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Does red meat industry have appetite for ‘transformative’ innovation, senators ask

Jon Condon, April 11, 2019

INCOMING Meat & Livestock Australia managing director Jason Strong fronted the Senate Estimates hearings in Canberra last week, in one of his first official public outings representing the industry service delivery company.

Questions from the Rural and Regional Affairs and Transport committee members focused primarily on the red meat industry’s appetite for innovation in its research and development activity, the industry’s ambitious commitment to carbon neutrality by 2030 and DEXA technology.

NT Labor senator Malarndirri McCarthy asked whether MLA was aware of the five recommendations made in Minister Littleproud’s review on Agricultural innovation, prepared by EY, and what steps MLA would undertake to address the recommendations.

Mr Strong said there were a number of issues in the report that cut across MLA operations at the moment—not least being MLA’s annual investment plan and strategic plan.

“Also, there’s the 2050 vision that the broader group of Research & Development Corporations has been working on as well. Even though that report was recently printed, we’re aware of those five recommendations and, even though we haven’t had any direct instruction or inquiry about actions on those, we’re certainly conscious of them as we are thinking about our next year’s planning cycle,” he said.

“In some ways, though, I think we are deferring a little bit to the broader group of RDCs and making sure that we make the most progress we can in those areas without creating too much duplication.

Greater need for ‘transformational’ innovation

Sen McCarthy asked whether MLA had been asked by either the minister or the department to act on the five EY review recommendations.

Mr Strong said he understood that had not occurred, but when asked, he said he expected that such instructions or advice could be made.

CT scanners are used to calibrate DEXA yield measurement equipment and other technologies

Sen McCarthy suggested the report indicated that RDC investment portfolios were largely focused on applied, commodity specific and incremental innovations, and that the innovation focus needed to shift towards a more balanced approach to deliver greater ‘transformational’ innovation, address cross-sectoral challenges, and target economic, environmental and social outcomes.

“Does MLA agree with that statement?” she asked.

“Broadly, when you look at all of our programs, yes, we do,” Mr Strong said.

“While it’s vitally important that we are able to make incremental change and improvement, particularly to current practice, and focus on what we can apply immediately to move forward, when we look at our broader programs and the broader supply chain challenge we have to come up with more innovative solutions which provide us with different (and potentially significantly different) ways of doing things to create and capture more value across the supply chain.

“As far as action goes, I think that’s where we see one of the opportunities for us in the way MLA manages, in particular, our commercially engaged R&D programs, where we’re partnering with individual businesses or companies that have ideas about a significant activity that might fundamentally change the way we do things,” he said.

“We can then partner with them and, of course, the government partners with some of those as well. So certainly in our R&D programs we already have a split in things which are going to have immediate benefit—or potentially immediate benefit, if we can get them applied—and those things which might significantly change.”

Mr Strong said industry was investing in things like the DEXA technology, to provide more comprehensive information than it had had previously, to allow stakeholders to make better decisions and better manage product through the supply chain.

New focus for DEXA?

In what appeared to be a somewhat contradictory set of questions, given the emphasis mentioned above on ‘transformational’ innovation, senators then questioned Mr Strong about the merit of investment in DEXA technology.

Queensland Senator Barry O’Sullivan* Glenn Sterle suggested the DEXA technology project seemed to have slowed down. (*Editor’s note – the original version of this story incorrectly attributed these questions to Sen Glenn Sterle.)

“There was a lot of energy and expectation 18 months ago about the introduction of it, particularly across the export plants—of which we heard today there are 80. Where is it at? There was a figure of $150 million through the donor company, which was made up of contributions from MLA stakeholders and attracted, obviously, some research funding, or matched funding, from the federal government. Where is it at, Mr Strong? I’m not a supporter of it, so I’ve got some serious questions that hang over this dual X-ray program.”

Mr Strong said he did not have a number on exactly the spend on DEXA to date, but pledged to source it and pass it on to the senate committee.

“But the investment in that specific type of technology cuts across both sheep and beef. With sheep it’s much more advanced and effectively demonstrated benefit. One of the things that it does, of course, is instruct the use of robotics and provide a much higher definition and higher quality set of information to use. The other premise is being able to provide more accurate information on the value and volume of products, so quality and yield, particularly on the beef side,”

“So I’m a producer and I’ve got a cow calf operation,” Sen O’Sullivan said. “I take the weaner and in eight, 10 or 12 months I sell it to a backgrounder, who holds it for 100-odd days, perhaps longer—and then it goes into a feedlot for similar periods of time. So there are two other owners post-me. I don’t necessarily know who the sire of that calf was, I may have a particular blood line of the bull, but I don’t know which bull was responsible for the calf—and I probably don’t know who mum is. At AA Co, did you match up every calf with every cow?” he asked.

“No,” Mr Strong said.

“So I don’t know who mum is. Thirty months later, and there’s a chance that a third of my herd may have turned over, mum might be gone—the bulls are certainly not going to play a role if I’m retaining heifers. So my 1000 calves that I produced 28 months ago, have gone through the hands of two other entities, and what they did or didn’t do impacted on the quality of the carcase.

“So I get this information—I’ve got 1000 of them laid out on my kitchen table up at the farm. Apart from giving me some overall genetic picture that I’ve probably got the wrong blood line or the wrong quality of cows, how am I ever to apply that information in a practical sense as a producer?”

“Your predecessor, said, ‘Well, you get DNA testing done on the cow and all the bulls and the calves at $15 a head.’ No-one’s going to do that.”

“How is it applied? The reason I’m interested is, if it was just meat processors’ money, I wouldn’t have a bother, but there was talk of a $50-odd million contribution from the Cattle Council levies towards DEXA.”

Mr Strong agreed that in the example laid out by Sen O’Sullivan, it was challenging to see that return on an individual animal or a unit basis.

“But I think the discussion is very closely tied to the senator’s question about investment and innovation. Separately we can talk about execution and how we make some of those decisions, but we do have to be thinking about what it is that we need to actually move the needle and make a big difference, and having more information is one of those. What you’re highlighting now is having more information that then has to be able to be used as well.

I understand the overall push for innovation. What I don’t understand is taking $50 million worth of socialised funds from cattle producers to go into a project where I see zero benefit for them. I see a benefit to the industry, the sector, down the road on the supply chain,” Sen O’Sullivan said.

“But I tell you what’s going to happen to some producers who donated generously to the introduction of it. When these additional innovative reports come in from looking at a carcase, they’re going to get less money for their animal. So, their reward for investing in this technology is less money, and the plants that don’t have it will be at a complete disadvantage compared with the plants that do have it.”

“I feel very, very strongly about that element of it—the producers’ socialised funds.”

Sen O’Sullivan asked MLA’s Andrew Ferguson whether given the potential budget that was ‘in the ether’ for the full introduction of DEXA, whether $50 million was still the anticipated figure from Cattle Council.

“I think it would be very unlikely,” Mr Ferguson said. “The initial proposal for the project, which was I guess referred to as project 150, was the $150 million that we thought would be required to put DEXA installation in every plant, or every accredited plant. It was at that stage that we were exploring how that might be funded as an all-of-industry initiative—and importantly an all-of-industry initiative, because a lot of the work that was done about the return on investment across the supply chain was dependent upon that information being consistent across the supply chain.”

“I think the world’s moved on a bit. The DEXA project is ongoing. We no longer refer to it as project 150. Processors, individually and independently of each other, are taking on this technology themselves.”

Asked whether that meant without socialised funding support, Mr Ferguson said there was still an element of socialised funding.

“Generally speaking, the model going forward is largely that the processors themselves will put in some cash. The levy from the processing site will put in some cash, and federal matching will also go into that model, roughly in a 25 percent, 25 percent, 50 percent model.

“So at this stage, on an ongoing basis, R&D for the identification of how those models might work is largely without producer levies.”

Carbon neutrality objective

Senators, led by NT Labor senator Malarndirri McCarthy, also asked about MLA’s progress in tackling former MD Richard Norton’s bold commitment to reach carbon neutrality by 2030.

“That’s obviously one of the most public and ambitious statements that we’ve made in the last two or three years,” Mr Strong said.

“I think it was made at the AGM two years ago on the back of identifying the things that were going to be challenging for our industry at the time and moving forward and how to take a proactive position on trying to deal with those things and get in front of them,” he said.

“The impact on climate and particularly the livestock impact on carbon production was a big issue for the industry, and remains so, and, as a result of that, the industry, through the MLA MD, made a commitment that by 2030, the plan would be for the livestock beef industry to be carbon-neutral. At this stage, largely, those projects are still in their early stages,” Mr Strong said.

Sen McCarthy asked what the projects were that would drive such change.

There were a number of projects across some of our pillars—around supply chain efficiency, for example, and also in productivity, Mr Strong said.

“At this stage, largely, those projects are looking at what the impacts are, and what areas could be most effective as far as improvements and change are concerned.”

“There are some examples, though, of individual producers already who have taken very proactive steps. There’s one in Victoria, for example, who is in a position of claiming a carbon-positive production system.

“So even though the industry programs are still in very early stages, there are examples in the industry of where individual producers have been proactive.

Sen McCarthy said it was a topic she planned to follow up, because the 2030 target was a ‘very bold pledge’ and an important one.

 

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Comments

  1. Greg Brown, April 12, 2019

    Thank goodness somebody has finally questioned the validity of Richard Norton’s claim about carbon neutrality by 2030. If the MLA board, and the previous MD think that is possible, they would be the only ones in Australia to do so. A totally arbitrary decision, and how on earth did the board tick off on it?

  2. David Byard, April 11, 2019

    Very simple question despite all the hype about Dexa machines has it been proven beyond doubt that Dexa machines will be any more efficient than the camera technology being trialled, which to my understanding is far cheaper and easier to install than Dexa in a beef plant.
    Perhaps Mr Strong could give us the figures and findings ,and general update on Dexa opposed to cameras.

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