Investing in genetic technologies to meet future market requirements and assist in delivering profitable sheep and cattle farming

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1 Investing in genetic technologies to meet future market requirements and assist in delivering profitable sheep and cattle farming

2 B+LNZ GENETICS The Government through its Ministry of Business, Innovation and Employment (MBIE) has committed $15 million over the next five years, to accelerate genetic progress in New Zealand sheep and cattle. has been established to carry out this work. It will bring together the existing sheep and beef genetics research and innovation by consolidating Sheep Improvement Ltd (SIL), the Beef + Lamb New Zealand Central Progeny Test and Ovita. The new entity will allow Beef + Lamb New Zealand to continue providing world-leading genetic technologies that assist breeders to produce fit-for-purpose sheep and cattle to meet the future needs of New Zealand farmers. Why genetics? Genetics investments deliver great value due to the multiplication factor as improved genetics spread out from ram and bull breeders to their commercial clients. This impact flows through to other groups in the value chain right to the consumer. INVESTMENT HERE Current investment IN B+LNZ Genetics Genetics R&D Ram/Bull Breeder B+LNZ CENTRAL SIL PROGENY TEST OVITA The New Zealand system for performance recording and genetic evaluation used by the majority of ram breeders. Used to demonstrate the impact of using high genetic merit sires, to provide key genetic connections between different ram breeding groups and to demonstrate new technologies in sheep breeding. A company investing in the research and development of new genetic selection tools for sheep based on DNA markers and tests. Genetics supporting both sheep and beef Historically these entities have been focused just on sheep, but B+LNZ Genetics will include beef focused activities and it will increase extension of tools and services to commercial farmers. CREATES VALUE HERE Lamb/Beef Producer Lamb/Beef Finisher Processor Retailer Consumer How will it benefit me? By accelerating the genetic gain of sheep and cattle in breeders flocks and herds, commercial sheep and beef farmers will be able to buy rams and bulls with greater genetic merit. This will contribute significantly to farm profitability.

3 What investment is required? No extra money is required from farmers. On behalf of farmers, Beef + Lamb New Zealand currently invests $2.9 million a year in genetics-related activity through Sheep Improvement Ltd (SIL), the Beef + Lamb New Zealand Central Progeny Test and Ovita. It s intended that this investment continue and be matched by government funding through the Ministry of Business, Innovation and Employment (MBIE) plus some third party investment. Over five years, $44 million will be invested: $14.5 million by farmers via Beef + Lamb New Zealand, $14.5 million by third party investors and $15 million in matched funding will come from the Government. A copy of the cost/benefit analysis is available by calling Beef + Lamb New Zealand How will Beef + Lamb New Zealand Genetics deliver value to the industry? Future breeding objectives must focus on profit, efficiency and product quality. This means that the hard to measure traits must be considered to add further value. Opportunities offered by new tools based on DNA genetics are absolutely critical to address some of these challenges and to offer the best way to assess genetic merit for some new traits. DNA selection tools will play a significant role here as they allow us to get more accurate genetic information earlier, for key traits affecting profit and efficiency. will produce more accurate and more relevant genetic information that will be routinely used in business decisionmaking by users across the value chain of our sheep and beef industry. Why is a good investment? The sheep industry has undergone dramatic change with increased productivity in the last two decades. The weight of lamb sold per ewe has increased 85% in the last 22 years. By comparison, over the same period, dairy cattle productivity has improved by 31% per cow while beef productivity (average steer weight) has seen a more modest improvement of 4% (source: B+LNZ Economic Service). The extra value of genetic improvement delivered by SIL in the 13 years since it was formed is estimated at $786 million. If this farmer investment had not been initiated collective farm incomes would be $786m less. These returns come from increased genetic gain achieved after SIL was formed ($480m) together with increases in rates of genetic change after the Central Progeny Test allowed SIL-ACE (the large across flock and breed evaluation) to provide better benchmarking of genetics in different flocks ($306m). Value delivered has been assessed by AbacusBio. What has genetics delivered? Sheep breeders in NZ have achieved remarkable success in the last years. The two Genetic Trend Graphs show steady genetic improvement with accumulated gain for more traits quantified in the following table. Table: Genetic gains since Ewe Meat Trait breeds breeds Number of lambs 10.3% n/a Lamb Survival 0.47% 1.18% Weaning weight kg kg Carcass weight kg kg Autumn bodyweight kg kg Ewe weight kg n/a Carcass Fat Yield -204 g -507 g (per 18kg carcass) Carcass Lean Yield +61 g +208 g (per 18kg carcass) Fleece weight +304 g n/a Dual Purpose index (RGAW) $ n/a Terminal Sire index (GM) n/a $ 8.03 Figures: Genetic Trend Graphs depicting gains made by NZ sheep breeders since CW ebv - kg NLB ebv - proportion Genetic Trend for Carcass Weight Genetic Trend for No. of Lambs Born Year 2003 Year

4 What is the expected return on investment? Each year, for the next five years, Beef + Lamb New Zealand proposes to contribute $2.9m year towards a total annual investment of $8.8m. This will return an extra $5.90 of profit per lamb after 10 years (source: AbacusBio). Overall, estimated gains on-farm for the sheep industry from the B+LNZ Genetics programme are $742m over 20 years from the five year investment of $44m. This extra profit comes from adding new traits, improved accuracy in genetic evaluations and greater adoption of genetic tools and information by industry. Gains for beef and for other parts of the value chain are additional to this. ON-FARM ADDITIONAL VALUE Improved evaluation accuracy Greater adoption New genetic traits $82m $304m $356m What beef genetics activity is planned? Beef + Lamb New Zealand will add value to services delivered to the beef industry and deliver outputs in the areas of better breeding objectives, adding new traits and making better use of genetic information. This will start with undertaking a beef industry needs project, canvassing breeders, finishers and processors, to better understand the drivers for genetic technology, services and innovation. Parallel projects will occur for the sheep and beef sectors to assess common opportunities. These include: Economic evaluation that focuses on profit and efficiency for selection objectives, including meat quality traits Development of a farm genetic plan tool to help bull and ram buyers target genetics to suit their needs Development of best practice in the use of genetic information for buyers of bulls and rams Beef genomics including: - Paternal parentage and genotype - Development of molecular breeding value traits in collaboration with genetics service providers Who is involved? will be funded through three main sources: 1. Farmer investment through Beef + Lamb New Zealand and the New Zealand Meat Board 2. Industry investors 3. The Government through MBIE, AgResearch, AbacusBio and universities will also contribute to outputs. Where will the money be invested? The funds will be invested primarily in three areas: 1. Upgrading the software that runs the SIL genetic engine so it s capable of dealing with increased flows of data 2. Research into new genetic traits relevant to sheep and beef profitability (e.g. longevity of ewes and cows, product quality and efficiency), particularly on hill country 3. Increasing farmer adoption of genetic selection tools and services across the sector Why the focus on hill country? will be supporting improved profitability of New Zealand sheep and beef farms, particularly on hill country, as a greater percentage of sheep and beef production relies on this type of country.

5 Government investing alongside farmers and industry Assist in delivering profitable sheep and cattle farming Identify new traits that thrive on hill country Speed up genetic gain

6 What will Beef + Lamb New Zealand Genetics do to achieve these gains? Beef + Lamb New Zealand Genetics will deliver value through three broad areas of activity: SERVICES Focused on delivery of genetic evaluations to the ram breeding industry through SIL ADOPTION Focused on accessibility and supporting the use of genetic information for sheep and beef INNOVATION Focused on core research and development for sheep and beef Why does this require a farmer vote? Because Beef + Lamb New Zealand s total investment over five years in is more than one third of its $23 million forecasted levy funds for one year, the Beef + Lamb New Zealand Constitution considers it to be a Significant Transaction and a farmer vote is required. What do I have to do? Using the enclosed voting form, you need to let us know if you support Beef + Lamb New Zealand funding the work for the next five years. The $2.9 million proposed annually is the same as has been invested over the last five years. In addition to the Government investment, private sector funds of $1.5 million a year for the next five years have been secured by Beef + Lamb New Zealand Genetics and a further $1.4 million a year will be sought from other sources to take the total funding to $44 million over five years. New Zealand Meat Board funding It s intended that Beef + Lamb New Zealand will apply to the New Zealand Meat Board for reserve funds to invest in. In considering a proposal for funding the New Zealand Meat Board must satisfy criteria that is set out on the website More information on B+LNZ Genetics can be found on the Beef + Lamb New Zealand website at beeflambnz.com/genetics.

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