MSA grading cracks 2 million head milestone

Jon Condon, 27/07/2012


Graphic: Georgia Condon

Australia’s world-leading Meat Standards Australia grading system has cracked two million head of cattle graded for the 2011-12 financial year, figures to be released in coming days show.

Fuelled largely by the adoption of full MSA grading by the nation’s largest supermarket group, Woolworths, MSA has recorded growth of 43pc in numbers for the fiscal year just completed to reach 2.0685 million head.

Absolute grading numbers were up 646,184 head across Australia on a year earlier.  

The result is all the more encouraging, given that Woolworths’ 8000+ head per week kill was only included in full for the last eight months of the financial year, starting last November. That means the current financial year is likely to include another 200,000 head of Woolworths cattle, alone.

As the graph here shows, the breakneck pace of MSA adoption is showing no sign of slowing, and in fact is increasing in pace. This is illustrated by the fact that MSA celebrated its one millionth carcase graded milestone only three years ago, in 2009.

While the adoption of MSA by Woolworths through its own supply channels is the biggest single factor behind MSA growth in the 2011-12 year, Beef Central has identified a range of other factors:

  • Existing MSA-licenced processors gearing-up throughput to supply Woolworths with MSA boxed beef, to supplement its own supply
  • Adoption by new plants, such as Nippon Meat Packers’ Wingham and Oakey abattoirs. While it has graded some grainfed cattle for some years, Oakey started grading grassfed MSA yearling early this year, and now accounts for 500-600 bodies weekly  
  • Stanbroke Beef’s Grantham (Qld) export plant, which abandoned MSA for a period, but re-entered the program last financial year
  • Further growth in grading numbers among existing MSA processors, including large sites operated by Teys Australia and JBS Australia
  • Dedicated processor suppliers to the northern, southern and western Australian Coles supply chains
  • Growth in MSA uptake among second-tier large supermarket retailers like Aldi, Costco and IGA.

 MSA operations manager Michael Crowley said it was a combination of growth in existing supply chains, as well as uptake by national supermarket retailers that had really driven the sharp increase in grading numbers for the fiscal year just completed.

Additionally, second tier supermarket groups have also added to MSA momentum. The Aldi chain for example, now has an MSA-backed grassfed brand program called Highland Park, which appears in all stores. The brand was awarded a silver medal at this week’s Melbourne Fine Food Awards branded beef competition (see earlier story here).

Other growth retailers like Costco, various IGA groups, and the Drake’s chain in South Australia are all underpinning their beef offer with MSA.

Mr Crowley said retail butchers allied with MSA also continued to grow in number.

“We still have some way to go in terms of absolute uptake at independent butcher level. But there is no doubt that MSA is being utilised heavily at back-of-store, while not always taken through to the consumer. It’s just that some independent retailers are looking for a point of difference against the supermarkets, and positioning themselves by using the proprietary brands (most of which are underpinned by MSA) rather than the MSA identity itself,” he said.

So given the rate of current growth in MSA experienced in the past few years, is there a critical mass approaching somewhere that will make future growth difficult to achieve?

“With our forecast for the financial year just gone, we thought things might start to slow down a little. But that hasn’t happened: if anything, it has gone the other way and increased quite dramatically,” Mr Crowley said.

“At some point, we may reach a stage where the domestic market can only handle so much MSA product, but at this stage we have not seen the price differentials between MSA and non-MSA decline, which would be an indicator of that.”

“The interesting point is that demand for MSA cattle has never been higher,” Mr Crowley said.

“Of course it fluctuates through the year and in different regions, but over-the-hooks premiums for MSA have risen, as the demand for cattle has risen. And the end-user premiums have remained relatively similar to those seen in previous years,” he said.

“It suggests that within the supply chain, processors are paying more for MSA cattle, but then in turn getting more for the product. It seems to be evenly spread throughout the supply chain. Looking at the average MSA carcase weight around 275kg, the premium is around $50 a head. If you work off 12pc of the carcase actually being packed as MSA (representing only the four main grilling cuts, but obviously including others on some bodies), it works out to be a very similar amount for each part of the supply chain.

Taking MSA into international markets is one obvious answer in continuing the program’s future growth. While a number of brands being sold overseas are underpinned by MSA, this aspect is not being heavily exploited at this stage.   

Mr Crowley said while it was still fairly seasonal, muscle cuts other than the four main grilling cuts were being seen in greater volume in the market carrying an MSA identity, including chucks and blades in winter. Some butchers in recent months have complained to Beef Central that they are unable to keep up with the demand for MSA diced meat for slow cooking. One prominent Sydney butchery located in a major railway station complex had chuck steak last week retailing for $17.99/kg.

Another significant point in the recent growth in grading numbers is that the trend is not due to older cattle being directed into MSA, despite pathways being developed earlier for limited cuts from older cattle. The overwhelming majority are still young cattle, statistics show. While dentition data is not collected by MSA, most cattle graded carry an ossification score of 200 or less, meaning they are possibly a maximum of 20-24 months at slaughter. Having said that, some grids are now taking MSA cattle out to four teeth, but priced at a discount to 0-2 teeth cattle.

  • See this morning's companion story, "MSA carcase compliance hits 94.3pc" 




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