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THE COMPETITION IN 1997
U.S. and
Competitor Expenditures on Export Promotion and
Export Subsidies for Agricultural, Forestry and Fishery Products
New Zealand
The majority of New Zealand's export promotion is carried out by statutory producer marketing boards and by private companies. Funding for agricultural export market promotion through the producer marketing boards in 1996/97 is estimated at $217.6 million, an increase from the 1995/96 level of $139.5 million. The New Zealand government also funds export market promotion through an independent organization, TRADENZ, the Trade Development Board. Funding for TRADENZ promotion activities was $5.2 million in 1996/97, a slight increase from 1995/96. Total export promotion funding for New Zealand agricultural products is estimated at $222.8 million for 1996/97 compared to $143 million for 1995/96.
Structural reforms in the 1980's and early 1990's abolished agricultural subsidies and ended foreign exchange controls and import licensing. However, processing and marketing of agricultural production is still highly regulated. New Zealand’s marketing and promotion boards, which control the marketing of almost 80 percent of New Zealand’s agricultural exports, include: the Apple and Pear Marketing Board, the New Zealand Dairy Board, the Kiwifruit Board, the Wool Board (as of July 1, 1994, Wools of New Zealand), the Meat Producers Board, and the Game Industry Board. To a lesser extent, New Zealand hop and raspberry producers also promote and market their products through marketing boards, although no expenditure information for these products is available. Finally, New Zealand horticultural producers promote their products through the Horticultural Export Authority. The producer marketing boards and the Horticultural Export Authority are allowed by law to fund their operations, including promotion activities, through retained earnings and assessments on producers and processors.
TRADENZ, the New Zealand government’s export promotion organization, has a mission of increasing New Zealand’s foreign exchange earnings by helping exporters. In 1995-96, TRADENZ provided funding for market analysis, promotion and consultancy services through specific projects with the beef, horse, horticultural, floricultural, natural health, organic, processed food, bakery, seafood, venison, forestry, and wine industries. TRADENZ also works with the New Zealand Food and Beverage Exporters Council (FBEC) to develop and implement strategic and tactical initiatives. In addition, numerous small businesses used TRADENZ as an export consultancy for which they were charged fees on a partial cost recovery basis. Many TRADENZ projects are operated as joint ventures, on a 50:50 funding basis. Domestically, one of TRADENZ key goals is to promote a national export culture through the media, award and recognition programs, education programs and trade fair support.
New Zealand government funding for TRADENZ totaled $38 million in 1995/96 with $19.8 million for overseas operating expenses and $5.2 million for direct export promotion projects. 1996/97 expenditures were at similar levels. It is estimated that almost one-half of TRADENZ’s promotions are conducted in Asia, followed by the Americas, Europe and the Middle East. TRADENZ has representatives in 45 locations overseas. Half the offices are in Asia. Total overseas staff are estimated at over 250 persons. In addition, TRADENZ maintains 9 offices across New Zealand.
TRADENZ cooperates with the New Zealand Tourism Board to establish a brand image for the country as a whole. "Brand New Zealand" is designed to create a brand image for a wide range of products based solely on New Zealand origin. The trademark is easily recognized and is an abstraction of a fern across a field of blue and green and features "New Zealand" prominently across the top of the logo. Based on recent research conducted on behalf of TRADENZ, the brand seeks to capitalize on New Zealand's clean green image. Businesses which apply for the brand undergo quality, environmental, and marketing assessment before being licensed to use the brand.
Due to the small scale of many New Zealand enterprises, TRADENZ orchestrates working partnerships with industry under Joint Action Groups (JAG). JAG's are a representative body of exporting businesses within a defined industry committed to enhancing individual export endeavors through joint strategic planning and a program of marketing activities. More than 30 JAG’s have been established.
The Apple and Pear Marketing Board (APMB) controls exports of New Zealand apples and pears on the international market and the procurement of all apples and pears for export, although it no longer controls domestic market commercial (off orchard) sales (as of January 1, 1994). The Board generally exports the apples and pears itself, but grants export licenses in extraordinary cases. To be approved for an export license, the applicant must show that the potential export will: 1) maximize income to New Zealand; 2) be complementary to the Board’s export business and strategies; 3) have substantive defined points of differentiation in key respects which will translate to increased returns; and 4) maintain the New Zealand industry’s reputation and image in terms of market access, plant health and food safety. In addition, the potential exporter must be in good financial standing and business competence.
The Board has focused its promotion efforts, estimated at $10 million in 1996/97, at the trade level using trade magazines and trade fairs, but more recently expanded into consumer promotions. The Board has sought premium prices for its fruit by winning acceptance and trade support for its "ENZA" brand. Brand development and product exposure have been achieved through an increasing amount of sponsorship of New Zealand yachts in major regattas and through increased fruit labeling and trade and media promotions. Integral to the marketing strategy is the promotion of New Zealand’s unique varieties and mix of varieties, backed up by high quality and full trade servicing (merchandising, point-of-sale promotions, and retail price promotions).
In North America, promotions included event sponsorship and radio advertising. Similar efforts in the United Kingdom have resulted in brand awareness increasing 5 percent among British consumers. The Board's overseas activities are conducted through offices in London, Belgium, Vancouver, Sydney and a new office in Singapore.
The Dairy Board, a statutory producer board first established in 1925-27 and reconstituted under the Dairy Board Act of 1961, controls all dairy products exported from New Zealand by acquiring and marketing the majority of New Zealand’s export dairy produce. The Board negotiates with overseas buyers for the quantities and prices of dairy products to be exported and fulfills contractual obligations entered into by the New Zealand government in terms of specific tariff rate quotas bound under the GATT 1994.
The Board sells directly through a world-wide marketing network of close to 100 subsidiary and associate companies in Europe, Latin America, the Middle East, the United States, South East Asia, Japan and Australia. The largest proportion of promotional funds, used by subsidiary companies, is spent on the Board's own-brand advertising, using the full range of promotional activities, including TV, radio, press, and in-store promotion. Advertising and promotion of consumer products, such as "Anchor" brand butter promotion in the United Kingdom comprise the Dairy Board's major promotional efforts. Major campaigns for New Zealand brands of butter, milk powder, and cheese continue in South East Asia, Latin America and the Middle East. Promotional funds for 1996/97 were estimated at $139 million, increased from $128.3 million in 1995/96.
The Kiwifruit Marketing Board, established by statutory authority in 1988, acquires and exports kiwifruit produced in New Zealand. Private traders may only export New Zealand kiwifruit to Australia; the Board controls all other exports. The Board also determines prices paid to growers for fruit destined for export. The Board spent $19.5 million for export promotion in 1996/97, compared to $17.3 million for 1995/96. Promotion in European countries dominates the Board’s promotion expenditures, while Japan and other Asian markets account for the next largest share of funding. The Board also conducts international marketing activities from offices in Belgium, Tokyo, Hong Kong and Vancouver. In its established markets, the Board’s focus has shifted from generic consumer advertising to branded promotion targeting retail sales and the trade.
The Wool Board, first established in 1944 and reconstituted under the Wool Act of 1977, sets quality standards related to testing and packaging; licenses exporters; sets the time and place for wool auctions; promotes wool; provides information to exporters on import market requirements; and funds research into wool and sheep.
Wools of New Zealand is the producers' representative body with functions including promotion, research and development, quality assurance, industry standards, and grower services -- all funded from a 6-percent levy on farmers' wool sales. In 1995, New Zealand withdrew from the International Wool Secretariat, an international promotion group comprising Australia, South Africa and Uruguay. As New Zealand's share of world carpet wool production has declined, the motivation to promote under a New Zealand umbrella has increased. Wools of New Zealand has seven offices overseas, in Dusseldorf, Ilkley (U.K.), Atlanta, Hong Kong, Beijing, Ichinomiya (Japan) and Tokyo. Wools of New Zealand’s promotional activities include media advertising, product development, technical servicing, design and styling and final product quality control. In 1997 Wools of New Zealand launched its Fernline brand for apparel and currently has 150 licensed partners. Licensed brand partners for the Fernmark brand, mainly carpet, upholstery and bedding manufacturers, have increased to 200. Export promotion activities of the Wool Board totaled $38.3 million in 1996/97.
The Meat Producers Board (MPB) powers are limited to controlling and coordinating New Zealand's export meat industries. The MPB is currently involved in grading, export licensing, international trade policy, market information, research and development, and promotion for beef and veal, lamb, mutton, goat, and associated by-products. Promotional efforts are largely conducted in joint venture with private meat exporting companies, or groups of companies. Board funding is from a per head levy on sheep, cattle and goat slaughter stock, as well as from return on investments in the meat and other industries. In 1996/97 the MPB spent about $6.7 million on export promotion and market information compared to $4.8 million in 1995/96.
Long-term market development efforts are designed to increase demand for N.Z. beef and lamb by enhancing their image, differentiating New Zealand from other suppliers, and encouraging strong relationships with downstream market channel segments. Efforts include developing educational materials, conducting seminars for wholesalers, retailers, and chefs, organizing educational visits to New Zealand for potential buyers, producing trade guides, participating in trade shows, providing cooking and sampling demonstrations, and providing technical training courses for butchers, caterers, and restaurants. Market development funds are also used to prepare market information reports, generate recipes and develop new products.
Promotions have predominantly focused on consumer advertising and in-store promotions of sheepmeat in Europe (particularly in the United Kingdom) and the Middle East (Saudi Arabia). Promotion of beef has also been carried out in South East Asia and Mexico - the latter in conjunction with TRADENZ. Promotion in other markets is usually undertaken by individual meat exporters, although the Board does purchase space in food service and catering magazines in most of the markets importing New Zealand meat. The Board operates three offices in Asia (Seoul, Tokyo, and Hong Kong) two in Europe (Brussels and London), one in the Mideast (Manama), and one in North America (Washington, D.C.).
The Horticultural Export Authority (HEA) was established in 1987 to assist in export marketing of horticultural products. It initially received government seed funding, which ended in 1993, but receives some promotion funds from TRADENZ for specific commodity promotions. The majority of funds for the administration and promotional efforts come from commodity groups (i.e., producer associations) which have signed contracts with HEA. The commodity groups that HEA work with include squash, apricots, cherries, berry fruits, nectarines, persimmons, avocados, and specialty vegetable crops for the Japanese market. Promotional efforts in this area are small and run less than N.Z.$1 million per annum.
HEA promotional activities are mainly focused on trade promotion, trade fairs and in-store promotions. The general thrust of these market promotion efforts have been in Japan and other Asian markets. However Australia is still a major market for some products and promotional efforts continue there. Most recently, the Kiwifruit Growers Board is considering organizing its promotion efforts in Australia through HEA.
HEA also controls exports of the above-named fruits and vegetables through its issuance of export licenses. Applicants for export licenses from the HEA must submit an export marketing strategy for their product which must include plans for: 1) the distribution, transport, form, production, promotion, selling and export pricing of the product; 2) provision of export market information and product market research; and 3) auditing of compliance with and effectiveness of the strategy.
The New Zealand Game Industry Board (GIB) represents the industry, not only producers. This means that farmers, processors and exporters are all represented on the board of directors. The GIB is funded by a levy on deer slaughtered and on pelts sold. A major thrust of the Board's effort is toward quality assurance and certification and associated branding. The GIB has two promotional strategies - the Cervena branding strategy (United States and Australasia) and the Zeal trademark (Europe). Both are based on differentiation of product using quality assurance throughout the marketing chain, and promotions to the trade from the quality platform. All GIB promotions target the food service sector using chef training, recipes, competitions and leaflets. Promotional expenditures were reported at $1.5 million in 1996/97.
Forestry and Timber Products. Generic promotions of New Zealand pine and radiata products are conducted through TRADENZ in cooperation with the Forest Owners Association (radiata logs to end user groups in Japan, Korea and China), the Timber Industry Federation (treated framing timber to the trade in Australia), the Radiata Pine Remanufacturers Association (wooden components, furniture, and moldings to end-users in the United States). These promotions are funded by both TRADENZ and the relevant private sector firms. No expenditure information is available.
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