News

CCA backs voluntary price reporting, ABA questions report transparency

James Nason, 03/06/2016

A report released by Meat & Livestock Australia last week identified a range of options that are available to the Australian cattle industry to improve price transparency in the cattle and beef supply chain.

The main options identified were the introduction of a mandatory price reporting system, a voluntary price reporting system, carcase cut-out report, an online board including final OTH carcase selling price, and enhanced MLA and commercial market reporting and intelligence services (as detailed in this earlier story).

After analysing the report at a meeting last week, the Cattle Council of Australia expressed its preference for a voluntary price reporting model.

Asked why, CCA said it believed the costs and complexity of introducing a mandatory price reporting model would outweigh any benefits received.

“Australia exports over 70 percent product and has such a diverse market that it’s difficult to develop a meaningful cut-out value on an export animal,” CCA’s supply chain integrity chairman Peter Hall said.

“The complexity of the market means to be fully inclusive, a mandatory reporting scheme would be a significant amount of work and expense that could potentially outweigh any benefits received.”

“If an accurate voluntary price reporting model can be developed then a mandatory scheme could potentially create more work than is necessary.”

Voluntary price reporting systems also have shortfalls, particularly surrounding accuracy and reliability in that information is only provided by those who choose to report, and does not necessarily provide a meaningful representation of the overall market or transactions. Scope also exists for those reporting prices to behave strategically and to provide reports that suit their own aims, not those of the broader market.

In response to these concerns, Cattle Council says it has asked MLA to explore developing a system to capture information on boxed and wholesale beef prices to further develop transparency in the supply chain, so a more informed decision can be reached on moving forward with a price transparency model.

In relation to suggestions that industry explore the development of tools to accurately report the cut-out value of domestic and export boxed beef, the Australian Beef Association says it has already effectively done this through a simple spreadsheet it developed several years ago.

ABA chief executive officer David Byard said the ABA had managed to get a beast slaughtered, boned and sliced into case ready meat with all the costs along the way and overseen by University and professionally filmed.

“A calculator spreadsheet was then developed so one can put in prices to purchase animal, slaughter animal, dressing percentage from live to dead, then the cost of bone and then the cost to slice and pack into case ready meat. Then retail meat prices is collated and put into the spreadsheet.”

The ABA’s view is that unless someone can point out why the spreadsheet it has developed isn’t good enough, there is little point in industry spending more industry money to reinvent the wheel and develop a very similar tool.

“I just wonder how much the MLA would spend to find out the cut-out value of a given beast, when we already know.”

Cattle Council said it understood the ABA report is based on a shelf-ready product.

“The report CCA has asked MLA to look into developing is based on a boxed beef (wholesale) and co-product value for a grass-fed export steer, US cow and domestic carcase.”

ABA questions transparency of price transparency review process

The ABA has raised questions about the price-transparency report.

“This recent release of this report typifies the very real non-transparency in the beef industry that caused the instigation of this investigation in the first place,” Mr Byard said.

“Two reports were released within hours of each other on the same subject.

“The first report was marked ‘confidential’ and listed consultants used while the second report was not marked in a similar fashion and was published with a different consultant list.

“The first report contained 18 pages while the second only had 9. What they did have in common was that, regardless of the version, nearly all consultants mentioned are ex-MLA employees.

“The releases raise more questions than they answer: Why two releases? At what cost? Why is one confidential and the other not? Why two different consultant lists? What are the benefits for producers?

“One could be excused from wondering if we will ever have transparency while the industry is dominated by the processors and supermarkets’.  This domination extends right through to the MLA, where the 200 biggest levy payers dominate any votes and MLA decisions. The suggestion by CCA that we have a voluntary assessment of price transparency in the beef supply chain simply flies in the face of reality.

“Voluntary systems never work where money is involved. This is why we have a police force!”

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Comments

  1. Philip Downie, 03/06/2016

    Do CCA actually work for producers?

  2. David Byard, 03/06/2016

    Cattle Council state that they believe that the ABA spreadsheet is based on shelf-ready/case ready meat. They are correct! However, prices can be adjusted easily to reflect export prices, simple. The spreadsheet allows for such modification of prices and costs including by-products. So this spreadsheet can easily be adapted to either retail or export prices. The beast has only so many muscles, all accounted for! e.g. rump weighs the same whether exported or sold domestic.

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