Independent research has revealed the productive benefit of the Red Meat Profit Partnership
As attention shifts to how the new Labour Government might help fund the farming sector to adopt ever more rigorous environmental standards, a former model of support for industry transformation is coming to an end with the Red Meat Profit Partnership PGP due to expire in March, 2021.
A comprehensive evaluation of the RMPP programme has been completed to better understand its overall impact, and whether the initial lofty goals of driving transformational change within the sector have been achieved. The numbers suggest the government’s investment has been worth it, but the focus is now on whether the successful initiatives will be sustained by the industry.
The RMPP was established in 2013, with a financial commitment of $64 million drawn from the government and industry partners, to attempt a transformational shift in productivity and profitability in New Zealand’s sheep and beef sector.
A 2011 Red Meat Sector Strategy had identified a clear opportunity existed to raise the level of profitability by adopting initiatives already proving successful on top-performing farms, and the RMPP attempted to make the strategy recommendations work.
At April 2020, RMPP had invested a total of $50.4 million of the initial committed fund. Of this, $38.1m (76%) has been directed towards various external and internal projects to assist farmers with practical ideas and tools to improve onfarm profitability. The remaining $12.3m has been spent on functions associated with managing the programme.
The two most significant investments have been establishing the Action Network extension programme ($14.4m spent) and delivering training programmes ($11.8m). A raft of smaller initiatives have also benefited from investment as part of the RMPP, including the nProve user interface (Livestock Improvement), the Electronic Animal Status Declaration (eASD) and the New Zealand Farm Assurance Programme (FAP) but, over the course of the programme to date, the efforts to lift onfarm profitability have been focused on the Action Network.
At a high level the evaluation undertaken by independent consulting firm Scarlatti and published in September clearly suggests it has all been worth it. The combined RMPP investment to 2020 was found to have delivered benefits of $845m – a ratio of about 17:1.
Confidence that the programme would deliver what it promised hasn’t always existed.
In 2017 the then Minister for Primary Industries and PGP champion Nathan Guy effectively pleaded with underperforming sheep and beef farmers to do better at taking up opportunities available to improve onfarm productivity. Soon after, an analysis by the ANZ, one of the RMPP partners, found sector growth had lagged well below the level needed to reach the aspirational target of being a $14 billion industry by 2025. The ANZ study noted that shifting farmers’ focus to a business mindset was difficult given the varied motivations (in some cases skewed towards lifestyle) among sheep and beef farmers for being involved in the industry.
There were also doubters as to whether Farms participating in the extension groups will on average increase profitability by $24 per hectare, or $17,712 per farm, each year.
The Red Meat Profit Partnership expires in March, 2021.
Phil Edmonds seeks views on what it has achieved.the government should be involved at all. Then in opposition, Damien O’Connor repeatedly argued that the PGP concept was generally a case of taxpayers funding ‘business-as-usual’.
The criticism did fade when a review of the PGP system, called for by O’Connor when he became the Minister for Agriculture, found the government was getting good value from its contributions. This has subsequently been borne out in the Scarlatti evaluation.
Why has the return on investment only started to appear in recent years?
Scarlatti director and author of the RMPP evaluation Adam Barker suggests the overall success has been assisted by the Action Network extension and adoption work programme. RMPP chair Malcolm Bailey says when the programme was launched there was a sense that work on genetics would deliver the biggest return on investment, rather than transfer of knowledge.
However, the evaluation found the Action Network to be the biggest contributor with returns measured at $381m. Farms participating in the extension groups will on average increase profitability by $24 per hectare, or $17,712 per farm, each year. Across the entire sector, the review found the Action Network will raise profitability by $5.51 per hectare, by 2025.
Barker says the Action Network has comfortably nailed its expectations from a financial return point of view and is the “crown jewel” in the overall programme.
“Investment in the extension groups has been effective because they have been designed to unlock potential of the land through knowledge and technology that already exists – the hard work (research, innovation, etc) had already been done. The investment has been channelled into people and human capability – to transform the huge economic potential already sitting there.”
“One of the key strengths of the model we’ve observed has been the successful engagement between facilitators and farmers to find each other and find top fixes that are relevant to them. Over the last couple of years the rate of farmers coming in did accelerate.”
Along with the well-identified economic benefits, some of the Action Network participants reported equally positive outcomes that have not necessarily been economic. Scarlatti took account of this noting that, given the relatively isolated nature of farming, having regular, purposeful, group interactions with fellow farmers provides positive wellbeing benefits.
Barker says “The wellbeing outcomes are a significant benefit from the RMPP investment, comparable to what might have been achieved through a more specific intervention.”
Manawatu-based Action Network facilitator Gary Massicks has seen these benefits in his groups. “We were successful in making people comfortable to share concerns around wellbeing. The social interaction that some of the members have got probably wouldn’t have happened outside their participation, and that’s been a big win.”
Returns on RMPP investment across other initiatives have been mixed. Given the transformational nature of the task when established, and the RMPP ambition to have an impact on all facets of the supply chain, it’s no surprise they have varied.
Barker says that not every programme has been a good investment, but none has been disastrous. “Some have been spectacular in delivering returns; some have paid for themselves.”
One project that has not delivered any measurable economic value yet has been the investment in Data Linker – an attempt to design a framework to reduce the duplication of data collection and entry for farmers and stakeholders and streamline how they capture and share data. Not enough entities have spent money to enable their IT systems to process data in the right way, and to get the benefit everyone has to be in and participating.
The talent attraction programme has paid back its money two or three times, which is good compared with putting your money in the bank but possibly not the kind of return that meets the threshold required by an industry organisation where investments are hard to measure.
There are also some RMPP initiatives that have a longer-term focus where the benefits will probably not be realised or fully understood by 2025.
The Farm Assurance Programme (FAP), for example, was an RMPP project initiative started later than others and a lot of the work is still ongoing. Barker says it has the kind of benefits that naturally take time to accrue.
Back to the now. With the RMPP about to expire, what chance is there for the biggest gains made from the RMPP to continue without government assistance. Will they be lost?
RMPP chair Malcolm Bailey says that while the numbers in the evaluation represent a phenomenal result, it does require the work to continue. “MPI’s measurement date to determine success is 2025.
While we are wrapping up early next year it will require a step change for a lot of people, so we avoid this being a promising initiative for seven years but subsequently dying away. And that would not be an acceptable outcome. It will require farmers, Beef + Lamb New Zealand and others to kick on with this.”
Some Action Network facilitators spoken to by the Dairy Exporter have doubts that the value of extension is well enough appreciated to warrant ongoing investment. However, B+LNZ, which is planning to support the transition of the existing extension groups beyond RMPP, is committed to making sure the momentum achieved by the Action Network concept keeps going.
“We will be making the concept a key part of our delivery model. We won’t be funding the groups directly but will be providing a lot of support by maintaining contact with lead farmers and the group facilitators,” B+LNZ CEO Sam McIvor says. “We’ll be setting up regional hubs for facilitators to meet and we’re proactively creating a national network to share information and knowledge being undertaken by groups doing similar things across the country.”
He expects some of the groups funded by RMPP will come to an end, but that won’t necessarily be a funding issue.
“Some will have been set up to achieve a single goal, and they might have achieved that goal. But for others, strong relationships will have been formed by working together and there will likely be motivation to continue. We expect the majority of them to carry on and pay a consultant a commercial fee.”
Looking at what other opportunities there are to capture government support, some Action Network groups have already been looking at how they could generate funding to keep going with SFFF grants, and by anticipating support from Labour’s pledge of $50 million to help farmers with planning to transition to environmentally friendly practices and cope with growing compliance requirements. Prior to the election, O’Connor said farmers have great methods for sharing information and knowledge, and that the Government wanted to support that.
But dedicating all funding to extension services specifically targeting environmental compliance may not be optimal. Support for environmental changes is only a small part of what farmers do. There will be some farmers who just want to focus on this, but there are wider opportunities to generate improved farm performance that will make them more profitable, which in turn will enable them to put more money into environmental initiatives.
Massicks says he’d like to see the Government front-load funds into the current extension companies. “We are seeing a big future need for consultants to develop farm environment plans. My message would be if you want to get change happening fast – there will be hundreds of farmers needing these plans – then bulk fund those who can assist.”
Looking back over the RMPP’s life, Massicks says there may have been mistakes in how some programmes have been rolled out, and some of the incentives to generate involvement might not have been well proportioned. But there has been an improvement in the connection between farmers and the rest of the industry, and that is a good outcome.
This view is shared by Bailey. “The feedback from processors and partners is that it has been a catalyst for them to co-operate in a way they had not necessarily done before. When I became involved I was wary about how this programme could be shaped from concept to action. And from the beginning we made sure we focused on how this could succeed beyond its funding life. It was always around succession and, based on what we are seeing now, the signs are positive.”