CLEAR price signals that align carcass attributes that meet consumer expectations with producer incomes are seen by many in the cattle and sheep industry as the way to make the most of the growing global demand for red meat.

This is called value-based marketing and great strides are being made in this direction, including the launch this year of the world’s first rack of lamb paying producers on the yield of lean meat, the weight and intramuscular fat.

NSW’s Gundagai Meat Processors offered a premium of 50 cents per kilogram for lambs with an intramuscular fat measurement of 5 percent or more.

GMP CEO Will Barton believes the combination of objective measurement of lean carcass yield and taste quality will identify the best lamb genetics and effectively revolutionize the industry.

Together they enable the introduction of a value-based payment system that will send clear price signals to producers on the most profitable sheepmeat genetics, he said.

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Many industry leaders have long argued that paying for livestock based on the value of cuts of meat, objectively measured, holds the key to the integrity of red meat products and Australia’s competitiveness in the market. global.

Extensive research and development programs are underway on the technology and methods that objectively measure quality and yield both on and off the farm.

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Much of this is expected to boost VBM, although Australian Meat Industry Council chief executive Patrick Hutchinson points out that the technology will be used in different ways.

“Processors will use it in whatever methods best suit their individual operations – internally to incorporate cost savings or externally by influencing sourcing to pay based on the performance of particular supply chains.” , did he declare.

“The big advantage of this innovation is the flexibility it offers.

“But it will certainly allow meat companies to differentiate themselves and support brands and product claims.

“The end game is the total value of the carcass, which allows us to create margins and keep livestock prices constant. This is where future prosperity will come from.

“Building stability in supply chains and eliminating volatility from extreme peaks and troughs in markets is what our strategies should focus on, whether it’s value-based marketing, trading. free trade or biosafety agreements. “

Sheep Producers Australia supports the evolution of sheepmeat industry value chains to support objective measurement technologies at chain speed.

This would mean that consumers can be assured of a quality product, that producers can adjust their selection of rams for a balance between yield and taste quality, and that processors can optimize boning, target specific markets and potentially reward. producers, according to general manager Stephen Crisp.

“We are currently looking to rebuild a herd, and if we can build a better herd in the process, it can only be good for future yields and the sustainability of the sheep industry,” he said.

No to a regulated price

Large national and export processor Teys Australia is one of those leading the work to bring VBM into the industry.

Business and Industry Director John Langbridge said working collaboratively on producing the various product attributes that end customers are willing to pay a premium for is the way to go, not market regulation.

Australian Competition and Consumer Commissioner Mick Keogh has also acknowledged this.

“Processors and retailers are increasingly dealing directly with farmers to ensure a constant supply of higher-value products and bypass more traditional agricultural markets and the public price discovery systems associated with these,” a- he declared.

“In doing so, they use increasingly complex pricing systems that target very specific product qualities and characteristics.”

According to Langbridge, in the case of red meat, these pricing models take into account the many business factors unique to each supply chain, such as the domestic market versus export.

They were complex and not conducive to regulation, he said.

“A regulated pricing structure covering such a complex and diverse supply chain as the Australian red meat supply chain runs the very real risk of diluting collaborative relationships and therefore diminishing the value of current brands,” a- he declared.

“It would be impossible for a regulated price structure to take into account the different consumption trends that influence the value of the product in so many different markets.

“How could it be that a regulated price structure treats an Argentinian president seeking re-election who stops without notice all Argentine beef exports, or the fluctuation in political relations between Australia and China, or even the fluctuation international exchange rates? “

Our annual publication Carcase Merit will be released on July 22, published in The Land, Queensland Country Life and Stock and Land. It will feature many stories like this as well as extensive coverage of innovations in processing plants and on-farm profiles of producers targeting certain carcass traits.

The Story Red meat making great strides in value-based marketing first appeared on Farm Online.