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).