Meat & Livestock Australia has provided a response to criticisms made last week by the Australian Beef Association over MLA’s recent release of its new producer share of retail dollar assessment.

The new industry benchmark was launched during MLA’s annual general meeting in Perth last month. Managing director Scott Hansen said the annual calculation was designed to help gauge the state of health of the beef industry.

He warned stakeholders, however, that it should not be used in isolation from other indicators (see Beef Central’s original report, “Retail $ share provides new tool to gauge industry health”).

Such a measurement has been called-for for some years by industry lobby group, the Australian Beef Association, as a useful gauge of industry and MLA performance.

In a follow-up report published on Beef Central last Wednesday, the ABA, through an article authored by southern director, David Byard, levelled a number of criticisms over the construct of MLA’s retail expenditure share assessment.

In the article “ABA responds to MLA's launch of retail share calculation”, he suggests that for such a tool to work with any success, it was important that the data used be factual and correct.

Mr Byard suggested MLA’s calculation was not based on appropriate figures. For example he said MLA’s own daily figures suggest that the price of young cattle on last week’s market was a fraction below $3.40/kg – a long way from the figure of $3.90 used in the 2012 retail share calculation.

Referring to this pricing ‘discrepancy’ highlighted by Mr Byard, MLA says the data quoted in the initial article referring to the release of the data was based on 2011-12 fiscal year average price for cattle – not the current market price.

The release by MLA of the fiscal year average of the producer share of the retail dollar was firmly grounded in a methodology used by the US Department of Agriculture, the response said.

MLA agained stressed that given the size, scope, complexity and constantly evolving nature of the Australian cattle and sheep industry, no single measure could provide a complete assessment of the state of the industry when used in isolation.

“The producer share of the retail dollar indicator should only be considered in conjunction with a group of indicators that are published by MLA on behalf of the industry,” it said.

These indicators included production figures, export volumes and value, the A$, beef consumption and domestic expenditure.

The methodology and definitions for MLA’s calculation of the producer share of the retail dollar are outlined below:

The ‘producer share’ indicator calculation:

Producer’s share (PS) = ((farm price per unit of quantity) / (conversion factor representing the number of retail units derived from one unit of farm gate quantity) – (co-product value – if available)/average retail price per unit.

For beef this becomes:

Beef producer’s share = ((cattle price per kg carcase weight) / (0.57 being the average conversion from carcase weight to retail weight)) – (co-product value per kg retail weight)/average retail beef price per kg.

Data sources

• Cattle: Cattle price used is domestic trade steer 180-220 cwt (C3) national weighted average collected by MLA's NLRS.
• Average conversion from carcase weight to retail weight (57pc) sourced from Viascan data.
• By-product value sourced from potential value of a prime steer collected through a survey of Australian domestic and export processors by Kurrajong Meat Technology for MLA.
• Average retail beef price calculated using ABARES base quarterly figures and applying ABS quarterly price changes released with CPI (note: this ABS and ABARES data is not available on a monthly basis).