In what is shaping as a rare and significant industry-led rollout of technology, Meat & Livestock Australia says it will borrow $150 million to fast-track the implementation of x-ray-based carcase assessment equipment in up to 90 AUS-MEAT registered abattoirs across Australia.
The bold move will be announced by Meat & Livestock Australia managing director Richard Norton at today’s MLA annual general meeting in Hahndorf, South Australia.
The introduction of objective carcase measurement (OCM) technology is seen as a way to provide more independence and accuracy in the carcase grading and pricing process, and to rebuild producer confidence in how carcase-prices are determined behind closed doors in abattoirs.
Prioritising the introduction of objective carcase measurement was a key recommendation for the industry in the Australian Competition and Consumer Commission’s interim report, released last week following a six-month investigation of the cattle and beef supply chain.
“Once implemented, the information arising from this technology will greatly enhance both the objectivity and the scope of carcase feedback provided to producers,” the interim report stated.
“The ACCC believes that the use of more objective carcase appraisal systems should be a high priority for all processors, and should also be strongly supported by industry leaders and relevant policymakers.”
However, the ACCC did also note that the technology is “not a panacea”.
“During the market study, producers have raised concerns with the ACCC about the calibration of the grading technology and worries about who would oversee this. The ACCC considers that technology should be implemented in conjunction with an independent dispute resolution system, in order to develop a trusted system.”
OCM will provide wide-ranging benefits: MLA
MLA MD Richard Norton says the move to fast-track the rollout of OCM will pave the way for scientific measurement of saleable meat yield, future value based marketing and industry-wide productivity gains through processing automation, genetic improvement and data-based on-farm decision making.
Longer term, the plan is also expected to reduce the industry’s annual multi-million cost of grading, he said.
Universal adoption of the technology was the only way to capture the potential of the data it generates to benefit all of industry, he said.
MLA will acquire a commercial loan on behalf of industry to finance the $150 million one-off cost of installing Dual Energy X-ray Absorptiometry (DEXA) technology in up to 90 AUS-MEAT registered slaughter facilities, he said.
It is not yet clear how the loan will be repaid, and from which source the money to repay the loan will come, but more detail is expected when Mr Norton speaks today.
MLA has informed Beef Central that DEXA technology is being rolled out because it has it been proven, The technology is not new, as it has been around for many years in health and medical fields, but levy-funded research has recently shown it can be applied effectively to carcase assessment in the red meat industry.
DEXA is now ready for full commercialisation for lamb and goat. Commercial trials will begin early next year on beef, but MLA feels this will be straight-forward as the same principles should apply across livestock, a spokesperson told Beef Central.
It is also understood it will be up to each abattoir to decide whether it wants to install and use the technology. Some of the larger processors are already well down the path of investigating objective carcase measurement technology for their own commercial purposes. Whether this DEXA technology will fit their objectives or be welcomed by them remains to be seen.
Mr Norton said MLA has sought and received in-principal support from the Federal Minister for Agriculture for the introduction of objective measurement across industry.
It will also consult the industry’s peak councils about how to best structure the one-off cost of its introduction.
An MLA spokesperson told Beef Central that Cattle Council of Australia and Sheepmeat Council of Australia have been consulted and are both supportive of the project.
“The most important product of objective carcase measurement is the data it will generate – and MLA’s plan ensures that data will be available to all participants across the value chain,” Mr Norton said.
“We’re now at a stage where our smallstock DEXA technology is ready for commercial deployment, while for beef our DEXA research and development is nearing completion and ready for commercial installations in early 2017.
“Once the first stage of objective carcase measurement is installed, both systems will provide valuable information for the supply chain including saleable meat yield, bone and fat.
“The systems will become more and more valuable as ongoing research and development enhances the application of objective carcase measurement around all conceivable measures.”
Mr Norton said the ACCC’s interim report on its cattle and beef market study supported Cattle Council of Australia’s focus on how the competitiveness of Australian beef and cattle markets could be improved by the adoption of objective carcase measurement.
The universal adoption of the technology would also contribute to maintaining the Australian red meat industry’s ability to compete in global markets, he said.
“Australia is a high cost producer compared to some of our international competitors, so we need to constantly innovate and invest in productivity and efficiency improvements from the farm right through to the processor and ultimately to market,” Mr Norton said.
“MLA’s plan will drive a shift from the current subjective grading of lamb and beef to a new system of livestock production and marketing where producers can be transparently rewarded against objective data and value measurements.
“On farm, that will stimulate further advances in genetics and livestock production systems.
“Within the processing plant, the technology will reduce wastage and workforce injuries and boost productivity through the use of accurate, objective measurement and automation.”
Mr Norton said that in developing its plan, MLA had listened carefully to calls from the industry for more transparency in the process of grading carcases at abattoirs and, more recently, had noted the ACCC’s remarks around the integrity of the grading process.
“Under our plan, AUS-MEAT will be the whole-of-value-chain independent regulator. AUS-MEAT will calibrate the system, conduct the audits and will also provide a complaints resolution process,” Mr Norton said.
“Ensuring that the data generated from objective carcase measurement is accessible and easy for producers to use will further enhance the integrity of the grading system and also forms the basis of MLA’s digital strategy.”
He likened the universal introduction of objective carcase measurement to other visionary initiatives such as the MSA eating quality system and the industry’s food safety and traceability systems, both of which continue to return hundreds of millions of dollars to producers decades after their implementation.
“Through collaboration and collective investment, this plan will generate value across the red meat industry today, tomorrow and through to beyond 2020,” Mr Norton said.
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