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
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Click comments below to add a comment.

Thursday, December 3, 2009


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


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.