Saturday, December 26, 2009

WHY OUR SECRET GRADING SYSTEMS ARE NOT WORKING...and what we can do to fix the problem.


In a Nutshell

Australia’s MSA is the best grading system in the world and MSA graded cuts attract a price premium. But Australia has failed to develop a whole of market grading system that accurately describes eating quality to consumers.

Some of the better beef is MSA graded and some of the old cow beef is labelled Budget. But most beef sold to Australian consumers is not graded and consumers buy a good steak one day and a bad steak the next.

Most consumers have never heard of MSA and do not know that Budget Beef means beef from old animals.

Beef is generally retailed as a commodity and the price of the bad steak brings down the price of the good. Consumers do not know how to tell the difference between the good steak and the bad, become dissatisfied and switch from beef to chicken or pork and beef consumption continues to fall.


The Original Plan

In 1999 MLA introduced MSA grading to halt the Australian decline in demand for beef resulting from inconsistent eating quality.

In 2001 major beef retailers signed up to a Voluntary Retail Agreement to describe beef from animals with eight teeth as “Budget”.

Trend Decline
The MSA 1998 Business Plan noted that per capita beef consumption was on a long-term trend decline of about 1.7% per year (see chart, How did MSA begin?).





Source: MSA
The Outcome
Ten years and $74m later MLA has forecast a further decline in per capita consumption for the next five years (2009 to 2013) of 15.7% or 6 kgs less per person than it was in 1999.

Continued Trend Decline
The per capita consumption trend decline between 1999 and 2009 was about 1.76% per year. The trend decline which laid the foundation for the development of MSA has therefore continued at the same rate since the introduction of MSA 11 years ago (see chart, Australian Beef Consumption Since MSA).


Source: MLA

The Cost
The cost to the beef industry of a drop of 6 kgs per capita disappearance of beef consumption x .79 = a retail weight of 4.74kgs at an average retail sale price of $16.24 per kg multiplied by 21,800,000 Australians equals $1.6 billion a year.


The MSA Strategy
“Two of the strategic imperatives of the 1996 Meat Industry Strategic Plan (MISP) were to:
  • supply a consistent product to consumers; and
  • accurately describe palatability to consumers.”
The MISP concluded this would result in an annual $1.2 billion payout to the Australian beef industry by 2010.

The Meat Standards Australia Business Plan December 1998 stated that there were two reasons for introducing MSA:
  • consumers are clearly dissatisfied with beef. They are reacting to its uncertain and unpredictable eating quality by reducing their beef consumption; and
  • MSA would deliver increased profits to the beef industry.
The 1998 MSA Business Plan stated that “a strategy for expanding a whole of market grading system must be developed”.



So what went wrong?
Australia has failed to develop a whole of market Grading System.

The Australian Branded Beef Association told the Senate Standing Committee on Rural and Regional Affairs and Transport Inquiry into Meat Marketing that:

“Australia (has) the world’s leading grading system in Meat Standards Australia (MSA); however nothing is perfect and MSA only describes the product that meets its requirements. We believe that we need a system that accounts for and describes the entire product.

Therefore we (the Australian Branded Beef Association) support the Bindaree position on a National Grading System provided that it incorporated the current MSA system/technology for the product that meets the MSA specifications and then ascribed grades/descriptions to the product that does not meet MSA requirements.”

Last year only 20% - 25% of beef sold on the domestic market was MSA graded and less than half the retailers in Australia are signatories to the Voluntary Retail Agreement which requires signatories to describe beef from eight tooth animals as “Budget”.


Secrecy and Misdescription
Most consumers have never heard of MSA and don’t know that “Budget” beef means beef from older animals.

The Senate Standing Committee on Rural and Regional Affairs and Transport Inquiry into Meat Marketing report:
  • Slammed the retail practice of selling Mutton and Hogget (i.e. meat from older animals) branded as lamb to unsuspecting consumers;
  • Criticised the use of the word “Budget” under the Voluntary Beef Retail Agreement to describe beef from old cows saying that the Budget label was confusing and misleading and not enough to let the consumer know that the meat that they were buying was from older animals;
  • Found that a quality based Beef Grading System would benefit Australian consumers and the Australian Beef Industry as a whole and that at the very least consumers should be guaranteed the same objective AUS-MEAT grading classification for beef as those required for export abattoirs.

The Solution
A National Beef Grading System that grades all the product sold to Australian consumers.
Richard Torbay’s Beef Grading Bill which is before the NSW Parliament contemplates a National Voluntary Beef Grading Code underpinned by legislation which will impose potential penalties on any retailer who adopts the Code and then cheats by mis-describing beef as being a certain grade when it does not meet the standards for that grade.

Richard Torbay’s proposed National Beef Grading Code embraces MSA and recognises the general improvement in beef eating quality in recent years but, if adopted, will apply to all the beef products sold on the domestic market, not just MSA graded products and Budget beef.

Under the proposed legislation if a retailer purchased beef from an AUS-MEAT accredited abattoir labelled, for instance, PRS (up to 42 months old) and sold it to their customers as yearling, they would be subject to substantial fines.

Similarly, if a retailer purchased beef from an AUS-MEAT accredited abattoir labelled “Budget” and sold it to his customers under a label that did not include the word “Budget” that retailer would be subject to substantial penalty.

If all the beef is graded consumers will know the quality of the product before they buy and will no longer have to enter into the lottery of getting good steak one day and bad steak the next. This will lead to an increase in per capita beef consumption and good quality beef and cattle will attract the premium price they deserve. The potential payout to the beef industry will be well over $1Bn a year.


Truth in Labelling
If those retailers that are signatories to the Budget Beef Voluntary Retail Agreement really intended to label beef from animals with eight teeth as “Budget” in their shops it is difficult to understand why they would object to that Voluntary Retail Agreement being underpinned by legislation which imposed a penalty if the retailer cheated and failed to disclose to their customers that the beef came from older animals.

If retailers did not breach the Agreement no penalties would apply.
To find out about:
  • slaughter age, grading and the effect on beef consumption
  • the effect of inconsistent eating quality
  • audit issues
To print this article (PDF):
Click comments below to add a comment.

Thursday, December 3, 2009

THE WAY FORWARD UNDER NEW BEEF LABELLING LEGISLATION

The Cow Beef Debate

Subject to an MSA integrity review it is proposed that the “Budget” category for cuts of beef from animals with eight teeth would only include product that does not make the lowest MSA grade, and is not mince or tenderloin.

As Rod Polkinghorne, the Founder and current Chairman of Meat Standards Australia Committee says the cuts of beef from old cows that fail to MSA grade will not eat well however cooked.

Those opposing Torbay’s Bill and calling for a “Budget Grade” descriptor from beef from old cows generally don’t mention the proposed exemption of MSA graded cuts from old cows from the budget labelling requirements.

The reality is that only beef cuts that ‘Fail to Grade’ and won’t eat well however cooked will be required to be labelled “Low Quality” or “Low Grade” Budget under Torbay’s Bill. In these circumstances the term “Budget Grade” appears to be misnomer and a description that would continue to mislead and deceive consumers.

RMAC chairman Ian McIvor has said that the labelling of poor quality meat as “low grade” will not improve sale volumes and will simply turn customers away. Apparently RMAC’s solution to declining beef consumption in Australia is to sell more low quality meat to consumers, and to package it in a way that makes it seem more appealing than it is.

The claim by journalist, John Condon in the Queensland Country Life (29 October 2009) that the quantity of beef from 8-tooth animals sold onto the Australian domestic market is not significant is logically inconsistent with his claim two weeks later that branding cheap cuts of meat as “Low Quality” or “Low Grade” was “marketing suicide”.

If the amount of cow beef sold to the Australian domestic market was insignificant the Torbay Bill would have little effect on the industry and there would be no need for overdramatic “Beef Suicide” headlines.

Domestic Retail Beef Register

AUS-MEAT has released a new Domestic Retail Beef Register designed to allow trade description information to be accurately converted to applicable descriptors for retail sale to consumers.

The register will work in conjunction with Torbay’s Bill to create a legislatively backed, consumer friendly truth in labelling system for beef products in NSW.

Rod Polkinghorne made the following comments about section 4.2 of the Register which refers to Budget Grade Beef :

“The section clearly states the Budget Grade does not guarantee any eating quality but I wonder whether this will be obvious to a consumer when it is listed as a grade, the only equivalent being MSA grades. Will they just think that “a grade is a grade”?

“…The notion that ‘such product has practical uses including slow cook options’ is mostly false. There is plenty of product that has failed the consumer test when tested under slow cooking. Slow cooking may give a better result than grilling but it will not guarantee a satisfactory result.

“…My principal concern would be that we may in fact raise recognition of Budget Grade due to it being referred to as a grade and possibly confused with an eating quality claim.”

The Way Forward

The Torbay legislation can be used as a model for the implementation of similar labelling systems in other states, which will be a topic for discussion when the Primary Industries Ministerial Council meets in April next year.

The other States will have an incentive to introduce similar labelling systems.

It would be incongruous for New South Wales consumers to have the benefit of truth in labelling legislation so that they knew the quality of the “Budget” beef that they are purchasing before they make their decision to buy whilst consumers in the other States had to continue to engage in a lucky dip with a good steak one week and a bad steak the next.

If the other States don’t follow suit it is likely that cow beef previously sold in New South Wales will be redirected to Queensland and Victoria where retailers could continue to get away with misleading and deceptive descriptions for poor quality cow beef.

Wednesday, December 2, 2009

RESPONSE TO COMMENTS BY GRANT MAUDSLEY IN THIS WEEK'S QUEENSLAND COUNTRY LIFE

Comments made by president of AgForce Cattle Grant Maudsley, quoted in this week's Queensland Country Life (see article: "Maudsley: Torbay Damaging"), as to whether the Torbay Bill is a voluntary or mandatory Scheme fail to compare apples with apples and are off track.

The section 23B amendment to the NSW Food Act is a Truth-in-Labelling provision (introduced by "the Torbay Bill") rather than a grading provision and will take the AUS-MEAT language from the rear of the retail store to the front counter.

Subject to the debate over the appropriate qualifier for "Budget" beef from old cows, the AUS-MEAT Truth-in-Labelling provisions taking the AUS-MEAT language through to the front counter had the full support of industry who responded in a positive fashion to Torbay's Bill with the development of an AUS-MEAT Domestic Beef Retail Beef Register which will describe beef cuts in a more consumer friendly way than the existing AUS-MEAT trading language.

The section 23A amendment to the New South Wales Food Act 2003 contemplates the Minister promulgating Regulations to introduce a Voluntary Beef Grading Scheme to impose penalties on retailers who adopt the Scheme and then cheat by mis-labelling the product.

Torbay's Bill embraces and encourages MSA cuts grading and any carcase grading would simply relate to those animals which have not been, or cannot be, MSA graded.

The draft Beef Grading Regulations circulated to industry a couple of months ago contemplated a Platinum grade restricted to MSA 4 and 5 star cuts with the easiest pathway to the proposed Gold Grade through cuts that graded MSA 3 star and Silver and Bronze grades restricted to non MSA graded carcases. As the editorial suggests, any cut from an 8 tooth animal that makes an MSA Grade will be excluded from the "Budget" labelling requirements.

Rod Polkinghorne the Founder and Chairman of Meat Standards Australia Committee says that any cuts from cows that fail to MSA grade will not eat well however cooked. In these circumstances it is difficult to understand Mr Maudsley's view that the sale of cuts from old cows that have not been MSA graded, or Fail to MSA Grade, that are labelled Budget "low grade"or "low quality" will drive consumers to competing protein including pork and chicken.

This is the nub of the eating quality debate. The research shows that eating quality consistency is the biggest determinator in a consumers decision to make a repeat beef purchase.

Does Mr Maudsley really believe that consumers who are left in the blind, with no way of knowing the quality of the beef that they are purchasing before they make their decision to buy, are less likely to switch to consistent protein sources such as chicken or pork than they would, if they were given the heads up before they parted with their hard earned, that the cheap cut they were buying was low grade and may not eat to well?

The supporter's of the Torbay Bill, as did the founders of MSA, believe that inconsistent product that flows from the current lucky dip, where consumers buy a good steak one week and end up with tough and tasteless piece of old cow meat the next, have been driving consumers away from beef to competing protein such as pork and chicken for many years.

See also my letter to QCL: "Meat grading not mandatory in bill" published 10/12/09.

Thursday, November 26, 2009

CONGRATULATIONS RICHARD TORBAY - BEEF LABELLING BILL PASSED BY LEGISLATIVE COUNCIL

The Food Amendment (Beef Grading) Bill 2008 was passed by the Legislative Council today with only minor amendment (the Act will will be entitled “Beef Labelling” rather than “Beef Grading”).

The Act is to come into force by proclamation of the Minister for Agriculture next year.

Today's developments represent the culmination of a long process of industry consultation and negotiation, and Richard Torbay must be congratulated for his dedication and perseverance in supporting this legislation.

The Bill provides for AUS-MEAT product descriptors, which are currently removed at the back of the retail door, to be made available for consumers at the shop front. It also requires labels describing a product as "budget" must also carry the description "low grade" or "low quality".

Fines will apply to retailers who do not use the AUS-MEAT and “budget” labels consistently or in accordance with the legislation.

AUS-MEAT has this week released a new Domestic Retail Beef Register designed to allow trade description information to be accurately converted to applicable descriptors for retail sale to consumers.

The register will work in conjunction with Torbay’s Bill to create a legislatively backed, consumer friendly truth in labelling system for beef products in NSW.

The Act will now be put to Primary Industries Ministerial Council and will provide a model for other states to implement equivalent legislation.

Friday, November 13, 2009

TORBAY'S BILL PASSED BY THE LEGISLATIVE ASSEMBLY

The Food Amendment (Beef Grading) Bill 2008 was passed without opposition by the NSW Legislative Assembly yesterday.

In a speech before Parliament, Torbay pointed out that "consumption of beef on the domestic market has be falling for a number of years and much of this decline is attributed to an unreliable labelling system".

"At present our beef exports are falling quite dramatically and there is a greater reliance on a buoyant domestic market", he said.

"Guiding these necessary reforms has been a painstaking process off negotiations. But if, as expected, it results in a better deal for consumers, producers and the industry, it will be a very worthwhile outcome", he said.

Torbay also expressed disquiet at RMAC tactics to reneg on an earlier agreement to back the legislation and lobby MPs to withdraw their support on the day the Bill was to be presented.

He suggested the about-face by RMAC demonstrates "a disappointing lack of leadership".

Related Links:

Food Amendment (Meat Grading) Bill 2008

Second Reading Speech in the Legislative Assembly (Parliament of NSW website).

Richard Torbay's full Press Release

Wednesday, October 28, 2009

VINCE PTOLLEMY'S RESPONSE TO DAVID THOMASON'S COMMENTS IN THE QUEENSLAND COUNTRY LIFE

MLA’s David Thomason’s claim (QCL Oct 22, read HERE) that Richard Torbay’s NSW Meat Labelling Bill “could set the industry back 20 years” shows how out of touch he is.

Australian cattle producers currently receive about 30% less in real terms for their cattle than they did 20 years ago and prices continue to fall.

Twenty years ago Australians each ate 43.2kgs of beef every year compared to the MLA forecast of 31.3kgs this year.

Despite the continued increase in our population, the total volume of beef consumed in Australia is falling with Australian domestic beef consumption now down to 33% of our total production.

Only about 20-25% of the cattle destined for the Australian market are MSA graded and cattle from the Top End, the Channel Country, cattle sold through saleyards and cattle from non-MSA accredited properties, which would eat well, can’t be MSA graded because of the MSA rules.

A system has to be worked out to grade the beef that would eat well that is not eligible for MSA as well as the beef that does not make MSA grades.

MLA has spent a fortune on MSA but where are the results?

If we could encourage Australians to eat as much beef as they did 20 years ago and cattle producers were paid the same price for their cattle in real terms that they were 20 years ago, then producers may believe that they had received good value for their levy dollars.


Here's what readers of QCL thought about the article...

Ted O'Brian said:

"One thing we know for sure is that the lack of labelling has not been good for producers. It would be thirty years now since Ian Steele-Park told us that beef grading was just around the corner, waiting only for the fixing of problems with the device that measured the fat depth. Thirty years. Clearly somebody was being paid for thirty years to drop this jigger on the concrete."

Mac said:

"It is high time that we caught up with the USA and had a complete grading scheme not just for the upper echelons of the market; if it is good enough for them, why not the rest of us? I have been buying some meat lately as it is too dry to kill, it really is disgraceful that you have no idea what you are buying. Pig and poultry producers market their products much better than the beef industry. I wonder why that is? Someone may be able to tell me."

Les said:

"When you see 26-28 month old bullocks off oats making $1.60, & 8 &12 year old cows making $1.40 in yards recently, we need meet grading. All cows, know matter what age, should be mince. The wagons are circling - QCL editorial, Jon Condon, MLA, Cattle Council, AgForce, 2 abattoirs ... they stick together like glue. The day QCL & Jon Condon ever criticise MLA, AgForce, or Cattle Council on any issue, I'll send them a bottle of blue label Johnny Walker each. Go for it Richard Torbay."

Qlander said:

"The issue of generic description and labelling of beef has always bumped into the competition for brand marketing between the breeds."

To post your comment click HERE.

Monday, October 26, 2009

BEEF INDUSTRY SURVEY RESULTS RELEASED

Tony Windsor, the Independent Federal Member for New England, has released his survey results of 431 cattle producers in New England on Beef Grading and Truth-in-Labelling.

The survey found that "New England Beef Producers want the industry to introduce a Compulsory Consumer Orientated Beef Grading System and to better educate the consumer about the Beef Grading System".

"82% of New England producers want a better consumer education program" it found.

Mr Windsor was very pleased with the response by small and large producers to the survey.

“431 cattle producers ranging in herd size from less than 100 head to over 1,000 head kindly participated in the survey to let me know their views of their industry.

I thank those who took the opportunity to provide me with their thoughts”, Mr Windsor said.

Mr Windsor will now pass the survey results on to the Minister for Agriculture Fisheries and Forestry, Tony Burke and it will also be available on his website: www.tonywindsor.com.au

Alternatively, you can view the survey results HERE.

Thursday, October 22, 2009

QUEENSLAND COUNTRY LIFE: TIME TO ENTRENCH MSA'S GRADING MODEL

We welcome support from QCL which has endorsed a grading system 'describing all beef descriptions from end to end'. Torbay's draft grading model embraces MSA and has been designed to encourage continued increased uptake of MSA grading by processors.

As the QCL editorial points out the problem is the 'lack of product descriptors between existing MSA grades and the budget beef end'

The challenge facing industry is how to fill the gap and grade the product in the middle so consumers know the quality of the beef they are purchasing before they make their decision to buy. Currently consumers are being asked to enter into a lucky dip - they get a good steak one week and a tough and tasteless steak the next, vote with their wallets and don't come back for repeat purchases.

Only 12,500 cattle properties out of approximately 160,000 cattle properties in Australia are MSA accredited and as David Thomason from MLA points out cattle from Northern QLD, the Channel Country, the Northern Territory and cattle sold through saleyards will often eat very well but can't be MSA graded because of MSA's 24 hour transport and saleyard rules.

A system has to be worked out to grade the beef that is not eligible to be MSA graded.

The Peak Councils need to work constructively with the politicians to achieve this.

Read the full article HERE

Monday, October 12, 2009

BEEF GRADING IS FRONT PAGE NEWS

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The need for greater consumer protections from mislabelled beef products was the subject of a front page article this week in the weekend edition of the Sydney Morning Herald.

"Shoppers have little way of telling the true quality of the meat they are buying", readers were told, "because there is no grading system for locally sold beef, nor any onus on retailers to inform their customers of the quality of a cut".

The Primary Industries Minister, Ian Macdonald, expressed his concerns about truth in labelling of meat products. ''The beef market is a national market" he said, "and we would like to see a national approach that can be adopted by all states and territories.''

The Minister has indicated the NSW Government is preparing to take the first step and introduce AUS-MEAT accreditation for NSW abattoirs.

The article can be viewed on the SMH website HERE.

Monday, August 31, 2009

CHANNEL 7 AND THE GREAT MEAT SCAM

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Channel 7 have picked up on the recent findings of the Senate Standing Committee on Rural and Regional Affairs and Transport Inquiry into Meat Marketing and ran a 7 minute segment on Today/Tonight show on Monday 31 August criticising sale of beef from old carcasses as prime cuts and mutton dressed up as lamb.

The Today Tonight program showed a sirloin steak from an old cow being sold under labels and stickers that said:

“Special”
“Premium quality”
“Budget Boneless Sirloin”

Beef from old cows is tough, tasteless and pretty hard to chew.

Today Tonight said that the labels did not give the consumer any indication that the beef came from older animals but simply suggested that the meat was good value.

The program also explored the difference in eating quality between mutton, hogget and lamb and allegations that some processors were buying mutton and hogget at cheaper prices from farmers, branding the meat from those older animals as lamb and selling it to unsuspecting consumers at premium prices.

It compared an inedible dark peice of porterhouse steak with yellow fat from an old cow that retailed for $18.89/kg with a delicious prime light red yearling porterhouse with white fat that they bought for $16/60/kg. This shows how much of a lucky dip it is for consumers under the current labelling and grading arrangement as to whether they get good steak or bad steak.

To see the full Channel 7 story go to the Today Tonight website.

For further information on government moves to stop these practices and introduce truth in labelling read on below or visit the documents page on the Hunt Partners website HERE.

Click Comments below to add a comment.

Wednesday, July 1, 2009

SUMMARY OF SENATE COMMITTEE’S REPORT INTO MEAT MARKETING


The Rural and Regional Affairs and Transport Senate Committee Interim Report into lamb and mutton marketing recommended:
  • harmonised national standards for all domestic slaughtering and processing establishment including maintenance or dentition as a standard for classifying an animal as lamb with a requirement that 100% of animals classified as lamb be mouthed at slaughter.

The Senate Committee Inquiry into beef marketing found that:

  • grading system with broad application and acceptance would benefit consumers and the Australian beef industry as a whole;
  • the guesswork for consumers associated with purchasing ungraded beef diminishes consumer confidence in beef and is probably detrimental to the industry overall;
    grading of all beef products for quality would give consumers greater confidence in its reliability;
  • consumers should at least be guaranteed that the objective Aus-Meat classification standards imposed on processors supplying export markets are applied domestically;
  • the Commonwealth Government should negotiate with the States and Territories to have the Aus-Meat system applying to export meat extended to all domestic processors in Australia;
  • the use of "budget" beef to describe beef from animals with eight teeth is at best confusing and at worst misleading. Ideally the voluntary budget beef retail agreement should stipulate that beef from old cows is labelled "old cow beef" and at the very least "budget quality" so that it is clear that this beef is classified as being of poorer quality than other available products;
  • if the industry fails to undertake reforms on the budget beef descriptors then government should introduce legislation to ensure that beef from cows with more than eight teeth is required by law to be labelled "old cow beef";
  • it is not surprising that those selling beef into the lower end of the market do not want to have to pay for a government-imposed grading system that highlights the quality of their product relative to better quality offerings;
  • the government’s proper role in regulating beef products should be to ensure that consumers are not being given false or misleading information and that the introduction of a widely used beef grading system should not be mandated by government but be left to industry to introduce voluntarily;

Appendix 3 to the Senate Committee’s report confirms that the Industry wide Beef Grading Forum convened by RMAC in 03/04 recommended a Voluntary Beef Grading System underpinned by State Legislation.

Appendix 3 also concedes that the recommendations of the Industry wide Forum were later overturned at AMIC’s behest and consequently RMAC itself did not accept the recommendation of the Taskforce that it had established.

The recommendations of the Final Report into Beef Marketing are limited to:

  • a proposal that the Commonwealth Government negotiates with the states and territories to have the AUS-MEAT system applying to export meat extended to all domestic processors in Australia; and
  • a reference to ANZFA with respect to the creation of separate country of origin labelling standards.

COMMENTS

Richard Torbay’s New South Wales Beef Grading Bill proposes a voluntary code with penalties for those that adopt the code and then cheat by selling beef under a label that does not accurately reflect the standards of that particular grade.


If retailers do not want to comply with the proposed voluntary code they need not adopt it and can use their own labelling system.


Richard Torbay’s Beef Grading Bill also seeks to extend the objective AUS-MEAT classification standards imposed on processors supplying export markets from the back door of the retail store to the consumers at the shop front.


Richard Torbay’s Bill proposes a voluntary code underpinned by legislation rather than a mandatory industry labelling requirement and is therefore consistent with the findings of the Senate Committee.


PIMC Terms of Reference


The terms of reference of the Primary Industries Ministerial Council (PIMC) Meat Marketing Working Group include consideration of the costs and benefits (including examination of compliance and enforcement issues) in systems such as MSA as a basis for a voluntary meat labelling system for processors and retailers suitable for consumers or the establishment of a compulsory meat labelling system for processors and retailers suitable for consumers.

Richard Torbay’s New South Wales Beef Grading Bill proposes a voluntary meat labelling code for processors and retailers which is suitable for consumers underpinned by legislation.

Richard Torbay’s Bill therefore falls half way between the two alternatives proposed in the PIMC Terms of Reference.

The Bill is also consistent with paragraph 2(iii) of the PIMC Terms of Reference in that it seeks to make retailers who adopt the proposed voluntary code comply with the AUS-MEAT descriptors and consumer language.

It is equally consistent with the view of the Senate Committee that consumers should be guaranteed that the same AUS-MEAT standards imposed on exporters are applied domestically.

To view the full Working Group Terms of Reference CLICK HERE.

Some apparent inconsistencies in the Senate Report

The distinction drawn by the Senate Committee between "Budget Beef" and Beef from younger animals appears to be a little spurious.

The practice of describing beef from 2 or 3 year old 6 tooth bullocks as yearling or young on the face of it to be equally or more misleading than describing Old Cow Beef as "Budget".

The Senate Committee’s approach to Beef Grading appears to be inconsistent with the Senate’s Interim Report recommendations in relation to harmonised National Lamb Branding Standards.

The Senate Committee accepts that if industry voluntary codes use confusing or misleading terms then government should introduce legislation to ensure that the voluntary code complies with Truth in Labelling principals.

Monday, June 15, 2009

WHY NSW CATTLE PRODUCERS ARE NOT GETTING THE PRICE THAT THEY SHOULD BE FOR THEIR CATTLE

THE PROBLEM

Most of the beef sold to Australian consumers is sold as a single commodity with no differentiation between the good and the bad. The problem is that between 30% and 40% of the table beef eaten in Australian homes comes from old cows, so while consumers may buy good steak one day, there’s a good chance they’ll get bad steak next time round.

Consequently consumer dissatisfaction with poor quality steak sets the price for both the good and the bad, and there is little or no differentiation between the price paid to cattle producers for their old cows and the price paid to them for young steers.

The current abattoir grid price for four teeth steers at 275-290 kg is $2.80 per kilo and the grid price for 275-290 kg eight teeth old cows is $2.70 a kg


THE SOLUTION – A NATIONAL BEEF GRADING SYSTEM

If poor quality beef from older cows were clearly identified to consumers, fewer prime cuts from old boner cows would be sold as table steak on the Australian market. Cow beef would therefore no longer undermine the value of the premium quality product.

If a National Beef Grading System were introduced into Australia, the producers of quality and well finished British breed beef cattle could achieve a premium in excess of $100 a head over and above the price paid for standard grade cattle.

Cow prices, on the other hand, are underpinned by the American hamburger market and hence any cow price decline would be marginal.


GRADING PREMIUM

MLA research shows that over the hooks prices for MSA yearling cattle are between 7-26 cents more than for non MSA yearling cattle. For a 225 kg carcass this translates to a premium between $16.00-$58.00 a head. MLA research also shows that the average wholesale premium for MSA cuts was $1.56 per kg and the average retail premium for MSA beef across all cuts was $1.70 a kg.

In 2005 Cameron Dart (MSA Manager), Dr Barry Griffiths (Beef CRC and NSW DPI Economist) and Professor John Thompson (Beef CRC and UNE Professor of Meat Science) estimated that retail premiums on a whole carcass basis for MSA Graded Carcass was 0.39c per kg and the wholesale MSA whole of carcass premium was 0.29c per kg which translates into a $78.00 retail wholesale premium.

At the moment abattoirs are getting about $3.46kg for MSA carcasses, $3.30kg for grain fed carcasses and $3.19kg for yearling grass fed cattle. The MSA premiums are mainly found in full cuts-rump, strips, cubes and tenderloins.

Rod Polkinghorne, the founder of MSA, told the Senate Standing Committee of the Rural and Regional Affairs and Transport Inquiry into beef marketing in Melbourne on 26 March that the MSA grading premium at the farm level was between $150-$300 a head.


GRADING ALL THE CATTLE

Currently only about 25% of the cattle killed for the Australian market are MSA graded and the MSA cuts comprise only about 16% of the carcass. Hence only about 5% of the beef eaten by Australians is MSA graded.

If the consumer is to have confidence in the quality of the product that they are buying, all the beef sold to the Australian domestic market needs to be graded, not just the top and bottom grades.

It is therefore contemplated that the premium grades of the proposed National Beef Grading System will include top quality grass and grain fed cattle as well as MSA graded carcasses.


TENDERNESS & EATING QUALITY

MLA research and genetic testing has proven that Hereford, Angus and Shorthorn breeds have more tender genes and better eating quality than Bos Indicus cattle.

A joint paper by Professors at the University of New England, Adelaide noted that:
“Australia has two different broad systems of beef production: northern and southern. In the North (Queensland, the Northern Territory and upper regions of Western Australia) cattle properties and herd sizes are very large, extensive cattle production systems, which are characterised by grazing native pastures at low densities. This production system represents 73% of the Australian beef industry and is mainly orientated to exports to the United States. On the other hand, southern farms are smaller and cattle graze intensively on improved pastures and fodder crops. These cattle are sold on the domestic market and exported to Japan and Korea”.


INCREASED CONSUMPTION

Based on the experience of overseas countries with grading systems and limitations on the age of beef consumed the introduction of a National Beef Grading System in Australia will lead to an increase in per capita domestic beef consumption because consumers will have more confidence in the quality of the product that they are buying.

The 1996 Meat Industry Strategic Plan forecast that a National Beef Grading System that guaranteed quality products to consumers would produce a $1.2 billion annual payout to the beef industry.

This can be achieved if the 07/08 per capita beef consumption of 36.3 kg per person were to increase by 5 kg per person back to the 1997 per capita beef consumption of 41.3 kg.

To put it more simply, the $1.2 billion payout could be achieved if every Australian ate one more beef meal every three weeks.


AND THE WINNERS WILL BE...

1. New South Wales and the Southern State cattle producers who have the best quality cattle grazing on the best pastures, and therefore will receive the biggest portion of the windfall payout from increased consumption and premium prices flowing from a National Beef Grading System.

2. All Australian cattle producers and the Australian beef industry as a whole who will all share in the annual $1.2 billion pay out.

3. Australian consumers who will be able to make a buying decision based upon the price and quality of the beef before they buy.


ACTION

If you feel strongly about the introduction of a National Beef Grading System underpinned by legislation please register your comment (use link directly below this week's post) and vote so that we can pass your opinions onto the relevant State and Federal Ministers (use the online poll in the right hand column of this page).

Wednesday, March 25, 2009

My address to the Senate Inquiry into Meat Marketing

The following are excerpted from the notes of my address to the Senate Inquiry which will be delivered tomorrow.


OPENING COMMENTS

An Australian National Beef Grading System is an idea that is 40 years overdue.

It is an idea that according to the Meat Industry’s Strategic Plan forecast in 1996 has the potential to provide a $1.2 billion annual payout to the Australian Beef Industry.

A payout that can be achieved at current retail prices if every person in Australia were to eat just one extra serving of beef each week.

The cost/benefit to the Australian Beef Industry of a national beef grading scheme is overwhelming.

In recent years per capita beef consumption has increased or broken even in countries with beef grading or legislation limiting the age which cattle can be killed for the domestic market but declined in countries such as Australia and New Zealand who have no beef grading system or rely on voluntary schemes.

The cost/benefit issues will be dealt with in detail later but first I would like to discuss the history of attempts to introduce a national beef grading system in Australia.


HISTORY

The US has had a successful consumer orientated Beef Grading System underpinned by legislation in place for almost 90 years.

There has been a long and checkered history to try and introduce a similar national beef grading system into Australia.

Professor Yeates from the New England University in New South Wales began calling for the introduction of an Australian Beef Grading System in the 1960’s.

In the late 80’s and early 90’s as Chairman of the NSW Meat Industry Authority John Carter almost achieved the introduction of a Gold and Purple Beef Grading System but it wasn’t to be.

The Qld Beef Authority had a coloured beef branding system in the 1980’s. Western Australia currently has statutory provision for “Tender Gold” and “Lot Fed” branded beef from animals that have no more than two permanent incisor teeth and the AUS-MEAT language provides for participation in a national carcass branding scheme embracing Gold for grass fed cattle and Purple for grain fed cattle up to 30 months with older cattle being branded Bronze.


RECENT DEVELOPMENTS

The Food Amendment (Meat Grading) Bill introduced by Richard Torbay the Speaker of the Legislative Assembly in the NSW Parliament late last year, seeks to implement the 2004 Beef RMAC Beef Grading Truth in Labelling Forums recommendations and to introduce a consumer orientated beef labelling code backed by legislation.

A voluntary Beef Labelling Code which if adopted by the Retailer and breached could result in a $55,000.00 fine for an individual and $2.7 million fine in the case of a corporation.

As you are aware Federal Minister for Agriculture Tony Burke at the request of his NSW counterpart, Ian McDonald has put a national consumer orientated meat grading system on the agenda for the next meeting of the Primary Industry Ministerial Council (PIMC) to be held in Hobart on 24th April 2009.


DEVELOPMENT OF A CONSUMER ORIENTATED LANGUAGE

The Australian Consumers Association suggests that the consumer orientated language should either be a colour or a star system details of which will need to be road tested through focus groups and consumer surveys before adoption. There is plenty of precedent for the successful use of both colour and star grading systems in food retailing.

The ACA advises that they have renewed interest in the Beef Grading proposal since they took over Grocerychoice from ACCC. The ACA now want to publish direct comparisons between supermarkets in particular suburbs and regional centres and believe that the proposed grading system would help them make direct comparisons for price, ie they would be able to compare Woolworths Gold with Coles Gold etc.

At the moment each supermarket has its own quality coding system which makes it difficult to make meaningful comparisons.


BUDGET BEEF

A quick check of the meat sections of our supermarkets exemplifies the lack of uptake and/or compliance with the Budget Voluntary Code for beef from animals with 8 teeth.

As you walk through the supermarkets you will see the use of the words “Economy”, “Special Value”, “Premium” and “Budget” denoting beef from older animals.

As the Australian Consumers’ Association Choice Magazine said back in 2003 “the word Budget isn’t enough by itself to let you know that the meat you are buying is from older animals”.

Why not label so called Budget Beef for what it is – “Old Cow Beef and Old Ox Beef”.

If AUS-MEAT can call beef from animals up to 18 months old “yearling beef” and beef from animals from animals up to 30 months old “young beef” why can’t we call beef from an old cow at the end of her breeding cycle “Old Cow Beef”?


COST/BENEFIT

The main benefits which are set out in the Hunt Partners Submission to this Inquiry can be conveniently summarised as follows:

First, as the Australian Consumers’ Association Choice Magazine said back in 2003 “Australian Consumers will know what they are getting before they buy.

Secondly, as I said earlier, the Meat Industry Strategic Plan forecast in 1996 that the introduction of a Consumer Orientated Beef Grading System would provide a $1.2 billion annual pay out to the Australian Beef Industry.

This giant windfall can be achieved at current retail prices if every person in Australia eats just one extra serving of beef every 3 weeks.

Thirdly, beef per capita consumption in Australia has fallen by over 25% since 1982. In the same period in the US which has had a well publicised legislative underpinned Consumer Orientated Beef Grading System for almost 90 years consumption declined by just 6%.

Fourthly, following the mad cow disease scare in the UK the UK Government in 1998 introduced a law making it illegal for anyone to sell beef in the UK for the domestic market from an animal over 30 months of age. By the year 2003 against all odds beef consumption in the UK increased by 4.8 kilograms per person.

Fifthly, as I said earlier, in recent years per capita beef consumption has increased or broken even in countries with Beef Grading or Age Legislation but declined in countries such as Australia and New Zealand who have relied on voluntary schemes.

Sixthly, with the exception of mince meat for hamburgers, South Korea, Korea and Japan require all imported beef to come from animals with 6 or less permanent teeth and the European Union and North African countries require all imported beef to come from animals with 4 or less permanent teeth.

In the United States most of the table beef consumed on the domestic market comes from cattle 22 months of age that have been fattened in feed lots.

Finally, Industry sources estimate that up to 30-40% of the beef sold on the Australian domestic market comes from old cows that have ended their breeding cycle.

As incongruous it seems, the Australian consumer is the only consumer who eats table beef from Australian animals with 8 permanent teeth.

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For more detail, the Hunt Partners written submission to the Inquiry can be accessed via the link in the 'Related Links' list in the right hand column of this page.

Truth in labelling: NSW lead “sends a signal to the rest of Australia”

Truth in labelling was again front page news last week, as the proposed NSW meat laws gain national momentum.

The beef grading push in NSW has united behind Richard Torbay’s Private Member’s Bill, and it looks like the rest of the country is starting to take notice. A Senate Inquiry in Canberra last week has heard that the new laws in NSW could leave other states at a disadvantage.

As reported in The Land, Tasmanian Senator Christine Milne summed up the inter-state mood in saying “we (the inquiry) are a bit over voluntary standards and self-regulation”. Labelling terms like ‘budget’ cut and ‘economy’ cut came in for particular criticism as being vague and misleading. “Few shoppers would know the term “budget” meant [the meat] was cut from an older animal”, she said.

The ‘older animal’ she is referring to is often an 8 tooth old cow at the end of its breeding life. In these cases, ‘budget’ really means a better bottom line on the budgets of the big retailers, while consumers get hard to chew, tasteless old cow beef.

These labelling terms, described by Senator Milne as "vague and misleading", and the absence of a meaningful, consumer orientated grading system, have had a significant impact on the consumption of beef in Australia.

It is no accident that red meat consumption in Australia has fallen by over 25% since 1982, while in the same period in the US, which has a well publicised, legislated and consumer oriented beef grading system, consumption has declined by just 6%.

The evidence suggests that where good quality, properly labelled meat is available, people consume more of it.

Nowhere has this been more evident than in the UK, where in 1998 the beef industry reached crisis point following the emergence of mad cow disease. In response, the UK government banned the sale of beef from an animal over 30 months. Many thought this would spell disaster for the local industry. They couldn’t have been more wrong.

In the absence of old, tough, low-quality cow beef the UK market boomed. By 2003 beef consumption had actually increased by a remarkable 4.8 kg per person.

Why then did Australian beef consumption fall by 4.1 kg per person in the same period? Again, the figures tell the story: in the UK 0% of beef consumed came from old cows, whereas in Australia old cow beef comprised up to 40% of the market.

The 2001 Meat Industry Strategic Plan concluded that this downward domestic trend can be reversed by the introduction of a beef grading system guaranteeing palatability to consumers. The expected increase in consumption of red meat by (at least) one serve per person every three weeks would yield a $1.2bn annual payout to the industry from increased domestic consumption.

The beef industry cannot afford another decade of declining domestic consumption when the potential gains are so significant.

The way to get people eating that extra serve is straightforward: just give people what they pay for. If consumers think they are buying a juicy, tender, flavoursome steak off a yearling steer don’t give them tough old cow beef. To put it simply, the product offered on retailers’ shelves must match up with consumers’ expectations.

The national demand for mandatory and accurate labelling can not be held off for long. As Senator Milne told the Inquiry last week, the NSW solution “brings enforcement and compliance…it sends a signal to the rest of Australia.”

Monday, March 23, 2009

In the News: Primary Industries Ministers to consider a national beef grading system

Federal Minister for Agriculture Tony Burke has agreed to a request by his NSW counterpart, Ian Macdonald, to put a national consumer orientated meat grading system on the agenda for the next meeting of the Primary Industry Ministerial Council (PIMC) to be held in Hobart on 24th April 2009.

The word around the traps is that the PIMC will also be asked to establish a working group to deal with all aspects of a consumer based meat grading system, consider any relevant findings of the current Senate inquiry into meat marketing and refer the issue to FSANZ (Food Standards Australia and New Zealand).