Beef yield indicator pursued amid price transparency debate

James Nason, 30/01/2017

As attention focuses on the pros and cons of introducing US-style mandatory price reporting legislation in Australia’s beef cattle industry, questions around what true price transparency is, and how it would work in practice, continue to court debate.

At the same time, the grassfed cattle industry is actively working to develop an Australian beef yield indicator/wholesale carcase ‘cut-out’ to provide more transparency and price information back to producers (more on this below)

Price transparency: domestic versus export

Genuine price transparency in Australia’s beef cattle industry would require accurate knowledge of prices paid at each point of the value chain, from the price paid for cattle to the price paid for each individual cut of beef at domestic retail or export customer level, and the prices paid at each point in between.

Achieving this appears to pose different challenges depending on if cattle are destined for the domestic market or one of the many export markets to which Australia sells.

In Australia’s domestic market, the major supermarket retailers do not currently supply Meat & Livestock Australia with individual SKU (stock-keeping unit) price data for each specific cut.

However, MLA does have access to similar data via ACNeilsen Australia’s Homescan panels. This service provides retail price data on individual products, including individual meat cuts, drawn from the scanned weekly grocery shops of about 10,000 consumers around Australia.

Accessing this information currently costs the industry about $200,000 a year, and is used by MLA for consumer insights to develop marketing campaigns.

Retail accounts for 70pc of Australia’s domestic beef market, with 30pc to hotels and fast food.

The big two supermarkets Coles and Woolworths combined have 70pc of Australia’s supermarket share, which translates to about 50pc of Australia’s total domestic market.

If the ACCC or another Government body was to require that all supermarkets pass their retail price data back to MLA for transparency purposes, it would be powerful information for industry.

“Such information would provide price transparency but it would also help MLA develop insights into consumer trends to help develop retail innovation into future consumer demands, keeping red meat at the forefront of consumers,” MLA managing director Richard Norton said.

Then Australia’s beef cattle industry could claim to have full price transparency in its domestic market, which accounts for about 30pc of its total beef production.

But, in the absence of legislation forcing that disclosure, the best information it currently has available is Homescan data and the current modeling used by MLA.

By comparison, in the United States’ domestic market, legislation requires the mandatory reporting of cattle and beef prices.

US packers must inform the USDA of the price they pay for cattle as well as the price they receive for wholesale meat cuts, information which is then published by the USDA to show current margins through the supply chain.

The US industry is different to Australia’s in that it is dominated by its domestic market and also dominated by feedlot finishing systems. 80-85pc of US production involves the sale of fed cattle from feedlots to processors at a contract price for the US domestic market, which allows for a relatively seamless process of price disclosure.

The same mandatory requirement is not applied to reporting individual cuts of beef sold into the export market. However US processors do report export volumes and prices.

Where all roads in the US lead to a feedlot, in Australia, there are many different roads to an end-market destination, both domestically and for export.

In contrast to the US, more than 70 percent of Australia’s beef production sells offshore, heading into more than 100 different markets. Various carcases with offal can go any number of different ways, explaining why some carry three or more halal blessings.

True price transparency for beef selling into the export market would require accurate information on the price of the cattle going into the processing facility, and the sell price for every piece of that animal to each market it goes to.

The differences between the US and Australian industries adds to the complexity of achieving genuine price transparency in Australia’s export beef market in particular.

Advocates of a US-style mandatory price reporting system in Australia say better price information is needed to provide a truly competitive market and to ameliorate what they see as unequal bargaining power between producers on one hand and an increasingly concentrated retail industry and processing industry on the other (as explained by the Australian Meat Producers Group in its case to a Productivity Commission inquiry last September).

Farm gate percentage of retail price reports

Back on the domestic market, while MLA is not able to access retail price data by specific cut, it has used ABARES retail data and the EYCI to provide an indication of farm gate price as a percentage of retail prices for the past 20 years.

As an ISO accredited system, all data used by MLA market reporting must have a reference point. It says that at best the indicator is a guide, but it shows that farm gate returns over the past 10 years have averaged between 30pc and 35pc of retail price (ranging from a low of 28pc in 2013 to a high of 52pc in 2016).

Producers want to see this average lifted, and the strategy of their peak body, the Cattle Council of Australia, is to accelerate the adoption of objective carcase measurement and value-based marketing (where producers are rewarded with higher prices for producing cattle that better meet market specifications, in the process driving an industry-wide improvement in the production of quality beef for consumers).

MLA also recently outlined a plan for the industry to borrow $150 million to fast-track the installation of DEXA (Dual Energy X-Ray Absorptiometry) objective carcase measurement technology in all AUS-MEAT registered slaughter facilities in Australia. MLA says the ambitious move, which industry groups are currently considering, would 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. Longer term it would also reduce the industry’s annual multi-million cost of grading.

Australian Beef Yield Indicator being explored

As part of the broader push to deliver more transparency and feedback to producers, late last year Cattle Council of Australia asked Meat & Livestock Australia to start working on the development of an Australian beef yield predictor/indicator.

Beef Central’s understanding is that the indicator would give producers more accurate information about how their cattle are priced at a wholesale level ie prior to domestic retail or being exported.

The feedback, in the form a wholesale carcase ‘cut out’, would then help producers to make decisions from feeding to genetics to produce cattle that better meet market specifications, and in turn increase their returns.

However, for the indicator to work, it would require many processors to provide more information than they do now, either voluntarily or through Government intervening to make the information mandatory.

(It is important to note here that one of Australia’s largest processors, Teys, has been signaling its intention for a long time now to move to value based marketing.

This would ultimately require producers to be provided information on the yield of cuts and pricing by cut. It is a bold move for a processor, and one that aims to build the trust between producer and processor. The question will be: Will other processors will adopt the same strategy?)

An unintended consequence of the transparency debate?

For the time being however there are signs that the recent push for more information in the beef cattle market may have had an opposite effect in at least one short-term way.

Some processors who have previously contributed price information to MLA for its over the hooks reports have reportedly stopped doing so, citing fears that providing such information could now be interpreted by the ACCC as an attempt at setting the market. Beef Central has also been informed by some processors that they are no longer comfortable providing forward-looking market information to rural media, citing the same reason.

It reflects the level of uncertainty and conjecture currently pervading the industry as it awaits the outcome of a long-running senate inquiry and ACCC investigation process.

The next key development which may help to shed further light on the future of mandatory price reporting in Australia will be the ACCC’s final report and recommendations from its cattle and beef market study, due soon.


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  1. Norman Hunt, 03/02/2017

    Noting that the above leads to a broken link, Mr Norton’s evidence to the Senate Committee’s Inquiry may be found at:

    Mr Norton’s evidence was given on the 17 November Public Hearing in Canberra, and on the pdf his evidence begins at page 28 of the transcript, with the original quoted section found at the top of page 32 of the transcript.

  2. Norman Hunt, 03/02/2017

    I write in response to the comments by MLA to clarify my comments above about the AMPG erratum on US mandatory reporting of processor beef export sales, which were made for the purpose of ensuring that the error in the AMPG Submission to the Productivity Commission that was linked in the 30 January 2017 Beef Central article on price transparency was brought to the attention of Beef Central’s readers.

    My comments in that regard quoted Richard Norton’s evidence to the Senate Committee’s Inquiry on the effect of market consolidation on the red meat processing sector accurately. Nor were the quoted words from Mr Norton’s evidence to that Inquiry taken out of context.

    It is now common ground between Mr Norton and AMPG that US red meat processors are mandatorily required to report export boxed beef sales to the USDA. The AMPG did not comment above or in its 2016 Submission to the Productivity Commission as to whether the US export beef prices were made public or not, or whether the US price reporting point was the port or the abattoir. Nor does the body of the AMPG Submission to the Productivity Commission deal with these issues – rather AMPG’s argument, based on its then mistaken belief that US processors were not mandatorily required to report export prices on boxed beef, was because the US exported such a small percentage of their beef production the failure to publicly report beef export prices did not fundamentally undermine US mandatory reporting price indices, whereas failure to do so in Australia might because Australia exports 70% of its beef production.

    The MLA’s claim that the comment I made above about the evidence given by Mr Norton to the Senate Inquiry is “incorrect” either technically or by implication, is rejected.

    Beef Central readers can judge for themselves by reading a copy of Richard Norton’s evidence to the Senate Committee’s Inquiry into the effect of market consolidation on the red meat processing sector at:;query=ID%3A%22committees%2Fcommsen%2Fd60da97f-3af1-4f76-8eed-070ad8771bd7%2F0001%22 and a copy of the AMPG Submission to the Productivity Commission can be accessed at the link above in the Beef Central article.

  3. Norman Hunt, 31/01/2017

    Congratulations to Beef Central on a balanced, informative article on the important topic of price transparency that attaches a link to the AMPG September 2016 Submission to the Productivity Commission Inquiry into the Regulation of Australian Agriculture.

    I write on behalf of the AMPG to set the record straight about the error on the third paragraph of page 15 of the September 2016 AMPG Submission to the Productivity Commission which incorrectly states that the requirement for U.S. processors to report on export beef prices is voluntary rather than mandatory. In making this statement, AMPG relied on, but inexcusably failed to check, the evidence that Richard Norton of MLA made to the Senate’s Rural and Regional Affairs and Transport References Committee during a public hearing on 17 November 2015 in Canberra, where, in response to a question from Senator Williams about the dangers of price transparency from an exporting processor’s perspective, Richard Norton stated “Everyone refers to the US as a model we [Australia] should adopt, but 90 per cent of their production is consumed domestically in a population of 350 million. Their export market reporting is all voluntary.”

    Shortly after the AMPG submission was lodged with the Productivity Commission, one of the AMPG members properly researched the issue and found that the U.S. legislation did require mandatory reporting of export beef sales. AMPG then forwarded an erratum to the Productivity Commission pointing out the error on 6 October 2016. A copy of that erratum can be found at: files/2016.10.06 erratum to productivity commission submission.pdf

    Editor’s note: Beef Central approached MLA seeking clarification of its position on this issue. This was MLA’s response:

    “The assertion by Norman Hunt regarding evidence given by MLA’s Managing Director Richard Norton to the Senate is incorrect. Readers are encouraged to examine the entirety of Mr Norton’s and MLA’s near hour long testimony which extensively canvasses issues around price transparency in the USA and Australia.

    The facts are:

    • Export prices in the USA are not made public.
    • It is not mandatory for exporters to disclose their sell price to the export customer – hence it is not mandatory for US beef exporters to provide full price transparency i.e the price at export port.
    • Meat packers are required to report domestic and export boxed beef sales to the United States Department of Agriculture (USDA) twice a day, by 11AM ET and 3PM ET. Only domestic sales are made public by USDA.
    • USDA does not divulge the pricing of export sales and it is not publicly reportable.
    • US exporters provide information on the quantity of their sales transactions, the type and class of commodity, the marketing year of the shipment and the ultimate destination. They also report any changes to the previously reported information, such as cancellations or changes in destinations. Pricing is not part of this report, rather the focus is on volumes and triggers for reporting. This information is only used to calculate the comprehensive domestic beef cutout at the end of each week.

    As the Beef Central article referenced, MLA is working on the development of a ‘carcase cut out’ for the Australian market at the request of Cattle Council of Australia (CCA).”

  4. David Byard, 31/01/2017

    Price transparency by James Nason a balanced article and gives all points of view. Some interesting points I agree genuine price transparency requires accurate knowledge of prices paid at each point of the value chain. I also agree with Richard Norton that if the ACCC or government did require supermarkets to pass their retail data back industry organisation transparency purposes it would be of benefit to the industry and equally important in developing a system to collect goat on export product. Milestones 4 assessment price transparency in the beef supply chain claimed after reviewing the options that there was potential to review and negotiate the release of shipment value and volume is held by Australian Customs. This data will provide cutouts for a number of categories including export steer, export And subject to availability grain fed steers which does not sound overly complex to my way of thinking. Report goes on to say that the retail prices could be collected by individual barcode data for the full volume and value of retail cuts and trimmings transacted in the major supermarket retail sector and suggest that supermarkets dear cutouts could be calculate by the use of Nielson scan data. You can find a link USDA box beef dashboard online and if the NLIS darter was digitised, value added numbers of transactions could be pulled out in aggregate show trends in types of transactions over time without disclosing individual information. This information would indeed require legislation to enforce disclosure.
    It seems CCA had asked MLA to start working on the development of an Australian beef yield predictor indicator. What puzzles me three years ago the ABA decided to conduct our own trial, where as we commissioned the University Tasmania to manage and audit a farm gate percentage of retail price. We hired a boning room sessional butcher and slicer along with professionals the group (a video can be seen on ABA website). And we followed a carcass right through to retail meat. Saleable meat was then sliced into case ready meat, all fat and bone and saleable product . All saleable meat was weighed e.g. rump Scotch porterhouse ect knowing the weight of each muscle allowed a spreadsheet calculator to be developed and takes into account the price of carcass beef, all the costs along the supply chain and the price of retail meat at supermarket prices. One can be guaranteed of getting a very accurate figure. The ABA aremore than happy for a panel of experts to conduct the trial as to whether the spreadsheet calculator as he gives an accurate picture.( The spreadsheet can be seen on the ABA website). Surely it would be much cheaper to assess the spreadsheet rather than trying to reinvent the wheel.

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