New transparency focus for MLA

Jon Condon, 12/08/2011


MLA managing director Scott HansenMeat & Livestock Australia has committed to providing greater disclosure over its R&D and marketing activity, heralding an important step towards delivering greater accountability to stakeholders.

In the first major service announcement from the industry service delivery company's new managing director, Scott Hansen, the commitment was delivered at a Rural Press Club breakfast presentation held during the early stages of Brisbane Show.

Mr Hansen said it was ultimately ‘very important’ for MLA to maintain the trust of those that the company was created for to serve – Australia’s cattle, sheep and goat producers.

“We are taking steps to improve that transparency and to renew our vows of trust and integrity with the industry,” he told the show audience.

In the current 2011-12 operating year, MLA will publish a summary of all R&D projects – who they are with, how much they are for, what the outcomes are meant to be and when they are due for completion.

The producer-owned company will also publish details of its global marketing Industry Collaborative Agreements – what exporters and importers MLA is working with in co-funding marketing activity around the globe, and how much is being spent.

“This work is not about increasing demand or improving profitability or community trust – it is just what we need to do as a company to maintain our transparency and trust with our core constituency,” Mr Hansen said.

The announcement comes following sustained pressure from a variety of industry stakeholders for greater disclosure and transparency over R&D and marketing work.

Getting back to 'core business'

Mr Hansen told the gather that he thought that “MLA and what it does had become somewhat blurred over its 13 years of history, as the company has taken on more and more activities outside what many of us would see as core business.”

“Our priority now is to get back to basics, focussing on core business, and to make sure that when we do activity in those areas that we do it bloody well.”

While he intended to continue conversations with stakeholders as the company ‘narrowed and refined the scope’ Mr Hansen also had his own ideas on what constituted ‘core business.’

“I see levy payments as intended to be invested in marketing activities to create greater demand for producers’ livestock and the products derived from them; or invested in R&D to create tools, information, knowledge or systems to help lift profitability or sustainability as livestock producers,” he said.

“If I learned one thing during my time in MLA’s US operations, it was in fact that MLA on its own can achieve only very little. One of the key goals there was to have Australian grassfed beef branded and marketed as a niche consumer segment, that we knew already existed. The second was to deliver lamb as a product familiar to the US consuming public, by getting lamb burgers into small to medium fast-food restaurant chains.”

“But no matter how hard we worked at knocking on doors of retailers and food service operators, or how impressive the pitch to try to convince them to try an Australian product, if we weren’t working alongside a commercial supply chain representative, then no additional demand got created. It was only through close collaboration that we achieved our successes,” he said.

It was through that close collaboration with exporters and importers that Australia now had a some ‘really successful’ private brands of Australian grassfed beef in both US retail and food service, providing an additional global customer and helping ensure maximum value for those cuts out of the carcase.

“This area of working collaboratively with our supply chain partners in optimising results from money we invest on the industry’s behalf in demand activities is critical,” Mr Hansen said.

He said the industry was now in an interesting era with regard to investments to build the market.

Global Meat Analysis Group in the UK had suggested that world demand for beef, driven by increasing population and expanding economies in developing nations, will grow by 3.7 million tonnes by 2020.

Meanwhile the potential for increase in the global beef herd was somewhat limited, given the current environment.

“We know that there is herd rebuilding happening here in Australia, and that South America has a little capacity to increase its herd size, and a lot of potential to lift carcase weights. But given all that, increasing demand is going to put real pressure on the global beef industry’s supply capability.”

“Given that will happen, regardless of whether MLA invests a single dollar more in marketing, the question we need to ask ourselves is what should we be investing in?” Mr Hansen asked.

“In my mind it is in marketing efforts that maximise the value of every kilogram of every part of every carcase that comes from livestock that producers sell: working with exporters to find niches within marketplaces that command premiums, such as the grassfed branded beef in the US that can extract a 5-10c premium on traditional supplies,” he said.

“Our investments need to be selling that de-constructed carcase into the highest value markets to help capitalise on the potential return on each kilogram and hence the price on producers’ livestock.”

Collaboration also critical in R&D

Collaboration through the supply chain was no less important in MLA’s other main area of activity, research and development, Mr Hansen said.

For example MLA was about to invest $3.25 million in collaboration with other agencies to look at increasing the phosphorous utilisation by Australian beef producers.

“But the goal of decreasing producers’ cost of production by reducing the need for phosphorous through selection of species and cultivars that more efficiently extract available phosphorus will only be achieved if the solutions are delivered by commercial supply chain partners and uptaken by producers.”

Mr Hansen also focussed on MLA’s efforts to assist the industry to build trust with the Australian community.

“Some might think that the broader community’s trust in the beef industry may have been decimated in the past two months. It hasn’t,” he said.

“MLA conducts monthly benchmark consumer studies that reflect consumer and community sentiment to help us guide our investments in our domestic marketplace. This June, in the middle of the live export storm, we asked through independent agency, Milward Brown, the same questions we have asked every month for the past few years: how ethical and trustworthy do you believe Australian cattle producers to be?”

Across 2010, the average result was 65pc of the public felt they were ethical and trustworthy. On June 21, 2011, three weeks post Four Corners, 70pc of the public believed producers to be ethical and trustworthy.

“Producers have not lost the trust of the Australian public,” Mr Hansen said.

“We also asked how positively or negatively they felt towards beef. The average in 2010 was 57pc being very positive, while in July, the number was 65pc. So neither producers, nor their product, have lost consumer trust.”

US experience

“These figures point to and reinforce the message that our US industry counterparts have long realised and capitalised on: the general community wants and needs to trust producers. And that, by default, makes producers their own most powerful advocates in building and maintaining trust with the community.”

To capitalise on the growing number of beef producers in the US wanting to take a stand against animal activists, the US industry through its Beef Checkoff program (equivalent of Australia’s transaction levy) had established a Masters MBA course in Beef Advocacy. The on-line education program is designed to provide training and information for producers’ needs, not only for their own, but also their industry’s advocacy.

Since it was introduced in 2009, it now meant there were more than 2000 trained US cattlemen and women, armed and equipped to talk to community groups, media, consumers and others, telling their story and acting as their own advocates.

“MLA’s investment in the story of trust between the producing community and end users must start focussing more on arming and equipping our producers to tell their own story,” Mr Hansen said.

MLA has also undertaken to conduct and independent review of MLA’s and industry’s response to the live export crisis over the past two months.

“I intend to ensure that the findings from this review show not only how and what we engage in in terms of future crisis management in industry, but how we invest in helping prepare Australian producers to be their own advocates and story tellers to the Australian consumers and community,” Mr Hansen said. 


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