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MLA report says fast-tracking OCM worth $420m, AMPC says more study needed

by Beef Central, 28 March 2017

Should Objective Carcase Measurement (OCM) be fast-tracked or is further investigation needed before implementation?

Meat & Livestock Australia has released a statement saying a study by independent consultants commissioned by MLA indicates a $420 million potential benefit to the red meat industry from full adoption of OCM – provided its rollout is fast-tracked.

Otherwise the benefit to industry drops to $72m, the study suggests.

Meanwhile the Australian Meat Processor Corporation this morning released a statement calling for processing industry engagement with an independent review it has commissioned EY to undertake into the commercial benefits of OCM to the red meat industry.

The AMPC says it expects the findings of the final report to be publicly available next month.

MLA statement:

Report reveals $420m benefit from objective measurement

An independent report has found a $420 million per annum potential benefit to the Australian red meat industry from the full adoption of objective measurement technology.

However, the report finds that unless the rollout of the technology is fast-tracked, only $72 million per annum of benefit is likely to be realised by 2020 on current rates of adoption.

MLA Managing Director Richard Norton said the new report reaffirmed the financial benefits of rolling out objective measurement technology across the industry – and highlighted the benefit of fast-tracking adoption.

“As the report shows, there is an enormous amount of value that’s currently being lost to our industry through inaccurate measurement or appraisal systems within the red meat supply chain,” Mr Norton said.

“That’s why MLA has been working hard with industry to develop solutions, including our proposal to fast track the adoption of DEXA technology as an objective measure of lean meat yield in meat processing plants.”

The year-long examination by Greenleaf, Miracle Dog Consulting and S. Williams Consulting was commissioned by MLA to examine the value of adopting advances in objective measurement and systems across the red meat industry.

It found that benefits related to measuring lean meat yield account for around 65% of the potential $420 million per annum impact, shared between producers and processors.

The report noted that if the adoption of objective measurement technology is ‘fast-tracked’ – similar to MLA’s proposal for DEXA rollout – more of the potential benefits will be realised and sooner.

“MLA’s proposal will pave the way for scientific measurement of saleable meat yield, future value based marketing and industry-wide productivity gains through processing automation, genetic improvement and data-based on-farm decision making,” Mr Norton said.

“This is a solution for the whole of the Australian red meat value chain.”

MLA has referred the industry’s peak councils and the Australian Meat Processor Corporation to the report to further assist their consideration of MLA’s DEXA proposal.

The Executive Summary of the report is available here: OM Value Proposition

 

AMPC statement:

EY releases first Independent Issues Paper on DEXA technology

EY has released the first of a series of Issues Papers – calling on red meat processing industry participants to directly engage with the Independent Review Team by answering a series of questions that have been raised.

The questions focus on the benefits, risks and preferred funding methods regarding the potential introduction of Dual Energy X-ray Absorptiometry (DEXA) technology in Australia.

Australian Meat Processor Corporation (AMPC) Chairman Peter Noble encouraged the industry to provide thoughts and feedback to the Independent Review.

“It is important that this review is as thorough as possible – and that the independent reviewers receive responses from a wide range of red meat industry stakeholders,” said Noble.

“We commissioned this review because we have a responsibility to our members that investments made on their behalf are thoroughly evaluated and deliver commercial benefits to the entire industry,” he said.

Industry participants can directly respond to the Independent Review team by emailing dexa.independent.review@au.ey.com.

Answers are to be submitted by 3rdApril 2017.

In February, AMPC and AMIC appointed EY to undertake an independent review into the introduction of objective carcase measurement technology and its application in the red meat processing industry.

AMPC and AMIC support the introduction of proven carcase measurement technology – that delivers tangible benefits for members and the industry.

The final review will provide analysis and recommendations on whether investment in 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 Project 150.

Project 150 is the Meat and Livestock Association (MLA) plan announced in November last year to pursue a $150 million industry-wide installation of Objective Carcase Measurement (OCM) technology, underpinned by DEXA to all AUS-MEAT accredited plants by 2020.

Over the next coming weeks, EY will be releasing further issues papers to communicate their current understandings based on the research and stakeholder consultations being conducted.

The findings of the final report are anticipated to be publicly available in April 2017.

 

Initial questions that the Independent Review is asking:

  1. DEXA outputs
  • What effects might the outputs of DEXA have on the industry?
  • What effects might there be on the industry as a result of the proposed grading data?
  1. Adoption levels
  • Would you adopt this technology and on what basis?
  • What level of adoption is likely to occur across the industry and why?
  1. Benefits
  • What benefits can be expected from Project 150 and who will receive them?
  • What mechanisms should there be to support the realisation of these benefits?
  1. Risks
  • What are the risks of adopting this technology / proposal?
  • What are the potential risks of low adoption rates to the impact on the industry supply chain?
  1. Other technology
  • What other OCM technology should be considered and why?
  1. Funding proposal
  • How should this project be funded?
  1. Industry opinion
  • Are there any modifications which would enhance the Project 150 proposal?
  • Is Project 150 a prudent investment for the industry, and if so how?

Link to EY Project 150 issues paper here

Source: MLA, AMPC



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