Quality sought over quantity

November 23, 2017

Rabobank senior animal proteins analyst Angus Gidley-Baird.

Australia’s red meat industry needs to develop clear price incentives to encourage producers to focus on quality rather than volume, if it is to withstand intense competitive pressures from other global producers and proteins, according to a recently-released industry report.

A change in focus for livestock marketing in Australia, a report by agribusiness banking specialist Rabobank, says new pricing mechanisms are needed to close the gap between what is produced (driven by volume) and what consumers want (reliable high eating quality), in order to capture value growth in the red meat market.

The report’s author, Rabobank senior animal proteins analyst Angus Gidley-Baird, said while Australia’s reputation as a provider of high-quality meat was strong, the industry needed to remunerate producers to reflect eating quality in order to shore up that position and to avoid competing in the commodity trade market.

‘‘The red meat market is becoming more polarised,’’ he said.

‘‘And unless pricing mechanisms are developed to identify, measure and then monetise eating quality, Australian producers risk losing their seat at the high eating-quality table.

‘‘For this shift to a quality-based system to occur, the marketing of livestock in Australia needs to be modified, with new technologies developed to measure the traits that deliver the quality that consumers demand.’’

Mr Gidley-Baird said despite Australian livestock producers using a range of marketing options to sell their cattle and sheep, the key factor dictating the return from the animal was its weight.

‘‘Currently 16 per cent of cattle and 20 per cent of sheep procured by abattoirs are purchased through the saleyards, with producers paid per beast or by weight,’’ he said.

‘‘The remainder are bought through direct consignment, either through feedlots or from producers.’’

According to Mr Gidley-Baird, while abattoirs use a grid pricing mechanism — which has some parameters around age, weight and body conformation — it is only loosely attributed to eating quality.

‘‘Some abattoirs provide a premium for Meat Standards Australia-graded meat, which measures attributes such as carcase weight, rib fat and marble score, but the premium is often a single market rate for achieving MSA grading and doesn’t reflect the incremental improvements in quality along the MSA index,’’ he said.

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