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Keeping up with DEXA? Here’s a guide to bring you up to speed

by James Nason, 11 July 2017
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Keeping up with all the headlines about DEXA?

There have been numerous developments since November last year when MLA announced a proposal to acquire a commercial loan to finance a $150 million rollout of DEXA carcase imaging cameras in 90 meat processing plants around Australia.

For those wondering what the DEXA issue is all about, where it is now at and what’s next, we’ve prepared a guide to bring you up to speed.

 

DEXA: What is it?

Dual-Energy X-ray Absorptiometry (DEXA).

X-ray technology developed for human medicine and adapted by meat scientists to scan meat, bone and fat composition of carcases in abattoirs to more accurately measure lean meat yield (LMY).

DEXA is one type of Objective Carcase Measurement (OCM) technology, and deals specifically the measurement of lean meat yield.

A recent review of MLA’s proposed rollout of DEXA technology by EY (Ernst and Young), commissioned by the processing sector through AMPC, suggested that of all the OCM technologies currently available for measuring meat yield, DEXA is the “most appropriate” at this point. This was based on its combination of accuracy, ability to operate at adequate throughput speeds, and, while not low in cost, it is much less expensive than the ‘gold standard’ for accuracy, CT scanning (More in “have different OCM technologies other than DEXA been considered?” below)

The adoption of DEXA technology is also promoted as a way to reduce red meat processing costs by helping to facilitate the adoption of robotic processing in Australian abattoirs. In plants where automated boning technology is being trialed, x-ray images of carcases are used to guide robotic arms precisely where to make each cut.

An important issue emerging as new Objective Carcase Measurement technologies such as DEXA emerge is who will have access to the potentially powerful feedback data they generate in future – which will largely comes down to who funds it (more on this below).

 

What’s the plan?

The production and processing sectors both appear to strongly agree on the benefits Objective Carcase Measurement technology can deliver. MLA and AMPC have each invested millions of dollars in researching and developing OCM technologies for several years.

A key question has been: should the adoption of OCM technologies such as DEXA be left up to individual processors themselves to decide if, how and when to invest in this technology (a market-driven approach), or should industry funding be used to accelerate uniform industry-wide uptake (an industry-driven approach)?

At Meat & Livestock Australia’s November 2016 AGM in Adelaide, managing director Richard Norton brought the debate to a head by announcing that MLA would lead a $150 million industry-wide rollout of DEXA machines in up to 90 AUSMEAT accredited processing facilities around Australia.

The bold industry-driven approach would accelerate scientific measurement of meat yield; future value-based marketing; industry-wide productivity gains through processing automation (robotics) and boning room yield improvements; data-based on-farm decision making and genetic improvement; and reduce the industry’s annual multi-million cost of grading, he explained.

Details about who would fund the expensive rollout were yet to be finalised, but the move certainly placed OCM, and more specifically DEXA, at the forefront of industry attention.

Peak cattle and sheep producer councils backed the plan, while processor groups said more information was needed before supporting the high-cost technology rollout.

Mr Norton told the MLA AGM he wanted the rollout of the “150 Project” to commence in 2017.

(Where are we now? Much has happened in the past eight months – see “Where are we at now and what’s next? below)

 

What is the problem DEXA is intended to solve?

In ongoing senate inquiries and industry forums, producers have consistently voiced concerns about the accuracy and objectivity of human-based grading and pricing systems used to determine how much they are paid for their cattle post-slaughter.

“Cattle are sold mainly based on their weight,” Murdoch University’s Associate Professor Dr Graham Gardner, who developed DEXA in collaboration with Scott Automation and Robotics, explained in late May. “This is a poor indicator of the amount of meat on a carcase.”

The depth of fat at the P8 site is currently used to predict yield. But that measure is known to be an unreliable indicator of yield. Its accuracy is around 30-40pc, according to figures quoted in the EY report. By comparison, DEXA, at its current stage of development, has shown in a recent trial to be 88pc accurate (more below).

DEXA technology will allow processors to give producers a more accurate prediction of actual lean meat yield in each carcase.

This in turn will enable the introduction of yield based payments. In effect the DEXA-based Lean Meat Yield prediction would be used, in addition to existing AusMeat and MSA meat quality feedback, to determine the price a producer receives for each individual carcase. (Could this lead to a race to yield over quality? More below)

(Meat yield is applied in payment systems in some overseas countries. In the US, for example, USDA yield grade, as well as quality grade, is applied to every USDA-inspected carcase, using a simple formula (HSCW+EMA+fat depth). The key difference, however, is that US fed slaughter cattle are much more similar than what they are in Australia, based on feeding regime and duration, breed, weight, and fatness. Australian slaughter cattle tend to be much more diverse, making such calculations much less reliable here.)

DEXA-based LMY feedback, used in conjunction with AusMeat and MSA quality feedback, should also enable producers to make more informed on-farm decisions about genetics, health treatments, feeding and turnoff regimes etc, which should drive industry-wide productivity improvements.

MLA’s “150 Project” funding proposal also noted (as quoted in EY’s report) that producers distrust the objectivity of the current carcase grading process, because the majority of carcase graders are employed by processors. Machine-based measurement of yield and quality traits is seen as a way of providing more independence and overcoming this distrust.

MLA’s proposal further observed that concern also surrounds the lack of standardisation in grading and pricing systems between plants. Processors have varying approaches to determining saleable meat criteria. This, and differences in cutting specifications between plants, has led to unstandardised data, which limits the ability for it to be used for predictive purposes. MLA sees its accelerated rollout of DEXA as a way of improving standardisation of data across industry.

 

How would DEXA work in an abattoir?

Carcases hanging on a rail would be moved prior to boning into a protected lead-walled chamber to be scanned by dual X-ray beams.

The data captured by DEXA is then converted using customised algorithms to accurately predict the amount of meat, bone and fat on each carcase.

This Lean Meat Yield data would then be used, in addition to existing AUS-MEAT feedback and MSA, to determine the price a producer receives for each specific carcase.

 

Is DEXA more accurate?

The EY report quoted figures suggesting the accuracy of human-based predictions of lean meat yield of beef carcases is between “between 30pc and 40pc accurate”. Other sources have placed accuracy as low as 10-20pc.

Murdoch University’s Professor Graham Gardner said a recent trial of 50 beef carcases showed DEXA, at its current stage of development, was “88pc accurate” in measuring lean meat yield, and within a range of 3pc.

 

Is it fast enough?

Scientists leading DEXA research last year reported that DEXA can scan up to 30 lamb carcases per minute. Teys Australia has stated that it expects the new DEXA machine it is currently installing at its Rockhampton plant will be able to handle about 160 beef carcases an hour (about two and a half carcases per minute). The EY report noted that DEXA is not yet fully proven in a commercial setting for beef.

 

What will the rollout cost?

If fully implemented in all 90 AusMeat accredited beef, sheepmeat and goat processing plants in Australia, the total cost of installation and program administration is estimated at $150 million.

The estimated cost of buying and installing each unit outlined in MLA’s initial funding proposal is $1.45 million per unit ($1m for smaller units for sheep and goat plants, $2m for larger units for cattle plants). The rollout is voluntary, so the estimated cost could come down depending on the number of abattoirs that choose not to participate in the industry-funded rollout.

However the $150m estimate does not include other likely, and potentially considerable, costs such as plant modifications that may be needed to accommodate a DEXA unit, or ongoing operating and maintenance costs, the EY report noted. For some plants these costs will be substantial, particular older plants that are already cramped for space.

 

Who will pay for it?

The $150 million question!

Producers? Processors? Taxpayers? All the above would seem likely if the proposal is to go ahead.

MLA’s initial proposal was to acquire a government concessional loan through the Commonwealth Regional Investment Corporation, to be underwritten by MLA and serviced through producer levies over the loan repayment period. The total cost over the planned rollout period of FY17-FY20 would have been $183.4m, based on an interest rate of 4.75pc, as quoted by the EY report. (As outlined in chart below – click on chart to enlarge)

Further analysis of financing options was needed, the EY report recommended, looking also at who most benefits in the case of shared funding arrangements.

Since the 150 Proposal was launched last November, the funding model seems to have shifted from a commonwealth loan to the application of levies, with MLA to invest $37.5m from producer levies, AMPC to invest $37.5m from processor levies, and the remaining $75m to be sought from matching Australian Government funding. MLA maintains this is one of several funding options on the table.

On June 14 MLA publicly called for the Australian Meat Processor Corporation to agree to jointly fund an accelerated roll-out of DEXA objective measurement technology across Australia’s red meat processing industry.

“If AMPC and MLA can split the cost of implementing DEXA, we can capture greater efficiencies and ensure both the production and processing sectors pay their fair share,” Mr Norton said.

AMPC will consider MLA’s request at its next board meeting on July 25.

CEO Peter Rizzo said AMPC’s levy income was about 25pc that received by MLA.

“In context of our budget and required spend, no one has $37.5m idly sitting around, so we have had to substantially rework our budgets and understand MLA’s roll out expectations to present to the board,” he said.

In a joint statement released on June 21, following an all-of-industry briefing organised by MLA in Brisbane, the peak councils representing cattle (CCA) and sheep (SCA) producers, lot feeders (ALFA) and processors (AMIC) announced that they had given their support to the introduction of objective measurement across industry.

This included “supporting the adoption of DEXA technology to provide a single scientific measurement of lean meat yield for Australia’s red meat industry”.

The statement said the peak industry councils, and individual processors, endorsed further work on MLA’s proposed DEXA rollout including costings and installation requirements within individual facilities.

The support is still tacit in a sense because it still hinges on answers to those questions. The analysis work would allow peak councils and individual processors to consider the most appropriate funding model for an industry-wide rollout, the statement said, which would most likely involve producer, processor and matching Government funds.

What’s the rush?

MLA has previously stated that a rapid industry-wide rollout of DEXA is needed to maximise benefits across the sector.

It points to a report jointly funded by MLA and AMPC last year (the ‘Greenleaf et al report) which identifies around $420 million per annum of potential gross benefit from the adoption of further objective measurements, associated pricing signals and resultant on-farm management changes by 2030.

Less than $75 million of this was likely to be realised by 2020 while around $250 million was potentially realisable by 2030.

“The difference between potential benefit and likely benefit is the gap between opportunity and the level of industry adoption. These benefits were estimated to be split equally between producer and off-farm sectors of the supply chain in most of the scenarios modeled,” the report said. It said “widespread adoption by processors be encouraged to facilitate acceptance of value-based pricing signals by industry”.

MLA believes that if left to a market-driven adoption process, smaller processors could struggle to fund the capital investment, which would delay industry-wide adoption.

This inability to invest could also put pressure on smaller processors and lead to further processing industry consolidation, and in turn less competition for producers, it says.

Processing sector leaders say more information is needed before rushing into such a large technology spend.

EY’s recent review of DEXA, commissioned by AMIC and the AMPC, advised processors there are still questions to be answered (see “issues and concerns” below).

It’s report also appeared to suggest it could take three years to satisfy currently unresolved questions, as this info graphic from the report hints:

Richard Norton’s view: “We have the technology, it’s far superior to the inconsistent and unreliable systems in use now, it’s ready for commercial application and the benefits have been costed over and again. It’s now time to work together as an industry and get on with the job.”

MLA says it has had 13 processors seeking funding to install DEXA already, which it says is evidence many individual processors are satisfied and want to proceed now.

EY report’s advice to processors: “The industry should consider a more staged and incremental approach to allow for consideration of all the issues and to enable trials to be conducted and evaluated, and gather further evidence including how this might affect the range of different business models that exist in the industry.”

It comes down to the data:

Another less-visible, but arguably highly-compelling, reason for the rush to spend money on an industry-driven approach now: to ensure all future data produced is shared for all of industry’s benefit.

A rapid industry-wide rollout at least partly funded by producers, as proposed by MLA, would favour producers collectively holding some degree of ownership and access to this data in future.

A delayed rollout – such as the three years identified in the EY report – would appear to favour the continuation of a market-led approach, with individual processors funding DEXA technology themselves and advancing further down that path, reducing the case for an industry-driven rollout. Ownership and control of the future data generated under that scenario would ultimately be retained by the individual processors themselves (more below).

 

Is it the job of MLA, a levy-funded service delivery organisation, to drive this?

MLA MD Richard Norton has stated that Objective Carcase Measurement (OCM) was included in the Meat Industry Strategic Plan to 2020; the MLA board’s strategy; and the Beef and Sheepmeat Industry Strategic Plans set out by Cattle Council of Australia and Sheepmeat Council of Australia.

“MLA, as the industry service delivery company, has an obligation to deliver on those strategic plans,” Mr Norton said.

DEXA-ppeal: What are the expected benefits?

Potential benefits for wider red meat industry:

MLA says industry wide adoption of DEXA would pave the way for scientific measurement of lean meat yield, future Value-Based Marketing and industry-wide efficiency and productivity gains through processing automation, genetic improvement and data-based on-farm decision making.

In preparing its report EY interviewed 25 industry stakeholders (peak councils, RDCs, tech experts and providers) 20 processors (representing all scales of operation) and 17 producers (7 large, 4 small to medium, 6 seedstock). From those interviews is said all sectors appear to agree on the benefits that Objective Carcase Measurement can deliver to industry.

However, the use of DEXA as the preferred OCM technique received “mixed levels of support”.

MLA says economic modeling has shown a $220 million annual return for industry by 2020 from the initial $150m investment. This would be achieved by transforming livestock production and marketing through objective data and value measurements. MLA modeling predicts a cumulative industry wide benefit of more than $1.5 billion by 2026.

The rise of lower-cost beef exporting competitors such as Brazil and India, with whom Australia cannot compete on price, means Australia must focus on improving quality and yield, another point supporters of a rapid industry-wide rollout of DEXA see it helping to achieve.

Industry-wide adoption of DEXA and the feedback it would generate along the value chain would drive whole-of-industry productivity improvements, and position Australia at the forefront of global competitors in the area of producer feedback, MLA has stated.

Potential benefits for producers:

Accurately measuring meat yield in abattoirs has the potential to increase revenue for producers.

Producers told EY they expect OCM technologies like DEXA to increase the objectivity and transparency of carcase measurement, overcome carcase grading and pricing frustrations, potentially contribute to the fine tuning of breeding strategies, and identify inefficient stock.

Feedback from DEXA will give cattle producers a better indication of the actual meat content of a carcase, information they can use to guide genetic, health, feeding and turnoff decisions in future. Producers can target EBVs with a focus on carcase composition while improving growth, fertility, eating quality and meat colour, MLA states.

Dr Alex Ball, who did a lot of work on DEXA during his time with MLA, told Beef Central in 2015 that it was not uncommon to see an $80 variance in value between two yearling carcases of identical weight and fatness, based solely on the amount of saleable meat each body contains.

Potential benefits for processors?

MLA says DEXA can increase boning room efficiency and provide opportunities for automation to reduce the cost of processing.

Over time, based on price signals back to producers, it is likely that the lean meat yield of all beef carcases will improve – lifting processing efficiency, as it costs much the same to slaughter and bone a poor-yielding carcase as a higher yielding one.

Optimising carcase sorting and matching with customer specifications; optimising labour requirements; influencing feedback grid information based on carcase composition, eating quality and other valued attributes; increased carcase value; potential prediction of individual primal cut weights; and better understanding of supply based on the carcase composition of individual herds are among the additional benefits identified for processors.

Potential benefits for others?

Another large beneficiary will be the company or companies that win the $150 million contract to supply the industry with DEXA machines, should the proposal proceed.

MLA’s proposal indicates a tender will be held to determine the OCM technology suppliers and installation partners, if the proposal is successfully funded.

EY’s report said it was aware of only one service provider in Australia which has been involved in various trials and installations with several processor organisations so far – while not named in the report, the obvious candidate references is NZ based Scott Technology, which is now majority owned by JBS.

EY’s report questioned whether a single supplier would have the scale to meet the needs of industry (ie 90 DEXA machines over three years) and whether there is a potential risk to the proposal if the chosen supplier cannot deliver at scale.

Another question raised in the EY report: Is the existing quote of $1m-$2m per DEXA machine the price for one unit in a one-off sale (ie is there a discount for buying 90? Does the lack of apparent competitive tension in the technology marketplace mean the industry risks paying too much?)

EY has urged AMPC and AMIC to engage with a variety of objective measurement technology vendors to understand whether the estimated price per DEXA unit in MLA’s funding proposal is “fair and reasonable”.

Benefits for consumers?

This yield-based technology is focused on improving industry productivity.

One identified consumer benefit stems from the role DEXA can play in facilitating robotic processing. “The technology in lamb for example can offer improvements in the presentation of the product when used in conjunction with automation, with better cut lines from its enabling of automation,” an MLA spokesperson told Beef Central.

What are the issues/concerns of those not ready to back the proposal?

Some concerns outlined about MLA’s 150 Proposal in the EY report included:

Not yet proven for beef in commercial setting: “Key developments are showing that, while the use of DEXA as an objective measurement technology in beef appears to have promise, it has yet to be categorically proven that it can objectively measure carcases of all types and characteristics for the purpose of predicting Lean Meat Yield. Specific producers and processors interviewed favoured more trials before adoption.”

Still no definitive cost-benefit analysis completed: EY said its review had been unable to identify or validate the inputs for a Benefits-Cost Ratio (BCR) assessment on the information made available. EY has recommended a BCR be prepared after the findings of the pilot trials are known.

DEXA could result in a ‘race to yield over quality’: “It has the potential to move producers in the wrong direction e.g. towards yield and away from quality,” one top five processor said. EY said its research indicated that producers are well trained in the importance of meat quality factors, and intend to use the accurate yield measurement from DEXA to complement their decision-making, not to redirect it. “While producers expect DEXA will provide much more accurate estimates of saleable red meat yield, they also recognise that the value of their carcase is determined by the ‘grids’ provided by processors. MSA and AusMeat attributes such as colour, marbling, ph., and bruising are all of great importance to the price they ultimately receive from the processor today. Producers considered this would not change.”

Risk to processing operations if DEXA is the single point of failure: If DEXA fails, does a whole plant shut down until it can be fixed?

Risk of obsolescence of the technology within the rollout timeframe outlined: Is there a risk of another cheaper technology that can perform the same task emerging (an iPhone app for example?), creating the risk of DEXA turning into a $150 million white elephant?

Who would have responsibility for calibrating the machines: Machine-based measurement can still be influenced by potentially subjective human calibrators. MLA has nominated AUSMEAT to handle this role.

Who has backed MLA’s DEXA rollout plan?

Cattle Council of Australia and Sheepmeat Council of Australia early on.

More recently, in a joint statement released on June 21, the peak councils representing cattle and sheep producers, lot feeders and processors (CCA, SCA, ALFA and AMIC) announced they had given their support to the introduction of objective measurement across industry. This included supporting the adoption of DEXA technology to provide a single scientific measurement of lean meat yield for Australia’s red meat industry. (The statement noted that further work was needed to identify costs and the most appropriate funding model).

The ACCC, after investigating cattle and beef markets for six months, recommended that Objective Carcase Measurement be prioritised and introduced by all processors in “a consistent manner as soon as possible”.

The ACCC said it “welcomed moves by MLA to introduce OCM technology throughout the industry”. The same report warned that if industry did not voluntarily move to adopt the ACCCs recommendations, it ran the risk of Government forcing recommended changes upon it.

A $10 million DEXA pilot program announced by MLA in May will see four processors (Teys Australia in two plants in northern and southern Australia and three lamb industry abattoirs) install DEXA machines, funded through their own investment and matching Government funds through the MLA Donor Company, in coming months. Trials using these DEXA units in commercial environments will play a key role in helping to answer many of the outstanding questions around the technology.

MLA said the $10 million commercial rollout trials have generated significant interest from individual processors.  “We announced at the time we had already received project submissions from four processors – Gundagai Meat Processors, Frewstal Pty Ltd, Wagstaff Cranbourne Pty Ltd and Teys Australia,” an MLA spokesperson told Beef Central late last week. “We will have further announcements about the results of the open call for expressions of interest from other processors soon.”

 

Who is yet to decide either way?

The AMPC will consider MLA’s joint-funding request at its July 25 Board meeting.

 

DEXA, thy name is data

The DEXA rollout is being promoted as a way to provide more technical, accurate and independent feedback to producers, and to encourage the processing industry to move towards robotic processing as a way to decrease costs.

But it is also about who will own and benefit from the data produced by Objective Carcase Measurement technologies in future.

Will the technology be jointly funded by all of industry and the data shared by all of industry, or will it be owned by those individual processors who are prepared to invest in this technology, giving them ownership of the data produced in their plants, control over how it is used and with whom it is shared?

What is the incentive for spending producer levies to buy expensive DEXA machines for meat processing plants? A key motivator is to ensure shared ownership of data produced in future. A large upfront spend to generate a bigger pay back over time – one that will deliver benefits worth more than $220m a year, MLA suggests.

Conversely, will all processors be happy to accept producer funded tech if it means surrendering control of the potentially powerful data it generates in future? Large processors may see a clear commercial advantage in installing their own OCM technology as a point of difference to competitors, and may not be overly enthusiastic behind closed doors to see industry funding offered to equip smaller processors with similar technology and thereby negate that advantage. It is worth remembering too that feedback is nothing new – processors already supply their own data back to their own suppliers such as chiller assessment, and have been doing this for years.

Why is data valuable? 15 years ago a processing plant manager in Australia waved an almost phonebook-thick collection of printed pages in his hand during an interview in his office. The pages contained details of every producer who had supplied that abattoir with cattle – the size of their herd, the type of cattle they bred, and, most importantly, how their cattle performed in processing. Data that meant the abattoir knew precisely which cattle were worth bidding up for, a key advantage over competing processors who did not collate or have access to such information. “This is the most valuable document in this plant,” the processor commented at the time.

Indeed MLA’s 150 Proposal states (as cited in the EY report) that the project is “for producers to finance the procurement of DEXA technology in exchange for ownership of the data thus generated”.

MLA has publicly stated that it wants DEXA machines in every processing plant to ensure “the big ones that have been driving its use so far don’t get too far ahead of the rest”.

“We want to make sure any processing facility, and by default any producer in Australia who supplies those processing facilities, has the same opportunity to get their animals graded,” MLA’s Sean Starling told ABC Radio earlier this year.

Has the horse already bolted?

With OCM technology still emerging, this is seen as an important debate for industry to be having now.

But has the horse already bolted? Some larger processors are already moving well down the path of adopting DEXA technology.

JBS has been working with DEXA technology at Bordertown in SA (where it has pioneered robotic lamb processing) and Dinmore, Qld, for at least two years.

Teys Australia has been proactive in its adoption of this technology, announcing in 2015 that it planned to use DEXA to move towards a value-based-pricing payment system for its clients (Originally Teys said such a payment system may be a year away, most recently it has used a figure of three years away).

Asked who would own the data if MLA’s proposal goes ahead, Mr Norton said the data would be owned by “the producer and the processor”:  “Any processors accessing MDC funding to install the technology or any installations made under an industry funding model and using producer levies is required to provide feedback to producers,” Mr Norton said. “MLA will use high level data for further research and development”.

EY’s report said greater clarity around likely data collection, ownership and use, and intellectual property is needed.

The ACCC made its position clear in its cattle and beef market study report, when it said the data produced from objective carcase measurements should be “shared for the benefit of the industry.”

“The data produced as a result of objective carcase grading will be of wider benefit to the industry if aggregated and shared. For example, producers would be able to measure their own performance against the rest of the industry and make any production adjustments necessary to achieve higher cattle grades and prices.”

Some processors will argue that they are providing that, regardless. Teys Australia plans to start issuing lean meat yield performance data on kill sheets later this month. That will not only log predicted LMY on each supplier’s individual carcases, but will also compare that with populations of similar cattle passing through the plant, at the same time.

Will shared data be protected?

MLA says individual producers would retain their own data but the encryption of data will allow MLA to benchmark across Australia without MLA knowing who owned the livestock.

“If data is shared and encrypted there is the potential for producers to know exactly what they are producing, hence lifting the standard across Australia so processors have more product at the optimum points on the grid,” Mr Norton said.

 

What impact will the technology have on carcase prices? There will be winners and losers

Pricing will continue to be a matter for processors and their suppliers.

Answering this question is a matter of speculation. But, assuming that the installation of DEXA will not of itself magically expand the collective pool of money processors currently have to pay for cattle, there will be winners and losers among producers if and when the rollout takes effect.

The optimum would be a high yielding carcase measured objectively meeting MSA grading. Producers with cattle that produce a higher lean meat yield with a DEXA-based system under these circumstances would be expected to receive more, those lower yield measurements under DEXA would receive less.

One peak industry council quoted by EY made the comment that “Objective Carcase Measurement and Lean Meat Yield is going to allow better alignment of performance to reward. It does not necessarily mean that producers will get paid more overall”.

‘It is really a distribution of payment’

Another said: “the reality is that not all carcases make profit. There will be some winners and some losers. Therefore, it is really a redistribution of payment”.

EY said the impact of OCM on prices paid for carcases will depend on the way in which Lean Meat Yield is weighted in the pricing grids determined by individual processors.

“However, the long term increase in quality of stock as a result of data feedback influencing herd development is likely to increase prices paid, aligned with the increase in quality.

“OCM data output will enable products to be better matched and processed according to consumer preferences in domestic and international markets.”

One concern that has been voiced by some processors, especially during a period of low cattle supply as we now have, is the ‘risk’ attached with informing a percentage of their existing suppliers that their cattle are poor performers for LMY, and possibly then losing browned off suppliers to a competitor. If producers assume their own cattle are better than average performers, and are then told otherwise by a processor based on LMY data, does the processor run the risk of losing that supplier to a competitor?

 

Have OCM technologies other than DEXA been considered?

The EY reported noted that, based on research and development to date, the advantage of DEXA over other Objective Carcase Measurement technologies is that it has a higher level of accuracy in predicting LMY.

The report said that while other technologies including CT scan, MRI, Comb bean (flat panel), tissue depth probes, VIAscan (previously used in New Zealand) and 3D imaging have shown promise, they are either too expensive, are low on throughput or are unreliable in their current form, to be commercially implemented.

EY’s summary of additional technology that has been considered by industry included:

Computer Axial Tomography (CT)

“CT uses a system where an emitting x-ray source is rotated around the body with the resultant x-rays collected by a ring of detectors after passing through the carcase. The advantage of CT scanning is it gives an extremely accurate prediction of carcase composition, and issued in R&D by the industry to train devices to predict carcase composition as the ‘gold standard’. Despite it being one of the most accurate and suitable measures for the purposes of R&D, it is unable to operate at current chain speed within processing facilities with the machine needing a set time to cool down in between scans.” It is also the most expensive. (It is understood that under the 150 Proposal industry funding would be used to purchase a CT scanner which can be moved from one meat processing plant to the next to calibrate and validate each DEXA machine)

RGBD technology (Wii cameras)

“The RGBD camera technology and data acquisition software is an advancement from VIA in which it uses a number of small cameras to collect a large number of images and integrate them into a three-dimensional image. The advantage of this technology is that it is calibrated using CT composition (the gold standard), is cost-effective and will not require much space on the slaughter floor. The disadvantages of this technology is that it is still being analysed and tested, the results of which are yet to determine its accuracy and transportability across different datasets.”

Video Image Analysis (VIA)

“VIA works by capturing images either on the whole carcase or the chiller assessment system on a quartered carcase to predict SMY. The advantage of the VIA system in Australia is that it provides a useful tool in predicting SMY. However, the disadvantage is that SMY is a method which varies widely according to the trim specifications for a particular market and therefore limits its ability to be used as an industry standard.”

Where are we at now and what’s next?

Pilot trials of DEXA in a commercial setting will soon commence in four processing plants under a $10m project announced by MLA in May.

MLA says it has now more applications from individual processors and more individual plants will be announced soon.

An Objective Carcase Measurement (OCM) adoption and commercialisation taskforce, chaired by processing industry veteran Gary Burridge, is due to meet for the first time this month. Working to find an appropriate funding model to deliver an industry-wide rollout will be among the priorities for this group.

The AMPC board will consider, and potentially make a decision on, whether to support MLA’s request to jointly fund its proposed accelerated rollout of DEXA at its next board meeting on July 25.

MLA says that regardless of the lack of a “whole of industry” decision to proceed with the accelerated rollout at this stage, it continues to receive applications from individual processors who want to proceed with installation, and is progressing those installations with those processors.

The Government is also a key player in this issue, as taxpayer funding would be required to fund the full rollout.

The Government is unlikely to do anything until it sees the report and recommendations from the Senate inquiry into consolidation of red meat processing in Australia. With at least one more hearing yet to proceed, it seems likely that report will not appear until at least August or September.

The Government has also made it clear that any application for matching Government funds would have to be presented as a united front, so where AMPC lands with its decision on July 25 is likely to be an important decision for future of the proposal.

 

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  • Jim Cudmore July 11, 2017

    Well done – a very good summary of the “state of play”

  • John Gunthorpe July 11, 2017

    Thank you James for a well structured overview of Project 150. From my time watching bones going down the hogger in many Australian abattoirs, I can assure producers that lean meat is not wasted to meal and tallow by our processors. But of course this is not what the DEXA story is about.

    MLA are seeking to gain an economic advantage over other competitor countries by improving the use to which the cuts from the carcass are allocated. They also argue that automation in the boning room will reduce costs by eliminating labour for machines. There is suggestion that in the longer term producers, receiving the feedback from DEXA, will change their genetic selection to provide an animal that better meets the needs of our markets.

    However I fully support EY’s proposal for caution and a 3 year trial period seems reasonable. The individuals involved in the MLA, CCA and Sheepmeat Council have little experience in cutting carcasses and, with scientific endeavour, seem to think DEXA will be a silver bullet for our industry. It will not.

    If producers are to get increased prices from the adoption of DEXA, then the processors will have increased costs. If Brad Teys can generate sufficient additional revenue, or reduced labour costs from using the new technology, then perhaps he can afford to pay the additional prices for livestock. Time will tell.

    However, rushing into an industry wide roll out as proposed by MLA is folly and using any levy funds whether from MLA or AMPC is opposed. If the technology has legs, then the processors will pay for it. If DEXA provides information that the processor shares with their suppliers to increase feedback, then they will. Producers already receive grading data on each side to assist in their breeding decisions. Unfortunately much of this information goes to waste.

    As EY pointed out, a benefit – cost analysis is needed and an internal rate of return determined before a competent board can decide on capital expenditure for DEXA or any other OCM equipment.

    By the way, when automation in an abattoir is mentioned, I recall the zealots in AMLC rolling out the automated kill floor at Kilcoy after spending over $30 million of levy funds trying to replace labour with technocrats. The only winner from that fiasco was Kilcoy, which got a new conventional kill floor built at AMLC’s cost when the automated floor failed.

  • ken crotty July 11, 2017

    It is stated in the article that the P8 fat measurement is used to predict Yield. I have been involved with Carcase Competitions for 50 years and I have never seen P8 Measurement used in any equation to predict yield. The Rib Fat measurement is always used.

    Good pick-up, Ken – you are absolutely right. That one slipped under our guard, but obviously not under the guard of an eagle-eyed veteran (now retired) Queensland meat inspector. For readers’ benefit, Ken’s career goes all the way back to the 1950s, when ink branding was used at Cannon Hill to identify meat inspector-graded carcases in Queensland – purple for grainfed, orange for yearling etc. Ken still has his old roller somewhere. Editor.

  • Nick Burton Taylor July 11, 2017

    Having been involved in the Meat Research Corporation during the roll-out of Fututech automated processing technology to the process sector and watching the miss-match of practical reality to ambition, one can see the same warning signs in this unilateral roll out strategy.
    One absent piece of work seems to be on the consumer sentiment to having their food X-ray treated. We have seen with GMO’s what happens if technology gets ahead of what consumers want done to their food.
    It is an enormous bet of industry research and development capital to go viral on one strategy.
    I suspect this is not the last we will hear on this …it took years to unwind previous strategic industry grand plays.
    MLA is being very brave.

  • Robert Caine July 11, 2017

    Re John Gunthorpe’s comment on the industry’s attempt to install Fututech automated kill floor at Kilcoy. All said with the magnificent benefit of hindsight, John. The industry was 100 percent behind Fututech when the project was given the green light, and if it had come off, it would have put the Australian industry decades ahead of others. Remember there were huge issues at the time with inefficiencies caused by the tally system. Somebody very wise once said: “The most critical risk of all, is in not being prepared to take calculated risk in the first place.”

  • Gordon Davis SA July 12, 2017

    According to Mr Gunthorpe something failed over 40 years ago so we shouldn’t try anything new ever again, also lets wait 3 years to do anything. Why does Mr Gunthorpe think he is the expert on all matters. I understand whilst he was at AMH he was against MSA. All JBS brands today are unpinned by MSA. Teys and JBS are investing in this technology and 14 other processors according to this article. Are they doing it for fun?
    Could someone introduce Gunthorpe to golf, bush walking or pokies so he stops imparting his dated thoughts on our industry.

    NBT – all food is x-rayed for containments, anti-tampering and humans at airports – so why would x-raying a carcess be an issue to consumers?

    Why is our industry so negative to change?

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