MLA’s Michael Crowley addresses this morning’s World Angus Forum in Brisbane

THE red meat industry’s move into full-blown Value Based Marketing will depend on the a ‘win-win’ approach among processors and cattle producers, delegates attending the World Angus Forum being staged in Brisbane this morning was told.

Guest speaker, Meat & Livestock Australia managing director Michael Crowley has made progress towards VBM one of his personal crusades since taking on the industry service delivery company’s top job in July last year.

Value based marketing would reward (or indeed, penalise) each individual carcase on both meat yield and carcase merit, designed to lift the industry’s overall performance over time through price signals. The process is already in place in isolated examples in the lamb industry, but has been talked-about in the beef industry for a decade or more.

Mr Crowley told the World Angus Forum that one of the foundations necessary for VBM to evolve will be the further development and adoption of objective measurement technologies, for both carcase and meat quality traits and yield.

“Australia is a high-cost processor, there is no two ways about it,” Mr Crowley said.

“But we can now measure eating quality objectively.”

He showed an image displaying a suite of objective measurement technologies, all of which are now approved through AusMeat to measure and collect data on eating quality traits.

“The devices that drive automation and robotics in our processing plants will reduce the cost to process, and also allow us to measure lean meat, bone and fat to objectively measure yield and quality traits,” Mr Crowley said.

“When you build-in brand specifications, you start to think about how that shapes pricing signals back to producers, to incentivise that pull-through for the right genetics, and how we breed, feed and finish animals for each market destination.”

Part of the crowd of delegates at the World Angus Forum this morning

Capturing and distributing data

Underpinning all of that would be the industry’s data capability. MLA was in the process of redeveloping the NLIS database presently, which would not only future-proof the industry’s integrity systems and traceability systems supporting biosecurity and food safety, but enhance the capability to feed that information all the way back through the supply chain, to not only the final vendor, but the breeder, Mr Crowley said.

It also meant that the genetic potential of animals, and the credentials of on-farm production systems could be fed forward, so that each individual animal, on a liveweight basis, could be valued more appropriately.

“We can reduce variation in eating quality outcomes over the hooks, and get paid for doing it,” Mr Crowley said.

“I’m more confident than ever (in the evolution of VBM) because the conversations I’ve had around MLA’s strategic plan, with livestock producers, processors and brand owners, research providers and tech companies, suggest that there’s a willingness to come to the table,” he said.

“We can build a proposition to incentivise change, and no longer do we have the barrier of, ‘We don’t have the technology ready to go’.”

Culture and people challenge

The industry now needed to address the culture and the people challenge around making all of this work, together, Mr Crowley said.

“Along the way we shift the R&D process from a ‘push’ model to a ‘pull-through’ demand for the right type of livestock, and it will change the way we engage, when looking at adoption and R&D that ultimately delivers greater impacts and return on the investment made on levy payers’ behalf.”

Asked what the catalysts would be for VBM to gain real momentum in the beef industry, Mr Crowley said the starting point was working with producers and processors together.

On the positive side, there seemed to be an ‘absolute appetite’ around the industry presently to look at what the future can be, to future-proof the beef sector.

“Everybody wants to get out of the commodity cycle and the boom-and-bust nature of our industry,” he said.

“But in order to do that we need to design a program of work, in partnership (producers and processors) in order to find and create a value-proposition, that delvers a ‘win-win’ for both sides.

“For those livestock that are worth more to the processor, there clearly needs to be a willingness to pay the cattle supplier to produce more of them. Our data shows that there is huge variation in value (both quality and yield driven) between the best and worst animals in a mob. We have looked at that across multiple cycles, so there is big upside opportunity if we get this right.”

“So in order to make progress towards VBM we need the willingness to do it – and I believe that exists, among both producers and processors – the technology that provides the solution, and the feedback systems to get that data flowing.”

“On top of that, we need to make sure that the benefits and the value proposition are very clear, to de-risk the adoption process in making changes to our payment systems.”

• More reports from the World Angus Forum in Brisbane tomorrow and Friday.