THERE’S never been a better time to get industry-wide buy-in over embracing Value Based Marketing in the red meat industry, Meat & Livestock Australia managing director Michael Crowley believes.

Mr Crowley first flagged VBM as an important industry objective in an address to the Queensland Rural Press Club in July, and explored the topic again in a podcast released on Friday as part of Beef Central’s Weekly Grill series.

Value-based marketing is the concept of rewarding cattle producers not only for carcase weight, carcase specs and quality traits, but also for meat yield, and potentially, traits like animal health performance (offal value) and sustainability.

Opportunities to advance VBM in the Australian red meat industry will figure in MLA’s upcoming 2026-30 Strategic Plan, work for which is now getting underway for release around the middle of next year.

Mr Crowley said VBM was part of a ‘bigger picture’ challenge in looking for ways to create and capture more value for all participants in the red meat supply chain.

“One of the big drivers we’ve seen over the years has been in the Meat Standards Australia program where there are still significant price premiums for producers producing better quality product – which has started me thinking about the future value drivers for the industry,” Mr Crowley said.

“Our industry is getting asked to do a lot more around sustainability, animal welfare and how we drive genetic selection in putting the right pressure on the right traits to drive progress from a productivity viewpoint,” he said.

All that translated back to the question: How does the industry get better price signals flowing back to producers, and how does that support delivering more value for brand owners into the supply chain to capture those premiums.

Greater focus on yield

Asked about the importance of meat yield in any progress towards VBM, Mr Crowley said carcase yield was measured every day in a typical beef processing plant, but the feedback was not flowing back to producers on any significant basis.

There was also a conversation to be had around meat quality and yield, and the potential for conflict and compromise between the various traits, he said.

“The balance probably will still be that quality is number one, but clearly there are animals that can combine both meat quality and yield in the same package, that will be worth a lot more money under VBM.”

“It’s about identifying those animals, providing the feedback, and driving the adoption of objective measurement technology for those traits – both quality and yield.”

Animal health performance (and its proxy, offal value) could also come under the VBM umbrella, Mr Crowley said.

Brand equity

“A big part of extracting greater value is going to be around brand equity,” he said. “Its possible to have two animals that are identicial on quality and yield, yet different supply chains pay different amounts. That tends to be off the back of how their brands are performing in the market, and how close they get to the consumer – both domestically and internationally.”

Mr Crowley suggested there were three pillars under VBM, being meat quality, yield and brand equity.

“What builds brand equity is all of those other credentials, including features like provenance, sustainability and animal welfare requirements – and feeding all of that information forward through the supply chain, as well as the feedback coming back the other way,” he said.

“I tend to think of the VBM piece as fitting all of those features together, allowing us to be really consumer and customer-focussed, creating pull-through demand for the right type of product, and incentivising it.”

“I recognise there is still work to be done, and I’m not saying it can be turned on tomorrow, but there’s quite an upside opportunity when we start putting dollars around it, as well.”

“If we can get a common line as an industry that this is something worth getting behind, we will solve any challenges through the course of our five-year plan, and start piecing all this together.”

Five year strategic plan

Asked whether VBM would feature as part of the MLA’s upcoming five-year strategic plan covering the period 2026-30, Mr Crowley said it had certainly been part of his ‘own pitch.’

“We need to establish the scope of the next five year plan. We’re certainly not starting from scratch in the VBM space – a lot of investments have been made over the last five years that will flow into how we drive the value-creation piece. It’s about how we package it up, setting very clear boundaries around what’s in scope for our five-year plan,” he said.

“It’s something I’ve been thinking about, sitting over the top of a whole range of industry investments, from cattle genetics at one end, to the consumer at the other – that is, about how we drive different behaviour and engagement through how we look at value creation.”

Mr Crowley said a suite of very promising objective measurement tools were now coming forward for both yield and quality traits in both carcases and live animals.

But he said the industry needed to start now, in order to achieve adoption of VBM over the next three to five years.

De-risking adoption

There was a significant role for MLA to play in ‘de-risking’ the adoption of VBM, because it represented a significant change, when it is considered how embedded the industry’s current payment and feedback systems are, Mr Crowley said.

“We need to take everyone along on that journey. But because we have the systems and measurement tools that will support the flow of data – particularly through the NLIS database redevelopment and genomic technologies now being embraced – there’s never been a better time to get industry buy-in,” he said.

It would be critical to have processors and producers in the room together to work through the challenges surrounding VBM adoption, however.

“We want it to be an incentivised system. In might be that some cattle in future are worth more, and others less, but we have to understand what the drivers are, and processors and producers working together will help identify where the alignment is, and where we can take it forward,” Mr Crowley said.

‘This is about driving progress for the industry, not winners and losers. It’s about improving overall value – and we have to be in it, together as a supply chain, otherwise we go back to the status quo where we are today.”

Mr Crowley noted a lot of discussion during the recent LambEx event in Adelaide around uptake of a cuts-based model for eating quality in lamb and sheepmeat.

“That’s certainly where companies like Gundagai Meat Processors (already paying on lamb yield, as well as quality) are leading the way,” he said.

“But there’s a lot more work to be done in that space to get lamb and sheep production going through the MSA cuts-based eating quality model. The model itself has been ready for some time, but it has been reliant on the development of (carcase assessment) technology.

“I think the sheepmeat industry is going to learn a lot from the beef journey in MSA, and I think there is a lot of value to be added there, as well,” he said.

“Because of the way automation has been driven, the yield side is in pretty good shape in the lamb industry, but it’s the quality side where the big upside exists for lamb. In contrast, for beef, that sector has focussed on quality for such a long time, but much less on yield.”

“It’s now all about looking at ways to extract value out of all the technologies and R&D the industry has developed, to understand what the big commercial uplift can look like.”

Five year strategic plan

MLA’s executive team has already made a start in the development of the service delivery company’s next five-year strategic plan 2026-30, conferring with the MLA board next week and engaging and consulting with a wide range of stakeholders between now and Christmas. The objective is to release the finished strategic plan by July 1 next year.

A draft plan should be available by early 2025, for refinement and final approval around the end of May.