Former MLA chairman and MSA steering committee chair David Crombie was guest speaker at the industry service delivery company’s 20^th anniversary gathering in Canberra last week. Here is an abbreviated version of his address…

 

MEAT & Livestock Australia’s was a reluctant conception. It was a Frankenstein child designed to capture all of the good things that had been delivered by its parents – the Australian Meat and Livestock Corporation and the Meat Research Corporation – all in one new organisation.

The pregnancy went well beyond nine months, and the caesarean delivery reflected the complexity of conflicting industry views at that time.

MLA arrived screaming into this world in 1998 – a time when our red meat industries were facing major challenges at home and in our markets overseas.

So fast forward to today. On its 20^th birthday, what is the MLA report card? There are plenty of ticks and there are some entries similar to my old school reports, that suggest “This student could do better.”

Under then chairman John Kerin, AMLC promoted red meat and had achieved significant gains in market access, particularly with its contribution to the removal of US tariffs and to liberalisation in Japan in 1991, and Korea some years later.

Under Dr Ian McCausland, MRC had made similar gains in on-farm and consumer research and in the generation of industry data and future modelling.

The Interim Meat Industry Council played a minding (some would say a meddling) role while the details for the new single organization were being negotiated.

The resultant MLA was successfully delivered by John Anderson (who also spoke at last week’s 20^th anniversary gathering – editor). It was, by necessity, a compromise. It amalgamated the marketing and research functions of its predecessors but in true industry form, its structure reflected the agendas and the checks and balances demanded by the adversarial segments of our red meat supply chains.

The new MLA had a corporate structure with voluntary membership funded by compulsory levies; the AGM voted for directors through a selection process and there was an overarching Memorandum of Understanding giving power to the state farm organisations who appointed the councils.

We took the view on that initial board that our first priority was to abide by company law and to act in the best interests of the company and all of its shareholders. We would largely ignore the complexities of the structure – it was what it was, and we would make it work.

We selected the best of the best from the MLA and AMLC; we recruited to fill any gaps; closed the two separate CBD offices and we moved to an industry-owned building in North Sydney.

One of the early activities in the transition was the development of the first Meat Industry Strategic Plan. We received exorbitant quotes from consultants used to working with our industry, but decided that we had the best skills in-house, headed up by John Webster and Dr Peter Barnard.

A collaborative plan was developed that embraced all of industry and identified market failure priorities where broad industry support was required.

There were some major issues in 1998:

• Industry had a production and trading focus with little regard for our customers
• Market access was difficult. None more so than the UK lamb market where NZ enjoyed favourable access, and,
• Our supply chains were dominated by processer pinch-points where there was no clear price discovery and no transparency to guide production decisions.
• On the positive side, our farm and processing productivity was improving with the uptake of research and we had maintained our reputation for our clean natural production systems.

Shift from supply-driven to consumer-driven

I will not attempt to catalogue 20 years of MLA programs, but will focus on two priority areas where MLA built on the work of its predecessors, and has delivered a major shift in the way we think as an industry and how we do business.

The first has been a major paradigm shift from a production mentality to a focus on the customer – from supply push to demand pull.

MRC research in the early 1990s showed that beef demand was on a slippery slope. Our customers at home were telling us that they liked beef but it was inconsistent. It was high risk: sometimes it ate well, and the next time – same cut, same butcher, same price – it was tough.

It was an uncomfortable time for our industry. The status quo was being challenged as never before – we were being questioned about our product and how we produced it with the clear threat that our consumers were seeking and making alternative meal choices.

Advent of MSA

It was about this time that the first Beef Expo was held in Rockhampton – I am sure that many of you will remember it –

• 1988 was the year of our Bi-Centenary
• Bob Hawke was Prime Minister
• There was no Google, no internet, mobile phones were bricks  and you took photos on a camera using Kodachrome, and
• The beef offered to diners at the Expo Dinner in Rocky was inedible

As an industry it was a wake-up call – we had a real problem if we couldn’t eat the beef at our own industry signature dinner.

This was the start of the realisation we had to change from producing what we liked producing, to producing what our customers wanted to eat.

Meat Standards Australia continued the work of previous EQA groups and MLA led the charge in assembling the science to answer the two big questions –

• Can consumers tell the difference? and,
• Can we produce it consistently?

The answer, based on a million taste tests around the world was a resounding “Yes”. But there was no simple solution, no silver bullet.

Everybody in the chain from paddock to plate was accountable to each other and to the end customer. We had to change what we did on-farm and, truckies, saleyards, processors, retailers and meal-preparers also had to change what they did.

And change did not just happen. The meat science was evolving and we had to be certain that graded product ticked all of the consumer boxes before pathways were accredited. This put us at odds with large sections of industry who felt they were being excluded. We held producer meetings around the country – and some of them were pretty lively.

Over time the science developed and the pathways expanded but only where the product consistently met consumer standards. I cannot talk about MSA without mentioning some of the key people. John Webster, the Ayatollah himself Rod Polkinghorne, Jason Strong and Terry Nolan. These were true heroes amongst others in what has been a long journey from 4.3pc of cattle graded in 2001 to some 50pc today. Incidentally this is a rate of uptake well in excess of the voluntary uptake of the much-vaunted USDA Grading descriptor.

The rest is history, the beef was excellent at the Rocky Expo this year and tonight we are all relaxed and confident that our meal will be first rate …… there is no reason why it should be otherwise.

The MSA beef technologies have also been expanded to cover sheepmeat, but in true industry form, progress has been constrained by clinging to traditional lamb measures such as the number of teeth rather than a pure consumer score on the meat.

Market access platform

A second area where MLA has had a major impact has been through building on the foundations laid by AMLC and MRC in improving market access. We export more than 65 percent of our red meat production, and it follows that we need the greatest possible choice of markets.

For 150 years we expanded our livestock numbers in Australia and we sold our surplus production to a single market – Britain. It was our Commonwealth duty to produce it and it was their Imperial responsibility to take it.

Then Britain joined the European Economic Community, and Australia was forced to look for new markets, not only for our beef and lamb but also for our wool, our dried fruits, grains, sugar in fact all of our agricultural exports. Who knows, the British market may return with Brexit but in the meantime we have found new and better diversified markets.

We were forced to change direction overnight and it has been a long haul in securing the market spread that we enjoy today.

MLA has worked closely with Government in the negotiation of trade agreements designed to improve market access by reducing tariffs and quotas, and removing technical barriers to trade.

But it does not happen quickly. Removal of US quota restrictions took 50 years; liberalisation of trade into Japan and Korea has taken over 40 years; ChAFTA has been on-going for 10 years; Indonesia is on the cusp and the on-again, off again WTO and TPP negotiations continue.

And access is only part of it. Each new market has particular protocols and requirements. The US was looking for grinding beef while Japan favoured grain-finished table beef. We were forced to change what we were doing, we had to respond to the needs of our new customers.

One of the great MLA success stories has been the FARL Program. In 1990 the lamb industry was almost entirely domestic, consumption was falling and lamb prices were down.

MLA did the research and identified a US niche for heavy lean lambs, but it needed development capital and promotion for it to succeed. And succeed it did, and I would like to acknowledge Gerald Martin for his leadership with David Palmer and the late David Thomason for his innovative promotion of all of our red meat products.

I remember wearing the first cap “Lamb 50” – we were targeting $50 per lamb in the US market. Pretty soon it was a “$100” cap and then “$150”, and today the figure is $250 plus. I am not sure if there is a cap to celebrate this, but I am happy to wear it.

Eating quality consistency and market access were classic cases of market failure where MLA intervened with long-term commitments in the face of strident criticism.

“You will never change the US Import Law”, they said.

“You will never sell lamb into the US.”

“You are wasting money on MSA.”

“I’ll do it when someone pays me more money.”

I would like to acknowledge Jack Ware who stepped in as head of the Processing Council and threw in his personal support on a crucial vote for joint funding of MSA (This episode is well-documented in the book, “Grainfed: A history of the Australian lotfeeding industry” – editor). Jack asked me one day how I was going. I told him, OK, that there were plenty of critics and some supporters…..Jack’s advice was “That’s as good as it gets.”

Addressing the big challenges

So what is the position now and what of the future?

The mega-trend is, of course, world population growth, with more mouths to feed.

I am not a Malthusian. Globally we can produce enough food, and with technology, open borders and reduced waste, we can continue to do so.

Not only are there more mouths to feed, but as a result of economic growth there is a change in the nature of protein demand that is creating volatility leading to profitable market niches at a range of price points.

So – volatility and change is not all bad. Together they create an environment where there can be a level of price stability for enterprises that consistently pursue and deliver to the needs of selected customers.

Failure to recognise this will have us languishing as price-takers supplying a “fair average” commodity in competition with others who have a lower cost base.

This customer focus and product differentiation will require fierce determination to embrace new technologies and supply chain improvements. This is an area where MLA needs to focus its support in the future.

We should not aspire to be the ‘food bowl for Asia’. Our real opportunity is not by country. It is about locations where there is economic growth and the emergence of fragmented markets.

We have evolved from a ‘Fair Average Quality’ mind-set with adversarial supply chains producing bulk commodities. We cannot go back into the bargain basement.

We need to position ourselves at the high-value, quality end of these emerging markets. To do this, we need short transparent supply chains with through-chain accountability to our customers backed by credible verification and traceback.

We are not alone in this quest. Around the world, suppliers are positioning themselves to capture these high-value protein opportunities, and new competition is emerging with insect proteins and “Manufactured Meat”.

“Our future is in building unassailable points of product difference and provenance for high-end customers that can be delivered through accountable supply chain brands”

We dismiss these at our peril. Once again we need to listen to our customers. These protein substitutes are vegetarian-friendly and will be a growing challenge to our traditional beef and sheepmeat offerings.

Our future is in building unassailable points of product difference and provenance for high-end customers that can be delivered through accountable supply chain brands.

It is likely that the migration of the beef herd north will continue in a region where scale is possible. Productivity in the north can increase with improved breeding, growing and backgrounding platforms for a range of finishing options including irrigated and dryland crops with northern processing and shipment.

Enhanced functional genomics and EVBs that link stud data with commercial outcomes will send the signals for improved breeder performance. Better data will also allow early identification of market potential with individual animals being fed to optimise their ultimate commercial value.

Natural resource management will continue to be important also. A vacant landscape craved by some is no solution – not for better environmental delivery, nor for increased food production.

Planning for balanced development will require big data analysis, communicated through improved connectivity and new technologies for information sharing such as Blockchain.

Sharing information between supply chain partners will be a challenge for those whose market power has been in their ownership and control of supply chain data. But we need to change if we are going to be better.

Processing and cattle handling robotics, drones, virtual fencing, reactive animal tags and sensing devices are all tools that will increase efficiency and can only be delivered through improved workplace capability.

All of this will require public investment and consistent long-term policy settings that encourage entrepreneurial endeavour and attract the necessary skills and development capital.

Building public support for what we do

And probably the most important element will be through public support for what we do.

Farmers enjoy community support – witness the outpourings of public sympathy in the recent drought relief.

Community sympathy is nice, but I would prefer community respect and trust. We are amongst the world’s best in producing clean, natural and safe foods, and we need to tell our stories better.

We cannot afford confronting public images that challenge what we do. Where breakdowns do occur – and they will – our best insurance is community respect and support for our farmers and trust in the integrity and ethics of our farming systems.

MLA’s role is to identify and address these big-picture items and to connect with the largely urban Australian community that has little understanding of what we do. MLA needs to deliver systems and solutions that provide a framework that empowers industry to get on with what it does best – producing the best food in the world.

To do this MLA will need to think long-term. It needs to be ambitious and it needs to be brave. At the same time MLA needs to remain grounded. The true test of all programs lies in the response to two  questions:

• To the empty chair “What would our customers think about this?”
• And to our members “Is this good value for a producer with 750 cows or 7500 sheep?”

I will finish by briefly recounting a discussion I had with an Auckland Taxi driver.

He told me that NZ is a beautiful country and this supports tourism. He told me that NZ produces the best food in the world. I believe we will have succeeded as an industry when our Sydney taxi drivers carry this same message about Australian agriculture.

Happy Birthday MLA, and best wishes for the next 20 years.