Corporate Plan for Meat Promotion Wales (HCC) 2018-2021 - Hybu Cig Cymru Meat Promotion Wales
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Hybu Cig
Hybu Cig Cymru
Cymru
Meat Promotion
Meat Promotion Wales
Wales
Corporate Plan for Meat Promotion Wales (HCC) 2018-2021
Hybu Cig Cymru
Meat Promotion Wales
Contents
Page
Executive Summary 2
Hybu Cig Cymru
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
1
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.
2
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
3About 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.
4Introduction
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.
5HCC’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.
Positioning red meat from Wales as a premium product
EU trade opportunities developed for Welsh red meat
2025 Vision - Priorities
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 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.
6Current 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.
7In 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.
8Production 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
4.65 million 168,000 beef cows
4,000
breeding ewes (over 2 years,
breeding pigs
calved)
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.
9Welsh 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.
10Improvements 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.
11SWOT 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
12Opportunities
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
13Threats
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
14SWOT 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
15Delivery 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
16AHDB 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 A profitable, efficient, sustainable and innovative Welsh red meat industry which
Action Plan benefits the people of Wales, which is resilient to political and environmental change,
Vision and is capable of responding competitively to ever changing market trends
Strategic Increase demand for Welsh red Improve production efficiency (thereby
Action Plan meat products (thereby increasing increasing quality supply) whilst maintaining
Objectives sales and returns) the environment and landscape of Wales
Board 2025 1. Positioning red meat from Wales as a premium product
Priorities 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 Develop export markets for Welsh red meat
Delivery 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
17The 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.
Develop export markets for Welsh red meat
Priorities:
A greater percentage of Welsh red meat exports outside the EU
EU trade opportunities developed for Welsh red meat
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 Q1-Q4 Q1-Q4 Q1-Q4
markets to identify new opportunities and increase volume and
value of sales to existing customers
Provide key account support in established export market to Q1-Q4 Q1-Q4 Q1-Q4
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 Q1-Q4 Q1-Q4 Q1-Q4
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 Q1-Q4 Q1-Q4 Q1-Q4
wholesaler marketing campaigns in established markets to
increase brand awareness and improve perception of Welsh
Lamb and Welsh Beef
Developing markets
(UAE, Canada, Qatar & Sweden)
Identify, prioritise and attend appropriate shows in developing Q1-Q4 Q1-Q4 Q1-Q4
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 Q1-Q4 Q1-Q4 Q1-Q4
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 Q1-Q4 Q1-Q4 Q1-Q4
wholesaler marketing campaigns in developing markets to
establish brand awareness and improve perception of Welsh
Lamb and Welsh Beef
18Develop export markets for Welsh red meat (continued)
18/19 19/20 20/21
Activity Target Date
Potential new markets
(USA, China, KSA & Japan)
Continue participation in UKECP meetings and UK and Welsh Q1-Q4 Q1-Q4 Q1-Q4
Government forums to advise and keep abreast of
developments
Provide direction to Export Certification Ltd with respect to Q1-Q4 Q1-Q4 Q1-Q4
priority/target markets to ensure efficiency.
Collaborate with GB levy bodies to maximise benefits from Q1-Q4 Q1-Q4 Q1-Q4
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 Q1-Q4 Q1-Q4 Q1-Q4
value markets therefore achieving the highest possible returns
to the supply chain in Wales.
Participate in trade missions, fact finding Q1-Q4 Q1-Q4 Q1-Q4
missions and attend exhibitions/ conferences in potential new
markets to maximize the visibility of Welsh red meat in markets
Delivery of the Enhanced Export Programme Q1-Q4 Q1-Q4 Q1-Q4
KPIs Target
Sales of PGI Welsh Lamb and Welsh Beef maintained or Establish >4% > 4%
increased in established markets evidenced by volume and/or baseline
value data on sales to each account/country provided by main
exporting processors
Consumer awareness of PGI Welsh Lamb and Welsh Beef Establish ≥ 4% ≥ 4%
maintained or increased in established markets measured baseline
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 Establish > 5% > 5%
and/or value data on sales to each account/country provided baseline
by main exporting processors
Increase in number of potential new markets where trade is 1 New 1 New 1 New
established market market market
Budget
- Established markets £745,000 £750,000 £750,000
- Developing markets £ 94,000 £100,000 £100,000
- Potential new markets £ 63,000 £ 70,000 £ 70,000
- Enhanced Export Programme £441,000 £500,000 £500,000
19Develop home markets for Welsh red meat
Priorities:
Domestic (GB) consumption of red meat from Wales maximized
Outcomes:
Growth in the Welsh red meat share of market value
Increased trade and consumer demand for Welsh red meat products in the domestic market
18/19 19/20 20/21
Activity Target Date
Retail
Provide key account support in the retail sector including Q1-Q4 Q1-Q4 Q1-Q4
multiple, online and independent businesses
Support red meat sales through independent retailers through Q1-Q4 Q1-Q4 Q1-Q4
the delivery of a strategic programme of activity
Consumer
Manage the undertaking of marketing, PR and promotional Q1-Q4 Q1-Q4 Q1-Q4
campaigns for consumers (including effective engagement at
the Royal Welsh Agricultural Show)
Identify and develop brand partnerships to bring added value Q1-Q4 Q1-Q4 Q1-Q4
to consumer facing campaigns
Educate/inform consumers of benefits of Welsh red meat in a Q1-Q4 Q1-Q4 Q1-Q4
healthy diet
Foodservice
Increase volume and value of Welsh red meat procured by Q1-Q4 Q1-Q4 Q1-Q4
public bodies
Deliver processor account support programmes enabling the Q1-Q4 Q1-Q4 Q1-Q4
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 Q1-Q4 Q1-Q4 Q1-Q4
sector
20Develop home markets for Welsh red meat (continued)
KPIs Target
Consumer awareness of PGI Welsh Lamb, Welsh Beef and Establish > 2% > 3.5%
Pork from Wales maintained or increased in the UK market, baseline
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 Establish > 3% > 3%
Wales. Evidenced by volume and/or value data on sales to baseline
each account provided by main processors / wholesalers
Increase in number of multiple retailers engaged in +2 +1 +1
promotional activity
Butchers club membership maintained or increased ≥ 230 ≥ 233 ≥ 235
Budget
- Retail £281,000 £280,000 £280,000
- Consumer £771,000 £760,000 £760,000
- Foodservice £122,000 £120,000 £120,000
21Develop red meat brands and products to create and sustain a strong and competitive
position
Priorities:
Positioning red meat from Wales as a premium product
Outcomes:
Growth in the Welsh red meat share of market value
Increased awareness and improved consumer perception for Welsh red meat
18/19 19/20 20/21
Activity Target Date
Sustain PGI scheme membership for Welsh Lamb and Welsh Q1-Q4 Q1-Q4 Q1-Q4
Beef, and increase where possible
Develop and deliver innovative ways to ensure integrity of PGI Q1-Q4 Q1-Q2
scheme
Enhance the status of red meat brands as flagship products for Q2-Q3 Q2-Q3 Q2-Q3
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 Q1-Q4 Q1-Q4 Q1-Q4
PFN status post-Brexit)
Work with industry partners to evaluate the objective Q1-Q4 Q1-Q4 Q1-Q4
measurement of the eating quality of beef using the Meat
Standards Australia grading system
Explore opportunities for New Product Development (in Q1-Q4 Q1-Q4 Q1-Q4
relation to lamb) and seek collaborative funding opportunities
for research and development
Communicate key messages on the factors which influence Q3-Q4 Q1-Q4 Q1-Q4
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 Q3-Q4 Q3-Q4 Q3-Q4
KPIs Target
PGI scheme membership sustained 60 60 60
Increased shelf-life of lamb through processors in Wales Establish ≥ 3% ≥ 5%
baseline
Increased stakeholder awareness of HCC activity (measured Establish > 2% > 2%
through online survey) baseline
Budget £289,000 £290,000 £290,000
22Collate and disseminate market intelligence and research at Wales, UK and global
level
Priorities:
Development of a competitive Welsh red meat industry
New consumers for Welsh red meat sought in established markets
Contingency planning in terms of future trade, production and processing post-Brexit
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
Growth in the Welsh red meat share of market value
Increased consumption of Welsh red meat
18/19 19/20 20/21
Activity Target Date
Collate and analyse Welsh, UK, EU and global market Q1-Q4 Q1-Q4 Q1-Q4
intelligence data
Undertake trade and marketing research that will identify and Q3 Q3 Q3
illustrate buying patterns (trade and consumer) and potential
new market opportunities
Research findings incorporated into targeted plans, Q4 Q4 Q4
campaigns and stakeholder communications
Communicate intelligence data, policies, consumer and retail Q1-Q4 Q1-Q4 Q1-Q4
trends and the work of HCC to levy payers, stakeholders and
policy makers
Represent the red meat sector in EU Exit Roundtable Q2-Q4 Q1-Q3
discussions and relevant policy forums providing valued and
insightful market and trade intelligence
Undertake modelling work to assess the impact of EU Exit on Q2 & Q4
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, Q1-Q4 Q1-Q4 Q1-Q4
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 Q1-Q4 Q1-Q4 Q1-Q4
of current and future public policies on the red meat industry
Inform the public about the positive contribution of the red Q1-Q4 Q1-Q4 Q1-Q4
meat industry to Wales’s society and economy
23Collate and disseminate market intelligence and research at Wales, UK and global
level (continued)
KPIs Target
Increased understanding of micro and macro economic ≥ 20% ≥ 25% ≥ 25%
factors on the red meat industry
Regular updates on market and consumer trends issued to ≥ 10% ≥ 12% ≥ 15%
increased number of individuals within supply chain
Relevant reports and papers provided to policy makers as ≥ 70% ≥ 75% ≥ 80%
required (satisfaction rating (SR) collated) SR SR SR
Increase engagement of email communications to
stakeholders through:
- Average open rates > 25% > 27% > 30%
- Average clickthrough rates > 3% > 3.5% > 4%
- Email bulletins 25 25 25
Increase engagement on corporate Facebook and Twitter 5% 5% 5%
accounts
Increase engagement via corporate website (sessions) 10% 5% 5%
Increasing media coverage of proactive press releases and 10% 10% 10%
articles reinforcing key messages (press coverage)
Budget £231,000 £230,000 £230,000
24Support relevant programmes of R&D activities
Priorities:
Development of a competitive Welsh red meat industry
Outcomes:
Improved business management skills and industry resilience
Enhanced productivity and efficiency
18/19 19/20 20/21
Activity Target Date
Regularly communicate with research bodies to keep abreast Q1-Q4 Q1-Q4 Q1-Q4
of developments that could benefit the red meat sector
Evaluate R&D priorities to ensure their relevance to current Q2 Q2 Q2
and possible future production and processing challenges
Develop a new R&D strategy for the red meat sector in Wales Q4
Maintain a research and development portfolio relevant to the Q1-Q4 Q1-Q4 Q1-Q4
needs of Wales, and work collaboratively where possible to
maximise levy expenditure
Disseminate and communicate R&D activity to levy payers Q1-Q4 Q1-Q4 Q1-Q4
KPIs Target
Positive Return on Investment on R&D portfolio ≥ 1:4 ≥ 1:4 ≥ 1:5
Increased producer awareness of relevance of R&D portfolio Establish ≥ 30% ≥ 40%
to their businesses baseline
Budget £131,000 £130,000 £130,000
25Facilitate and encourage supply chain efficiency
Priorities:
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
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
Enhanced productivity and efficiency
18/19 19/20 20/21
Activity Target Date
Provide information to help producers to improve technical Q1-Q4 Q1-Q4 Q1-Q4
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 Q1-Q4 Q1-Q4 Q1-Q4
provide a strategic steer in delivery of the annual programme
Deliver Selection for Slaughter training (lamb and beef) and Q2-Q4 Q2-Q4 Q2-Q4
monitor impact to improve producer understanding of market
requirements
Support and encourage Welsh beef and sheep pedigree Q1-Q4 Q1-Q4 Q1-Q4
breeders to performance record and CT scan
Promote market requirements and HCC activity to future Q3-Q4 Q3-Q4 Q3-Q4
farmers through engagement with Farming Connect’s Agri-
Academy, NSA Next Generation etc.
Attend relevant health and safety in agriculture meetings and Q1-Q4 Q1-Q4 Q1-Q4
ensure that relevant messages are incorporated into relevant
communications
Develop and deliver technical information to improve Q2-Q4 Q1-Q4 Q1-Q4
processor knowledge and opportunities for cost-reduction
through increased carcase utilisation and waste reduction
Work closely with key stakeholders, Courtauld 2025, Q1-Q4 Q1-Q4 Q1-Q4
WRAPCymru and Welsh Government
Work with Welsh Government and industry to develop Q1
environmental standards to substantiate the Welsh Lamb and
Welsh Beef brands
26Facilitate and encourage supply chain efficiency (continued)
KPIs Target
Increase level of understanding of market requirements ≥ 25% ≥ 30% ≥ 30%
following attendance at events
Increased number of pedigree breeders in Wales performance ≥ 5% ≥ 10% ≥ 15%
recording
Reduction in waste produced by Welsh red meat processors Establish ≥ 5% ≥ 8%
baseline
Increase level of understanding within primary production on ≥ 20% ≥ 25% ≥ 30%
GHG lowering mechanisms/activities could be adopted
following attendance at events
Budget £216,000 £220,000 £220,000
27Finance
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.
28Levy 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.
29Summary Income and Expenditure
Budget Budget Budget
12 months 12 months 12 months
to Mar 19 to Mar 20 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
30Monitoring 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.
31Annex 1 – Graphical presentation of financial summary
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