sets out the key areas of work that have been prioritised by HCC’s Board of Directors for the effective use of Welsh Red Meat Levy monies during the three year period from 2018-2021. The success of this Strategic industry Action Plan relies on close working between governments, FSA Wales, Natural Resources Wales, HCC and all industry stakeholders.

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Current status of the Welsh red meat sector Red Meat Consumption

The overall long term trend in lamb, beef and pork consumption continues to be one of decline. Changing demographics of smaller households with busy lifestyles and the need for quick and easy meal solutions continue to drive demand. Within this there has been a move for a more consistent size of carcase that can be processed into cuts more cost-effectively. Price remains a key driver and red meat faces increasing competition from cheaper sources of protein such as chicken, fish and non-meat proteins. Demand for beef has remained relatively static although the perceived inconsistency in its eating quality remains a challenge and can affect consumer purchasing.

Alongside this, the wider social and political factors continue to exert considerable influence on consumer purchasing. Public perception of the possible adverse affect of red meat within their diet on health and the move towards flexitarian eating is increasing. These, together with open debate on the environmental impact of livestock production, present particular challenges with respect to red meat consumption. Whilst Brexit may stimulate consumer demand for home-produced goods this must be considered in relation to these constraints as well as to the relatively high costs of production and a highly seasonal supply (lamb).

This generates increasing pressure to develop new, innovative and healthy Welsh red meat products that can provide versatile solutions and assist in achieving carcase balance.

There is also increasing need to educate consumers about the importance and health benefits of red meat as part of a balanced diet and to counter the sometime negative public perception of a subsidised industry that has an adverse effect on the climate. Trade in Red Meat from Wales

With only five percent of the red meat produced in Wales consumed in the home (Wales) market, Wales continues to be heavily dependent on domestic markets - particularly England - and global export markets. More than a third of red meat produced in Wales is exported outside the UK, predominately to the EU. In 2016, close to 26,200 tonnes of sheepmeat and nearly 15,000 tonnes of beef were exported from Wales, which alongside exports of skins, hides and offal were estimated to be worth £185 million. These overseas markets are also crucial to help ease the continuing strain on carcase balance by seeking the highest value markets for the different cuts. Markets where there is demand for lower-value cuts and offals can deliver improved returns to the Welsh industry, as these cuts have little or no value on the domestic market.

The ability to attract a premium for Welsh red meat is key to success and it will be important to maintain PGI status or an equivalent protected food name status for Welsh Lamb and Welsh Beef. Opportunities to build on the PGI brand to include other factors such as eating quality and consistency must be explored.

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In addition to existing EU and non-EU markets, HCC is currently working alongside Governments to achieve market access for Welsh red meat in USA, China and Saudi Arabia. The potential impact of Brexit on trade in red meat from Wales and sheepmeat in particular could be profound. The possible scenario of a “hard Brexit” with no trade deal in place between the UK and the EU would see the UK revert to trading with the EU on the same basis as other World Trade Organisation members, with UK exports subject to MFN tariffs. The Agri-Food and Biosciences Institute (AFBI)1 predict that this would lead to significant disruptions to trade between the UK and EU-27 countries and producer prices in the sheep sectors are projected to decrease by 30%. A radical unilateral trade liberalization arrangement, where tariffs on imports from the EU and the rest of the world are reduced (or even zero) would have an even bigger impact with scenario producer prices in the beef and sheep sectors predicted to decrease by 45% and 29%, respectively. Free trade deals with countries outside of the EU who have a potential high demand for red meat from Wales are appealing but the timescales required to negotiate these are likely to be considerable. The reliance of the Welsh red meat sector on export markets does, however, bring with it a susceptibility to political and economic volatility and the value of the pound. Efforts must therefore be made to identify and develop markets that can spread both the economic and political risks.

1 Impacts of Alternative Post-Brexit Trade Agreements on UK Agriculture: Sector Analyses using the FAPRI-UK

Model, John Davis, Siyi Feng & Myles Patton (Agri-Food and Biosciences Institute) and Julian Binfield (University of Missouri), August 2017.

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Production and Processing

The Welsh red meat sector currently accounts for the largest share of Welsh Agricultural Output (45%, worth a forecasted £648 million, in 20162). In 2015 the Welsh agricultural industry directly supported a workforce of around 58,3003 people.

Red Meat Processing

There are currently 19 operational red meat abattoirs in Wales and the Welsh red meat slaughtering industry contributes approximately £460 million per annum to the Welsh economy.

The review of the Welsh abattoir and processing sector undertaken in 2016 indicated that there was capacity for expansion. However, opportunities to optimise throughput in Welsh abattoirs continues to be limited by a number of factors that have a substantial impact on the future performance of the sector. These include factors such as declining livestock numbers, increasing regulatory compliance, cost for disposal of by-products, the relatively low value of hides, skins and offal, as well as the shortage of skilled slaughter and butchery workers. The potential risks presented by a “hard Brexit” are likely to have a further significant impact on these and not least of which are livestock supply and a reliance on migrant workers from within the EU. A core challenge remaining is how to secure product and supply chain innovation, market intelligence and effective marketing in an industry where primary production is spread between a large number of small businesses, many of which are already under financial pressure, and where the processing industry is dominated by a small number of companies, many of which have their headquarters outside of Wales. Continued co-operation and collaboration across the red meat sector will be essential to help meet this challenge.

Red Meat Production

No. sheep holdings: No. beef cattle holdings: No.pig holdings: 14,023 7,435 1,369

2 Source: Welsh Government. Aggregate Agricultural Output and Income, 2016.

3 Source: Welsh Government. Welsh Agricultural Statistics 2015. October 2016.

4.65 million breeding ewes

168,000 beef cows (over 2 years,

calved)

4,000 breeding pigs

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Welsh red meat production is dominated by sheep. Breeding sheep numbers have increased in recent years reaching 4.65 million ewes in June 2017 and representing some 30% of the UK flock. The beef breeding herd in Wales continues to decline since the end of ‘coupled’ support payments, although numbers have stabilised in recent years. The pig sector in Wales is small (representing approximately 0.4 percent of total value of Welsh Agricultural output) and typified by a relatively large number of smaller holdings.

Welsh livestock production systems predominantly use forage based systems and around 83% of the active cattle and sheep holdings are within the designated Less Favoured Areas (LFA) of Wales. Grazing therefore plays an important role in the conservation of the hills and landscape of Wales and its biodiversity through the management of terrain that is not practical to manage by any other means. Hence red meat production not only supports the rural economy of Wales but helps to sustain Wales’ natural resources, preserve the landscape and environment, and is inextricably linked with the food and tourism industries that Wales’ economy and rural communites rely upon. The size of the Welsh sheep sector and the fact that, unlike Scotland and England, almost 16 per cent of the throughput of lambs at auction markets in Wales during 2016 was still considered as “light lambs” (finished lambs weighing less than 32kg) highlights an additional challenge facing the Welsh sheep sector as the UK moves towards Brexit.

The increasing consumer demand for cuts means that there is now a requirement for larger lamb carcases (greater than 14kg) for both home and export markets. HCC’s challenge is to help the industry to make progress in terms of the number of lamb and beef carcases reaching the required specifications (particularly with respect to the production of light and super light lambs) and to secure buy-in among producers to the fundamental rationale behind these requirements to make the supply chain more efficient. As export destinations are pursued that are further afield and opportunities to extend the UK season for Welsh lamb in particular are sought, efforts must be made across the industry to improve the shelf-life of PGI Welsh Lamb. Commercial drivers are already influencing progress in the processing sector and it will be important for producers and auction markets to fully understand their role in terms of presenting clean livestock for slaughter. Enabling producers to get feedback from the eventual destination of their livestock remains a challenge particularly within the sheep sector where a significant percentage of finished lambs are sold via livestock markets. HCC will continue to support the development and establishment of mechanisms that will allow feedback to producers who supply via livestock markets. The scale of the Welsh sheep sector also means that considerable efforts must be made in preparing red meat producers for a farming future that does not rely on subsidy for viability. Whatever the Brexit scenario, the most efficient farms will be best placed and so the need to address and lower the cost of production on Welsh sheep and beef farms will be imperative. It will be crucial to support the industry in making the necessary changes in productivity and efficiency to help mitigate the impact of Brexit on their businesses.

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Improvements in technical efficiency can also help mitigate / control greenhouse gas emissions and the development of climate change indicators for sheep and beef production could provide the ability to measure and promote the green credentials of Welsh red meat production. New technologies can offer practical improvements and potential ways to quantify difficult to measure traits such as meat yield and eating quality. A possible shift in the balance of production towards cattle may also need to be considered.

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SWOT Analysis

Red meat businesses in Wales operate within a number of constraints so it is important they maximize opportunities and strengths. Red Meat Industry SWOT There are a number of political, economic, social, technological and environmental considerations for the Welsh red meat industry, many of which will have a substantial impact on future resilience, performance and profitability of the sector.

Strengths

Large supply of lambs, cattle and pigs produced mainly off natural grass/ forage systems – appeals to consumers who have a strong perception of red meat from Wales and its environmental and animal welfare credentials

Production mainly from a base of family farms, robust to most commercial conditions - traditional base of experience in good stock farming coupled with environmental management

A variety of breeds and production systems to meet differing domestic and export demand requirements

Well developed international sales experience (lamb in particular) has created a strong image and reputation of PGI Welsh Lamb and PGI Welsh Beef from Wales

Ability to segment markets and to identify niche market opportunities

Weaknesses

Heavy reliance amongst primary producers on support payments

The Welsh red meat sector has a relatively high cost of production which exacerbates the need for premiumisation of red meat from Wales

Primary production is spread between a large number of small businesses – limits product and supply chain innovation, gathering market intelligence and effective marketing

Limited exploitation of advancing animal and plant genetics

Low level of reinvestment

Seasonality of production and variable carcase quality restricts marketing opportunities

Purchased feed and straw from outside Wales is relatively expensive due to transport costs – affects financial performance

Limited communication/ coordination and collaboration between supply chain partners

Wales is heavily dependent on supplying into the domestic markets, particularly England (accounting for 60% of Welsh red meat sales) which poses a risk should conditions/ markets change and demand in this market decline/ cease

The reliance of the Welsh red meat sector on export markets brings with it a susceptibility to political and economic volatility and the value of the pound

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Opportunities

Negotiations regarding the re-apportionment of levy that is currently collected and used in England (and Scotland) from animals that are born and reared in Wales should provide a mechanism to return monies to Wales, thereby supporting the industry and encouraging re-investment

Attract people to work within the Welsh red meat industry through training provision and supporting agricultural related studies

Maintain and enhance the recognition and positive perception of the Welsh red meat brands amongst target consumers in existing and emerging UK markets - consumers are increasingly seeking the reassurance of a high quality product of known origin. PGI designations allow the Welsh red meat industry to demonstrate its traceability credentials

New product development can be focused on a changing consumer base and for a different generation of consumer so that the industry is well placed to supply specific sections of society with premium Welsh red meat

Demographics and demand drivers are altering the demand for red meat products and there is now an increasing demand for cuts and consistent sized carcases - Wales has considerable scope to increase the number of lamb and beef carcases that reach the target specifications

Targeted marketing of red meat (lamb in particular) within countries that are geographically close presents many advantages but the Welsh red meat industry must continue to seek markets outside of the EU in order to maximise opportunities and spread risk. Overseas markets are crucial to help ease the continuing strain on carcase balance by seeking high value markets for the different cuts

Development of new, innovative and healthy Welsh red meat products will provide versatile solutions and assist in achieving carcase balance

Increased shelf-life of lamb through processors in Wales could help in opening up market opportunities in overseas markets

Inform and educate consumers about the importance and health benefits of red meat as part of a balanced diet

Opportunities to reduce cost of production through on-farm efficiency, uptake of relevant training and knowledge transfer

Market intelligence will enable producers to understand market requirements

Investment in relevant R&D will enable the red meat sector to take advantage of technological advancements in order to compete in a global marketplace Continued co-operation and collaboration across the red meat sector is required

On-site improvements through R&D and market intelligence could bring about advancements in innovation and technology – automation of abattoir processes could offer improved efficiencies and long term cost savings

The ability to generate “green credentials” for red meat from Wales is another key element that would help to enhance consumer perception of red meat

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Threats

The UK’s decision to leave the EU, its single market and the CAP has created a huge amount of uncertainty

Brexit could have a profound affect on trade in red meat from Wales (sheepmeat in particular) as trade agreements will need to be re-negotiated

Brexit could result in a reduction in livestock numbers and/ or a loss of processing facilities in Wales

Brexit is expected to impact on labour availability in Welsh red meat slaughtering/ processing sector as the sector is heavily reliant on migrant workers from within the EU

Ageing farmer population and few new entrants

Climate change (adaptation and mitigation - pressures to reduce GHG emissions from livestock, and challenge to meat consumption)

Price remains a key driver and red meat faces increasing competition from cheaper sources of protein such as chicken, fish and non-meat proteins

Public perception of the possible adverse affect of red meat within their diet on health and the move towards flexitarian eating is increasing

Declining livestock numbers, rising production costs, animal disease outbreaks, increasing regulatory compliance, cost for disposal of by-products, the decreasing value of hides, skins and offal, as well as the shortage of skilled slaughter and butchery workers limits opportunities to optimise throughput in Welsh abattoirs

Maintaining red meat production whilst responding to environmental change is a challenge, particularly with open debate on the environmental impact of livestock production

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SWOT for Corporate HCC There are also a number of strategic strengths, weaknesses, opportunities and threats facing HCC.

Strengths

High quality motivated staff with breadth of experience and high work ethic

Good standing with farmer stakeholders and good relationship with trade associations

Good communication and political network

Delivery focused remit

Weaknesses

Declining levy income – relatively small budget seeking to compete with larger competitors

Spreading finite resources broadly – wide statutory remit

Restrictions of operating under state aid rules

Managing stakeholder expectations - market and industry activities have a long gestation period before reaching fruition

Opportunities

Greater efficiencies through closer working with other sector bodies

DEFRA, Welsh Government and Rural Development Plan funding

Red meat levy redistribution

Use of new communications technologies to enhance reach and to facilitate more targeted and interactive engagement with a wide range of audiences

Threats

Government policies, particularly as a result of Brexit, could lead to reduced livestock numbers, affecting Welsh Red Meat Levy income

Access to European structural funds, particularly in light of Brexit, ceases or reduced

Future legislation arising following Brexit may not recognise Protected Food Name schemes

Animal health and traceability issues may undermine consumer confidence and lead to fall in demand for Welsh red meat

Closure of existing export markets

Public perception of red meat is adversely affected by public health scare

Increasing imports reduces trade demand for Welsh red meat

Exchange rate fluctuation

Increasing importance of UK Government in terms of negotiating trade and lack of direct HCC influence on UK policy

Increasing expectation of levy payers in terms of levels of delivery against remit and within a limited (and decreasing) budget

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Delivery Mechanisms 2018-2021

This Corporate Plan is directed by HCC’s Vision to 2025, which identifies nine priority areas for action. This Plan is focused on cost-effective delivery and recognises the importance of measuring the impact of investments. Collaboration, cooperation and communication across the industry is integral to achieving success. The focus for delivery is through two operational departments (Market Development and Industry Development) and these are supported by the Communications, Corporate Strategy and Policy, and Corporate Services departments.

Market Development - aims to increase returns to the Welsh red meat industry by maximising the sales value of Welsh red meat.

Industry Development - works within the red meat industry in Wales to improve quality and increase cost effectiveness in a sustainable way.

Communications - ensures that information regarding developments relating to Welsh red meat as well as the full range of HCC’s activities are made known to stakeholders and consumers.

Corporate Strategy and Policy - works to develop and implement strategies and inform decisions regarding the Welsh red meat industry.

Corporate Services - supports the operational delivery of the business and controls the resources required.

With Brexit negotiations ongoing, the details of the likely route to EU exit will continue to unfold during 2018. The HCC Board recognises that the ability for the UK Government to secure a “soft Brexit” with an appropriate transition period is paramount to safeguard the Welsh sheep sector in particular, but that HCC must continue to prepare the industry for the eventuality of a “hard” Brexit and impact of the potentially extreme trading scenario that would then unfold. This means that resources cannot focus on just one or two key areas and must continue to be deployed across a wide range of export and domestic marketing activities whilst starting to prepare the Welsh production and processing sectors for the scenarios that could eventually unfold. HCC input to Welsh Government Roundtable Groups, policy forums and other future industry shaping meetings will be essential to keep the survival of the Welsh red meat industry at the heart of all discussions regarding future trade, regulation and land use as well as discussions surrounding the future of the rural economy and communities that rely heavily on red meat production and processing. Communications activity will also need to ensure that decision-makers and levy-payers are aware of the likely impact of potential scenarios and of HCC’s contingency planning. The pursuit of these activities in parallel places significant pressure on the budget available from Welsh Red Meat Levy and so HCC will work to ensure effective delivery of the Welsh Government funded Export Enhancement Programme and will continue to work closely with

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AHDB and QMS to maximise the benefits from the combined activity that has been agreed using the ring-fenced monies. The planned HCC delivery for 2018-2021 is summarised below.

Strategic Action Plan Vision

A profitable, efficient, sustainable and innovative Welsh red meat industry which benefits the people of Wales, which is resilient to political and environmental change, and is capable of responding competitively to ever changing market trends

Strategic Action Plan Objectives

Increase demand for Welsh red meat products (thereby increasing sales and returns)

Improve production efficiency (thereby increasing quality supply) whilst maintaining the environment and landscape of Wales

Board 2025 Priorities

1. Positioning red meat from Wales as a premium product

2. EU trade opportunities developed for Welsh red meat

3. Domestic (GB) consumption of red meat from Wales maximized

4. New consumers for Welsh red meat sought in established markets

5. A greater percentage of Welsh red meat exports outside the EU

6. Development of a competitive Welsh red meat industry

7. Reduction in the impact of Welsh red meat production and processing on the climate, the environment and waste

8. Contingency planning in terms of future trade, production and processing post-Brexit

9. Effective communication throughout the industry to ensure unity of purpose

HCC Delivery



Develop red meat brands and products to create and sustain a strong and competitive brand position




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The following tables highlight the key activities and indicators of success (KPIs) for HCC for the next three years (2018-2021) and provide an indicative budget for each delivery area. Where new KPI’s have been set, baselines will be established in year 1 (2018-2019), allowing progress against these baselines to be measured in subsequent years.


Priorities:



Outcomes:

Growth in the Welsh red meat share of market value

Increased trade and consumer demand for Welsh red meat products in the export market

18/19 19/20 20/21

Activity Target Date

Established markets (France, Germany, Italy, Denmark, Spain & Switzerland)

Provide agent support to Welsh processors in established export markets to identify new opportunities and increase volume and value of sales to existing customers

Provide key account support in established export market to build on existing relationships with customers, increasing volumes and value of Welsh Red Meat sold through existing channels

Attend relevant trade shows in established markets to identify new opportunities for Welsh Red Meat processors in established markets and build on relationships with existing customers

Devise, develop and deliver consumer, retail, food service and wholesaler marketing campaigns in established markets to increase brand awareness and improve perception of Welsh Lamb and Welsh Beef

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4 Q1-Q4 Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4 Q1-Q4 Q1-Q4

Developing markets (UAE, Canada, Qatar & Sweden)

Identify, prioritise and attend appropriate shows in developing markets to engage with potential new retail and wholesale customers and build on relationships with existing clients.

Work to improve relationships that assist in the development of trade in developing markets such as government agencies and officials, e.g. achieving relevant halal certification

Devise, develop and deliver consumer, retail, food service and wholesaler marketing campaigns in developing markets to establish brand awareness and improve perception of Welsh Lamb and Welsh Beef

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Develop export markets for Welsh red meat (continued)

18/19 19/20 20/21


Potential new markets (USA, China, KSA & Japan)

Continue participation in UKECP meetings and UK and Welsh Government forums to advise and keep abreast of developments

Provide direction to Export Certification Ltd with respect to priority/target markets to ensure efficiency.

Collaborate with GB levy bodies to maximise benefits from non-competitive work to deliver the highest level of value for money for Welsh levy payers.

Develop and exploit relationships that will allow access to high value markets therefore achieving the highest possible returns to the supply chain in Wales.

Participate in trade missions, fact finding missions and attend exhibitions/ conferences in potential new markets to maximize the visibility of Welsh red meat in markets

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Delivery of the Enhanced Export Programme

Q1-Q4

Q1-Q4

Q1-Q4

KPIs Target

Sales of PGI Welsh Lamb and Welsh Beef maintained or increased in established markets evidenced by volume and/or value data on sales to each account/country provided by main exporting processors

Consumer awareness of PGI Welsh Lamb and Welsh Beef maintained or increased in established markets measured through conducting consumer research using online methods in target markets and use of social media analytic software

Increased sales in developing markets evidenced by volume and/or value data on sales to each account/country provided by main exporting processors

Increase in number of potential new markets where trade is established

Establish baseline

Establish baseline

Establish baseline

1 New market

>4%

≥ 4%

> 5%

1 New market

> 4%

≥ 4%

> 5%

1 New market

Budget

- Established markets

- Developing markets

- Potential new markets

- Enhanced Export Programme

£745,000

£ 94,000

£ 63,000

£441,000

£750,000

£100,000

£ 70,000

£500,000

£750,000

£100,000

£ 70,000

£500,000

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Priorities:


Outcomes:


Increased trade and consumer demand for Welsh red meat products in the domestic market

18/19 19/20 20/21


Retail

Provide key account support in the retail sector including multiple, online and independent businesses

Support red meat sales through independent retailers through the delivery of a strategic programme of activity

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Consumer

Manage the undertaking of marketing, PR and promotional campaigns for consumers (including effective engagement at the Royal Welsh Agricultural Show)

Identify and develop brand partnerships to bring added value to consumer facing campaigns

Educate/inform consumers of benefits of Welsh red meat in a healthy diet

Foodservice

Increase volume and value of Welsh red meat procured by public bodies

Deliver processor account support programmes enabling the Welsh red meat industry to benefit directly from the work and to assist in providing strategic steer to activity

Develop support to Welsh red meat customers in the HoReCa sector

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Develop home markets for Welsh red meat (continued)

KPIs Target

Consumer awareness of PGI Welsh Lamb, Welsh Beef and Pork from Wales maintained or increased in the UK market, measured through conducting consumer research using online methods in target markets and use of social media analytic software

Increase in Welsh red meat procured by public bodies in Wales. Evidenced by volume and/or value data on sales to each account provided by main processors / wholesalers

Increase in number of multiple retailers engaged in promotional activity

Butchers club membership maintained or increased

Establish baseline

Establish baseline

+2

≥ 230

> 2%

> 3%

+1

≥ 233

> 3.5%

> 3%

+1

≥ 235

Budget

- Retail

- Consumer

- Foodservice

£281,000

£771,000

£122,000

£280,000

£760,000

£120,000

£280,000

£760,000

£120,000

22

Develop red meat brands and products to create and sustain a strong and competitive position

Priorities:


Outcomes:


Increased awareness and improved consumer perception for Welsh red meat

18/19 19/20 20/21


Sustain PGI scheme membership for Welsh Lamb and Welsh Beef, and increase where possible

Develop and deliver innovative ways to ensure integrity of PGI scheme

Enhance the status of red meat brands as flagship products for the Welsh food industry and secure the buy-in of consumers, decision-makers and levy payers (including effective engagement at the Winter Fair)

Inform and influence political actors (including discussions on PFN status post-Brexit)

Work with industry partners to evaluate the objective measurement of the eating quality of beef using the Meat Standards Australia grading system

Explore opportunities for New Product Development (in relation to lamb) and seek collaborative funding opportunities for research and development

Communicate key messages on the factors which influence the shelf-life of Welsh Lamb and continue efforts to secure funding to develop an industry blueprint for all sections of the supply chain

Input provided to proposals on smoked skin on sheep meat

Q1-Q4

Q1-Q4

Q2-Q3

Q1-Q4

Q1-Q4

Q1-Q4

Q3-Q4

Q3-Q4

Q1-Q4

Q1-Q2

Q2-Q3

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q3-Q4

Q1-Q4

Q2-Q3

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q3-Q4

KPIs Target

PGI scheme membership sustained

Increased shelf-life of lamb through processors in Wales

Increased stakeholder awareness of HCC activity (measured

through online survey)

60

Establish baseline

Establish baseline

60

≥ 3%

> 2%

60

≥ 5%

> 2%

Budget £289,000 £290,000 £290,000

23


Priorities:




Effective communication throughout the industry to ensure unity of purpose.

Outcomes:

Enhanced industry knowledge and understanding of markets needs and trends

Enhanced productivity and efficiency


Increased consumption of Welsh red meat

18/19 19/20 20/21


Collate and analyse Welsh, UK, EU and global market

intelligence data Undertake trade and marketing research that will identify and

illustrate buying patterns (trade and consumer) and potential new market opportunities

Research findings incorporated into targeted plans, campaigns and stakeholder communications

Communicate intelligence data, policies, consumer and retail trends and the work of HCC to levy payers, stakeholders and policy makers

Represent the red meat sector in EU Exit Roundtable discussions and relevant policy forums providing valued and insightful market and trade intelligence

Undertake modelling work to assess the impact of EU Exit on the Welsh red meat industry which will inform the development of interventions to help the industry prepare for various exit scenarios

Deliver a strategic communications programme, incorporating PR, electronic media and public affairs activity, which grows the knowledge, recognition and support for the sector among stakeholders

Inform decision-makers so that they are aware of the impact of current and future public policies on the red meat industry

Inform the public about the positive contribution of the red meat industry to Wales’s society and economy

Q1-Q4

Q3

Q4

Q1-Q4

Q2-Q4

Q2 & Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q3

Q4

Q1-Q4

Q1-Q3

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q3

Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

24

Collate and disseminate market intelligence and research at Wales, UK and global level (continued)

KPIs Target

Increased understanding of micro and macro economic factors on the red meat industry

Regular updates on market and consumer trends issued to increased number of individuals within supply chain

Relevant reports and papers provided to policy makers as required (satisfaction rating (SR) collated)

Increase engagement of email communications to stakeholders through:

- Average open rates

- Average clickthrough rates

- Email bulletins

Increase engagement on corporate Facebook and Twitter accounts

Increase engagement via corporate website (sessions)

Increasing media coverage of proactive press releases and articles reinforcing key messages (press coverage)

≥ 20%

≥ 10%

≥ 70%

SR

> 25%

> 3%

25

5%

10%

10%

≥ 25%

≥ 12%

≥ 75%

SR

> 27%

> 3.5%

25

5%

5%

10%

≥ 25%

≥ 15%

≥ 80%

SR

> 30%

> 4%

25

5%

5%

10%

Budget £231,000 £230,000 £230,000

25


Priorities:


Outcomes:

Improved business management skills and industry resilience


18/19 19/20 20/21


Regularly communicate with research bodies to keep abreast of developments that could benefit the red meat sector

Evaluate R&D priorities to ensure their relevance to current and possible future production and processing challenges

Develop a new R&D strategy for the red meat sector in Wales

Maintain a research and development portfolio relevant to the needs of Wales, and work collaboratively where possible to maximise levy expenditure

Disseminate and communicate R&D activity to levy payers

Q1-Q4

Q2

Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q2

Q1-Q4

Q1-Q4

Q1-Q4

Q2

Q1-Q4

Q1-Q4

KPIs Target

Positive Return on Investment on R&D portfolio

Increased producer awareness of relevance of R&D portfolio to their businesses

≥ 1:4

Establish baseline

≥ 1:4

≥ 30%

≥ 1:5

≥ 40%

Budget £131,000 £130,000 £130,000

26


Priorities:



Outcomes:

Improved business management skills and industry resilience

Improved animal health, welfare and disease prevention

Improved supply, transparency and consistency of product and enhanced supply chain linkages

Increased uptake of techniques which support climate change targets and minimize greenhouse gas and methane emission


18/19 19/20 20/21


Provide information to help producers to improve technical

efficiency through genetic improvement, improved flock and herd health and welfare and better utilisation of grass/ forage and to mitigate against climate change

Cultivate relationship with Farming Connect to influence and provide a strategic steer in delivery of the annual programme

Deliver Selection for Slaughter training (lamb and beef) and monitor impact to improve producer understanding of market requirements

Support and encourage Welsh beef and sheep pedigree breeders to performance record and CT scan

Promote market requirements and HCC activity to future farmers through engagement with Farming Connect’s Agri-Academy, NSA Next Generation etc.

Attend relevant health and safety in agriculture meetings and ensure that relevant messages are incorporated into relevant communications

Develop and deliver technical information to improve processor knowledge and opportunities for cost-reduction through increased carcase utilisation and waste reduction

Work closely with key stakeholders, Courtauld 2025, WRAPCymru and Welsh Government

Work with Welsh Government and industry to develop environmental standards to substantiate the Welsh Lamb and Welsh Beef brands

Q1-Q4

Q1-Q4

Q2-Q4

Q1-Q4

Q3-Q4

Q1-Q4

Q2-Q4

Q1-Q4

Q1

Q1-Q4

Q1-Q4

Q2-Q4

Q1-Q4

Q3-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q1-Q4

Q2-Q4

Q1-Q4

Q3-Q4

Q1-Q4

Q1-Q4

Q1-Q4

27

Facilitate and encourage supply chain efficiency (continued)

KPIs Target

Increase level of understanding of market requirements following attendance at events

Increased number of pedigree breeders in Wales performance recording

Reduction in waste produced by Welsh red meat processors

Increase level of understanding within primary production on

GHG lowering mechanisms/activities could be adopted following attendance at events

≥ 25%

≥ 5%

Establish baseline

≥ 20%

≥ 30%

≥ 10%

≥ 5%

≥ 25%

≥ 30%

≥ 15%

≥ 8%

≥ 30%

Budget £216,000 £220,000 £220,000

28

Finance Income Welsh Red Meat Levy Funding The principle source of HCC’s income is derived from Welsh Red Meat Levy which is jointly paid by producers and slaughterers/exporters, raised on all cattle, sheep and pigs slaughtered in Wales (which are fit for human consumption) or exported live.

Since April 2012 the Welsh Ministers have been responsible for setting and raising Welsh Red Meat Levy. Through a Delegation Agreement, HCC collect the levy from sheep, beef and pigs at the point of slaughter in Wales and undertake the statutory functions in relation to the Welsh red meat industry. Statutory levy has existed in the red meat sector for a number of years to fund activities to assist with the development of this sector, notably work that would not be done under normal market conditions. This results from the fact that producers in these sectors, and in many cases processors too, are too small to be able to resource such areas of work themselves. The Accounting Officer is personally responsible for ensuring Welsh Red Meat Levy is spent appropriately. External Funding and Resources

Enhanced Export Programme (Welsh Government) This three year programme will commence in January 2018 and will enable HCC to:

Extend the work to maintain market share within the EU before departure from the EU and establish a strong platform for future trading through support packages for a minimum of 8 key accounts across the major EU export countries.

Undertake further market development within third country markets that are in their infancy to increase awareness of the Welsh Lamb and Welsh Beef brands. Hong Kong, Canada and the Middle East as well as Switzerland and Norway are the main existing markets outside of the EU that offer good potential growth and a potential buffer against the uncertainties of the EU market. This programme will deliver activities that will exploit our existing knowledge and contacts in these markets.

Other relevant markets include Qatar, Jordan and Iran, where red meat products from the UK have access but there is no or very limited trade. These markets are likely to deliver small volumes initially but with the potential to grow and to demand carcasses and cuts outside of the preferred specification for the UK market such as light lambs.

Intensify the work to obtain access to new markets and establish the Welsh Lamb and Welsh Beef brands in Saudi Arabia, USA and the People’s Republic of China.

29

Levy Reapportionment HCC will work alongside the Red Meat Levy Boards across GB (AHDB and QMS) and with the Welsh Government to further the negotiations regarding the re-apportionment of levy that is currently collected and used in England (and Scotland) from animals that are born and reared in Wales.

HCC will support the Welsh Government in effecting the necessary interim arrangements to ensure the direction of ring-fenced funding for GB-wide activities prioritises the needs of the red meat sector in Wales. HCC will undertake work to accelerate collaborative activity in areas such as export access, international shows, research and development, health and nutrition.

HCC will continue to seek a permanent solution regarding the re-apportionment of levy, to the benefit of Wales.

Other HCC will also work collaboratively with relevant organisations in order to seek funding and establish projects. Expenditure The structure of the Income and Expenditure account reflects the nature of the activity undertaken – Annex 1 graphically shows the split for the three years outlined in this Plan. Expenditure budgets are based upon the income available and upon the following assumptions:

Costs are based upon the activity plans for the individual departments, with due regard to the source of funding.

Personnel costs are budgeted to increase by 1.5 percent based upon staff levels at 31 March 2018.

No depreciation has been provided in respect of the building.

No provision for bad debts or related legal costs has been provided.

30

Summary Income and Expenditure

Budget Budget Budget

12 months to Mar 19

12 months to Mar 20

12 months to Mar 21

Income:

£000 £000 £000

Levy

Cattle Gross

682 690 690

Sheep Gross

2,792 2,800 2,800 Pigs Gross

40 40 40

AHDB levy repatriation

200 200 200

Total Gross Levy

3,714 3,730 3,730

RDP

- - - WG - Export 441 500 500 EU - Market Promotion - - - Other Income

28 30 30

Total Income

4,183 4,260 4,260

Expenditure:

Export:

- Established markets 745 750 750 - Developing markets

94 100 100

- Potential new markets

63 70 70 - Export Enhanced Export Programme 441 500 500

Home:

- Retail 281 280 280 - Consumer 771 770 770 - Foodservice

122 120 120

Development of brands

289 290 290 Market intelligence

231 230 230

Research & Development

131 130 130 Supply chain efficiency 216 220 220 Corporate costs 799 800 800

Total Expenditure

4,183 4,260 4,260

Surplus/(Deficit)

0 0 0

31

Monitoring and Evaluation As part of the fulfilment of its objectives, HCC has an established monitoring framework which:

Allows HCC to measure progress in meeting its objectives;

Provides valuable management information to the management team and Board of HCC;

Allows HCC to communicate its performance to external stakeholders on an ongoing basis; and

Provides a basis for evaluation at an appropriate time.

The monitoring framework extracts the actions and measurements from within the Operational plan and monitors the performance against these targets throughout the year.

32

Annex 1 – Graphical presentation of financial summary

corporate plan for meat promotion wales (hcc) 2018-2021 · 2019-06-12 · swot analysis 12 delivery...

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