Producer association heads discuss challenges and opportunities for beef and lamb producers
Editor's note: Meat Marketing & Technology Editor Bryan Salvage visited Australia more than a year ago. The following interview was conducted between Salvage and producer association heads David Palmer, executive director of the Cattle Council of Australia (CCA); Justin Toohey, CCA deputy director; and Kevin Shiell, executive director of the Sheepmeat Council of Australia.
-- MM&T: What are the major short- and long-term challenges facing Australia's beef and lamb producers?
-- Palmer: We must have a genuine and sincere approach from all countries, particularly the huge and powerful, toward trade liberalization and trade reform beyond the 1990s. Australia is very vulnerable; we're terribly dependent on a fair trading system.
When the "big toughies" and "school ground bullies" out there want to play tough, there's not a lot we can do about it. So, we plead for fair play.
-- Toohey: We need to further pursue the issue of food quality-and further develop quality assurance [programs] on the farm and get the producer more involved in the end product. We need value-based marketing and more strategic alliances between the links in the meat chain.
-- Shiell: From the lamb producers' view, one of the major challenges is how to get continuity of supply year-round, and that's a common challenge for the lamb industry in any country. You cannot be sophisticated about marketing a product if it's very seasonable in its production.
Our lamb industry is embarked on a major strategic planning exercise. We have all of the market segments together-nutritionists, foodservice people, processors, producers, agents-to talk through the problems of the industry and possibly find solutions for them. A strategic plan is being developed to identify what we see as being critical factors for our success, and what we have to do to achieve this success.
Another major challenge we're trying to address is getting market signals back to the producer so he knows what's in demand and can respond to that demand. Unfortunately, that does not happen very well. There are disjointed marketing arrangements with a lot of lamb sold on visual assessment-or in a sale yard in visual assessment-rather than on the basis of carcass composition.
On the sheep side, it's largely a disposal enterprise following wool production-it's [made up of] retirees from the wool industry. This gives you a mutton industry. The [high] cost of processing is an area of concern because we have low-value sheep. This brings in [costs involving] labor relations, processing techniques and technology. From our point of view, we need a reduction in sheep processing costs.
-- MM&T: What role is technology playing at the producer level?
-- Toohey: It's increasing rapidly. There's a growing realization that we need to get more objective in the way we represent producers and how producers get paid for their products.
We're seeing some exciting technologies developed under the auspices of the Meat Research Corp. and universities, such as video image analysis and TenderTec [a carcass probe developed by Meat Research Corp.], which are both in prototype form. We had to develop them so we could get more into value-based marketing.
-- MM&T: How strong is the communication between packers and producers?
-- Toohey: Strategic alliances [between producers, packers and other links in the meat chain] provide good information. It's taking off here. It has been a bit of a problem getting [information] back from the abattoir to the producer up until this point.
-- MM&T: Is there a lot of work going on in the area of genetic engineering with cattle and sheep to supply various markets with custom products?
-- Palmer: It's playing a significant part. We've imported a lot of genetics over the years from the United States and New Zealand. New Zealand has outstanding Angus cattle and a lot of European breeds. We have as many breeds now as the United States does. There are also a lot of cross-breeding programs.
-- Shiell: The same goes in the sheep industry, and it's a very costly and lengthy process. We've brought in [help] from the Middle East that specializes in that particular [market]. They're using very modern techniques to rapidly expand [into the Middle Eastern market] through embryo transfers within artificial insemination.
This is currently being drawn from a very small core crop of imports-tens of thousands-but they want to be in the hundreds of thousands in a few years to supply live export trade with a specialty product which is preferred in that market.
-- Palmer: But animal genetics are tricky. You have to be plugged into what community attitudes are [regarding genetic engineering]. The consumer is king, and the consumer reacts quickly. There are some people out your way we keep an eye on: Jeremy Rifkin, for example. He represents a fringe you can't ignore.
-- Toohey: The residue problem is one we deal with regularly simply because we have insects in Queensland that no one else seems to have. We're managing it in a responsible way, and that could carry into genetic engineering to eliminate insecticides.
-- MM&T: How is the relationship between Australian producers and packers?
-- Palmer: There's a good, healthy commercial contest. I don't think the relationships are too bad. Producers, however, need feedback on carcass information-meat color, fat color, marble, and scores.
The need for that information overwhelms any conflict that might be between how the packer is going to treat the animal at his plant pre-slaughter or at slaughter.
The concern used to be the packer would over-trim or bruise the animal or leave it locked up in the yard for days without water-all at the producer's expense. This situation has greatly improved.
We have a set of industry standards being devised through AUS-MEAT, which specifies a standard trim. There's an understanding about the delay between consigning and slaughtering. There are rules about bruising; where the bruise might be and how it's penalized.
We utilize hot standard carcass weight; an animal is weighed and payment is determined immediately. In the past, we used cold trim-the cold weight.
The weight would be taken and then the abattoirs would deduct between 3 percent and 5 percent of that weight to give you the cold weight.
[This is no longer practiced], and there's a much stronger trust between the two parties.
-- MM&T: The United States is experiencing a high supply of cattle and hogs, which is benefiting U.S. packers and processors. What's the situation in Australia? Palmer: The margins are low, but again supply and demand tends to drain the margins.
We skim a reasonable amount off the margins for investment in industry through things like international market programs.
We are inextricably entwined in the fortunes of the U.S. industry. A vast amount of Australian exports goes to the United States.
There's a need for more promotion. Getting consumer patterns to shift marginally has a huge affect on consumption and production.
-- Shiell: On the lamb side in the domestic market, there has been a major promotional program based on a product called Trim Lamb.
We're trying to reposition lamb in consumers' minds.
All of the market research we've done suggests lamb is regarded as old-fashioned, not versatile, and containing too much fat and bone. So we developed a set of cuts that are fat- and bone-free. One of the difficulties in this project was we needed a larger, leaner lamb. We didn't quite have the production systems right.
We have a good market in the Middle East for light lambs in the 14 kilo carcass to 16 kilo carcass weight range.
There's a certain market that we call a trade lamb-animals in the 16 kilo carcass to 18 kilo carcass weight range-which were all below the trim lamb specifications.