Agribusiness consultancy AGINFO has been appointed by Meat & Livestock Australia to conduct an independent assessment of price transparency across all areas of the beef supply chain.

The project, ‘An assessment of price transparency in the beef supply chain’ was requested by Cattle Council of Australia (CCA), to consider options for increasing price transparency after concerns were raised that a lack of price information along the beef value chain, coinciding with some of the lowest farm gate returns, was affecting marketing and investment decisions in the beef industry.

Consisting of lead consultant Brian Todd, along with David Warriner, Winifred Perkins, Peter Maloney (Connecticut, USA) and Peter Weeks, the AGINFO project team will identify whether there is a lack of price transparency in the beef supply chain and investigate areas where improved price transparency could deliver increased economic benefits to cattle producers.

The project will also look at the benefits and costs of price reporting options, including mandatory price reporting arrangements similar to those operating in the United States.

The project will be administered by MLA, under the industry issues and research program – where MLA commissions independent and apolitical research to inform industry on priority issues and support policy development through the Peak Industry Councils.

Cattle Council, as the peak industry council for grassfed cattle producers, has been heavily involved in development of this project including participation in the assessment panel.

The panel, consisted of two CCA producer representatives and one CCA staff member, an independent producer stakeholder, an ABARES economist and MLA staff. From 11 proposals received, the panel interviewed three applicants for final assessment.

As the successful applicant, AGINFO will now carry out the project to review the price information available to producers from each point in the supply chain, assess the value to producers of improvements in price transparency and develop options to deliver the price information to producers if, and where it is needed.

Based on the findings, and if required by CCA, the project will include a full cost benefit analysis of options to deliver the required improvements in price transparency.

A final report is expected in mid-2015.

MLA Managing Director Richard Norton has welcomed the project and encouraged a full and thorough investigation into all aspects of the beef supply chain.

“This was a call by industry to investigate the transparency of beef prices and is an opportunity to develop clearer lines of communication right across the value chain,” he said.

“MLA fully supports the advancement of this project to ensure levy-payers can have greater transparency around the price of their beef from the time it leaves their farm gate before reaching the consumer.

“It is crucial that levy-payers understand price movements at each step of the beef supply chain, to inform short term marketing decisions as well as long term production and business strategies.”

 Terms of Reference for the project:

1. Assess the transparency of prices in the beef supply chain and identify any gaps in market information requirements of grass fed cattle producers, using ABARES publications, MLA reports, services provided by private operators and customer research where required.
2. Identify specific points in the supply chain where price transparency could be improved to the advantage of producers. In particular, the project will identify how improved price transparency might impact on farm gate returns.
3. Outline options to address any price transparency issues identified. Consider price reporting and competition regulation arrangements as they apply in the United States as one option. Assess and advise on other possible mechanisms to improve price transparency, such as development of new marketing channels for producers, collection and reporting of new information and reporting of new analysis such as yield or ‘cutout’ value estimates. This should include before sales and post sales options.
4. In consultation with the project management committee, identify preferred options to conduct a cost-benefit analysis focused on potential change in farm gate returns.