Wednesday, December 8, 2010

NORMAN HUNT LETTER TO THE LAND 12/8/10

The comments by the MLA Chairman, Mr. Heatley, in the Land newspaper “Beef Plan ‘Naïve’ 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

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