Wednesday, December 8, 2010


The comments by the MLA Chairman, Mr. Heatley, in the Land newspaper “Beef Plan ‘Na├»ve’ says MLA” article on 28/7/2010, that “the US (grading) system wasn’t ‘test driven’” are incorrect.

The MLA 1998 MSA Business Plan disclosed USDA Consumer Test Results showing 94% consumer satisfaction with USDA Prime Grade, 89% for Choice, 75% for Select and 40% for Standard.

USDA continually check on consumer satisfaction with their grading system.

The US is generally regarded as having an export advantage over Australian exporters to the Japanese and Korean markets because the US has a grading system and Australia does not.

MLA Economist, Tim McRae, forecasts that Australian per capita beef consumption will fall to 31.8 kilograms over the next five years, which will represent a massive 10 kilogram drop in Australian per capita beef consumption since 1997, the year before MLA was incorporated and the MSA grading system was launched.

If we are able to get our Australian per capita beef consumption back to 1997 levels of 41 kilograms plus a year, it would, at current retail prices, boost gross national returns to the beef industry by $2.3 billion a year.

David Palmer, the CEO of MLA, is quoted in Wednesday 4/8/2010 SMH page 5 article as saying as “…we know that Australians eat roughly 100 kilograms of all meat each year…it’s finite…it is about how we divide that.”

In 2006, Australians each ate approximately 115 kilograms of meat, in 2007, 117.5 kilograms of meat, and in 2008, 210.8 kilograms of meat a year, or an average of 114 kilograms per person per year, up from 106 kilograms a year in 1990.

Mr. Palmer’s comments are therefore also not factually correct. Per capita consumption of all meat has, and can, increase.

When the MLA launched their MSA Business Plan in 1998, they forecast a $1.2 billion a year payout, which has not been achieved. Instead, they have, or will achieve a $2.3 billion a year drop off.

Mr. Heatley’s does correctly state that the current industry structures were set up to achieve the outcomes sought in the Beef’s New Direction Strategic Plan.

In the mid-1990’s, the former red meat industry structures, the AMLC and MRC were disbanded because their early 1980s budget of $14 million a year had blown out to $138 million a year, whilst real cattle prices had fallen by about 2% a year and beef consumption had been declining on a long-term decline rate of 1.7% a year.

The current industry structures, including the MLA were set up to remedy that situation. The MLA commenced in the late 1990s with an annual budget of $96 million a year, which has now blown out to approximately $170 million a year. Real cattle prices continue to fall and the long-term trend decline in Australian per capita beef consumption has continued at 1.7% a year.

There are many in the beef industry who think it is time for a new plan and a new restructure.

A copy of Beef’s New Direction Strategic Plan can be viewed HERE

Sunday, December 5, 2010


The MLA Northern Beef Situation Analysis 2009, completed in June this year, paints an alarming picture of the commercial health of the beef industry in northern Australia, which constitutes just under half of the total Australian herd.

In 2009 the northern beef industry was in its worst state since the beef slump of the 1970s with average return on assets (ROA) of 0.3% to 0.2%, the report says. Average beef producers tend to be spending more than they have earned in 6 of the last 7 years, indicating the northern beef industry is in a very unprofitable and unsustainable state.

The report attirubes the situation to "external" factors including:

- the decline in beef prices since 1994;
- a doubling in debt levels per large stock unit (LSU); and
- below average rainfall in QLD for 7 of the last 10 years;

as well as "internal" factors including:

a rise in overheads per LSU by 54% over the decade;
a rise in direct costs per LSU by 150%; and- the very poor performance of the extensive breeder herd.

The full report can be found on the MLA websiteHERE.


An anomaly related to GST on Livestock has created an $90M-$100M negative cash flow burden on the meat processing sector.

Read about it here.


Transcript of The Country Hour on ABC Illawara available here.


If every Australian ate one extra 187g meal of beef every three weeks, the number of meals of beef eaten would increase from 2.2 to 2.53 per person per week. Apparent annual consumption would jump by 4.9kg from 35.6kg to 40.5kg per person. At the average retail price of $15.55/kg the annual payout to industry would be and additional $1.08Bn.

For more details on the projected industry return from a national beef grading code CLICK HERE.


When BSE (MAD Cow Disease) spread to humans in the UK in 1996 the government there introduced legislation prohibiting the sale of meat for human consumption from cattle over 30 months at slaughter (the Over 30 Month Rule).

Prior to this rule, 22% of the beef eaten in the UK came from old dairy cows.

Despite all the adverse publicity about mad cow disease, 5 years later in 2001, UK beef consumption had risen by 5kg per person or 31% from 16kg per person to 21kg per person.

In Australia approximately 30% of the beef consumed comes from old cows. There are no age restrictions on slaughter and labels such as “budget” are commonly used to describe beef from old cows.

In the same five year period of rising consumption in the UK, per capita consumption in Australia fell by 4.8 kg or 12% from 39.3kg to 34.5kg.

In NZ, where there is also no grading or slaughter age legislation, beef consumption declined by 10.7kg per person or 27% (although the longer term trend was closer to -7%).

At the same time per capita beef consumption in the US, Canada, Japan and Korea, which all have grading systems, either increased or broke even.

In the US, approximately 80% of the cattle slaughtered are under 30 months old and most cattle slaughtered are under 18 moths of age.

Detailed information on the effect of UK slaughter age legislation on beef consumption and expenditure can be viewed HERE.

Full figures on beef consumption by country can be found on the Hunt Partners documents pageHERE.

For details on the UK 30 Month Rule see: FSA Background paper on BSE controls.

For details on cattle slaughtered in the US see:USU Extension Committee Consumer Information Paper on BSE.

Thursday, December 2, 2010


The Bindaree Beef PIP Final Report released last week collates the primary and secondary research conducted over 12 months on the eating quality of Australian beef and the potential benefits and costs of implementing uniform labelling and grading standards throughout Australia.

The project was co-ordinated by Hunt Partners with joint funding by Bindaree Beef and the AMPC. The publication of the project's Final Report follows the implementation of the "Torbay Bill" in NSW which imposes strict requirements for packaging and labelling of beef upon retailers. A proposal to apply the provisions of the NSW legislation at a national level is to go before the Primary Industries Ministerial Council when it meets next year.

The strength of the domestic market has been the subject of renewed focus this year given the high Australian dollar and weakening export prices. The level of crisis faced by the Australian beef industry was highlighted in a recent MLA report on the Northern Beef Situation Analysis 2009, which found that the northern beef industry, which comprises just under half of the Australian beef herd, is in its worst state since the beef slump of the 1970s.

The Bindaree PIP Final Report provides research and analysis on the potential benefits of uniform national labelling and grading standards through increased domestic demand, and includes the findings of the first ever Benefit Cost Analysis (BCA) into beef grading conducted in Australia (the GHD Hassall BCA).

In the present context the Report is a valuable resource for both industry and Government as they attempt to develop solutions to the serious challenges facing beef producers and processors.

The full Report can be viewed HERE.