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Processor bodies commission independent study into carcase measurement technology

by Beef Central, 24 February 2017
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THE Australian Meat Processor Corporation and Australian Meat Industry Council have commissioned an independent review into the introduction of objective carcase measurement technology, and its application in the red meat processing industry.

The review, to be undertaken by Ernst & Young, will provide analysis and recommendations on whether investment in Dual Energy X-ray Absorptiometry (DEXA) technology is a prudent operational and commercial decision for processors.

The review will evaluate all strategic, technical, financial, commercial, operational, governance, and implementation aspects of Meat & Livestock Australia’s Project 150 proposal.

Project 150 is MLA’s plan announced in November last year to pursue a $150 million industry-wide installation of Objective Carcase Measurement technology, underpinned by DEXA to all AusMeat accredited plants by 2020.

Peter Noble

Peter Noble

AMPC chairman Peter Noble said AMPC had commissioned an independent review because it had a responsibility to its members to ensure that investments made on their behalf are thoroughly evaluated and deliver commercial benefits to the industry.

“Without adequate consultation, cost-benefit analysis or due diligence there can be no level of comfort in investing substantial industry funds in DEXA technology which is yet to be sufficiently proven,” he said.

Beef Central’s article yesterday on Project 150 developments pointed out that there are wide differences of opinion about DEXA’s current level of development, and how close it is to commercial application in beef carcases.

“We take our obligation very seriously to provide members with a comprehensive fact-based approach to investment decisions to ensure their funds are spent in ways which will benefit them and the industry,” Mr Noble said.

As pointed out yesterday, AMPC has already invested and committed to invest $6.6m of processor levy funds in jointly-funded projects related to carcase measurement technologies, highlighting the processing sector’s underlying support for the principles behind OCM.

AMIC chair Lachie Hart

AMIC chair Lachie Hart

AMIC chairman Lachie Hart said a capital investment of the scale proposed in Project 150, that is without appropriate governance, consultation and feasibility assessments could encumber an industry already facing unprecedented cost pressures related to regulation, utilities, livestock, and labour.

“Until our members can be confident that this technology will provide a more independent and accurate way to grade and price carcases, we risk undermining the integrity of the cattle pricing process,” Mr Hart said. “If we get it wrong, it would be a costly and backward step.”

“At this early stage of its development, it would not be prudent to unilaterally roll out DEXA technology across the whole of industry,” he said.

The independent review and the pilot trials being undertaking by Teys Australia at its Rockhampton plant will better inform the industry as to the merits of the technology and provide the necessary confidence to make an investment decision.

The independent review will be led by Andrew Metcalfe, who has extensive experience in the sector and was the lead partner on the recent report on Strategic Risks Facing the Red Meat Industry.

EY has identified a team with key skills, knowledge and resources to undertake the review, including an international expert familiar with DEXA technology and its application across multiple industries.

The findings of the report should be publicly available in April.

 

Click here to view yesterday’s Beef Central report, outlining the processing sector’s rejection of the Project 150 proposal in its current form.

 

 

 

 



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  • Eion McAllister February 27, 2017

    Good to see that there is some questioning of the position being put by MLA. They are always good at spending other people’s money and increasing costs for producers with their grand plans. It would seem that some sections of the overall industry are becoming brave enough to question the position of MLA. May they continue to be so.

  • Catherine Ainsworth February 28, 2017

    Yes, Eion – as if there should be any argument about due diligence and good corporate governance !! The technology providers are the short term winners, but industry needs to be assured of long term gain.

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