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 • R&D 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 R&D • 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 R&D funding

6. R&D – 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. R&D – 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. R&D – 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 year’s 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 • R&D programme is the key to our success • CCL is vital to funding the R&D programme • No CCL = No future Peony industry