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Industry support growing for proposed $150m DEXA rollout

by James Nason, 31 July 2017

The future of the proposed $150 million spend to install DEXA carcase x-ray machines in abattoirs all over Australia now lies largely in the hands of peak industry councils, following the Australian Meat Processor Corporation Board’s decision last week to support the Meat & Livestock Australia rollout proposal.

Ultimately that decision is likely to come down to the results of a jointly-funded AMPC and MLA study over the next three months, which will work with some 60 plus plants across Australia to more clearly define the actual costs of purchasing the technology, installing it, and running it.

Questions such as what would happen if a DEXA machine breaks down in an individual plant, and how that would impact processing operations and price-determination procedures, are also yet to be fully considered.

It is understood the current proposal would see the full costs – currently estimated at around $150 million – drawn from a range of streams: 50pc from Government research and development funds through the MLA Donor Corporation; 25 percent in private funding from each processor that agrees to the voluntary install; 12.5pc from grassfed producer levies and 12.5pc from processing industry levies.

Given the amount of socialised funds involved in the proposed rollout – levies are technically classified as socialised funds as is the large matching Government funding component that would be required – it is likely the plan will ultimately need the Federal Government’s blessing as well.

In ongoing industry debates and senate inquiries in recent years the Federal Government has always maintained it wants industry to develop its own solutions to identified problems such as improving pricing transparency.

The Government will also be waiting to see a clearer picture of what the full actual cost of the technology rollout will be. But the fact that all industry peak councils now appear to be in support of the concept through the establishment of a new objective carcase measurement taskforce to oversee the DEXA rollout proposal, and the addition of support for the plan from the AMPC Board last week, would seem to be a big step towards demonstrating the project is gaining the type of industry-wide support the Government has long said it wants to see.

The progress of the plan so far is emerging as a rare example of industry sectors putting aside sector-specific motivations and working together to deliver industry-wide outcomes.

The financial scale of the proposed DEXA rollout is unprecedented and some are comparing its potential significance as being similar to the rollout of MSA in the 1990s.

MSA helped to focus industry-wide attention on improving eating quality.

The planned rollout of DEXA technology is intended to drive industry-wide improvements in efficiency.

It is well known that the Australian red meat processing sector competes in global markets against other exporters with far lower production and processing costs.

Key planks of the proposed DEXA rollout are to drive greater efficiency through enabling wider rollout of automated boning technology in more Australian abattoirs (DEXA x-ray technology underpins that shift to automation by providing the information needed to precisely guide robotic cutting saws), and by producing more accurate data needed to change payment systems to reward producers for producing cattle which yield and process more efficiently.

“As an industry I think we have to look for efficiencies and use data to give feedback to producers to improve the efficiency of industry,” Cattle Council of Australia director and objective carcase measurement spokesman David Hill said.

“Producing carcases with too much fat adds to the cost of processing and creates inefficiency.

“Cattle have to eat a lot of feed to lay down fat, as a producer, if I am producing more of those animals with adequate fat cover, but higher marble scores, I can hit higher quality targets whilst not wasting my on-farm or feedlot resource.

“Those animals will hit market specs without requiring much additional trim in the boning room, which will create more efficiency through the supply chain.”

Focus should not be price signals but ‘profit signals’

It was not about giving producers the right price signals, but the right “profit signals”, Mr Hill said.

The DEXA plan has led to some concern that redistributing payment systems to include rewards for higher yield could detrimentally impact eating quality in future.

Mr Hill said Cattle Council has always maintained that eating quality should be a higher profit signal than yield.

“We don’t want to end up where Europe is where it is all about yield and not about quality.

“We have to get the synergies right so producers get the right profit signals.”

Mr Hill said it was encouraging that industry was starting to work together for common outcomes. “It is people coming to the realisation we’re not going to achieve anything in isolation in this industry, we have to work together for the common cause.”

He said the mix of funding for the proposal was important to ensure different sectors all have skin in the game.

“If people have something invested in it they are more likely to use it to maximise their return on investment,” he said.



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