Over many years producer’s, government and institutions like the ACCC wondered who gets what share of the retail dollar.
For its part the ABA has approached both meat and livestock Australia and cattle Council to actually cut a beast up and find out who gets what share of the retail dollar. Cattle Council didn’t have finances and MLA felt it would be impossible.
In November 2012 at the MLA conference in Longreach the question was asked when prime cut of beef or lamb was selling for more than $30-$40 a kilogram and retail but producers were receiving $3-$5 a kilogram at the farm gate.
The task of explaining the perceived imbalance fell on the shoulders of MLA board member, Peter Trefort, who is a revered lamb processor from Western Australia a real expert with an honorary degree from Deakin University.
Mr Trefort went on to do a costing on a 25 kg lamb. His findings suggested that producers share is five dollars a kilogram or 125 dollars for a full carcass. Processing costs between $30-$35 a lamb, the cost in Tasmania was $10 a head.
A 25 kg lamb was cut up and trimmed to satisfy consumer demands which results in 17 kg of saleable product.
Of that 17 kg of saleable product 12.4 kg or half the original 25 kg lamb can be sold as prime cuts. The balance is necks, flaps, breast and trim which sells at much lower retail prices.
Could it be possible that if that lamb was cut into chops the same as the supermarkets would you would end up with 23 kg plus of saleable meat?
If MLA was prepared to actually perform a cut up I know where my money would be 23 kg plus.
An ACCC inquiry in 2007 into the meat industry, supermarkets gave some very interesting evidence that some may contend was simply incorrect. In 2008 at the grocery inquiry again some of the information bought forward by large supermarkets may not stand up to basic scrutiny.
To be fair to the government and the ACCC the concept of getting a handle on costs from the gate to the plate is very complicated.
From the ABA’s point of view the only thing that remains the same is a carcass yield, prices for cattle slaughter, cattle boning and other costs will vary over time. Publicity over carcass yield when we stated that 70% was the average drew a swift response from the MLA who claimed 57% was the percentage of saleable meat. Another well-known processor identity came out and stated that the ABA was getting confused with wholesale and retail and 70% was a wholesale yield. Evidence given to the ACCC by a supermarket suggested yield was 60%.
The ABA has started with a carcass yield so as to make sure that we have credible evidence to support a yield of 70% saleable meat and 30% fat and bone. Whilst doing this we have listed all cuts of a 200 kg carcass.
The University of Tasmania was enlisted to be an independent umpire so as to make sure that everything done was under professional scrutiny.
The ABA then went to the supermarket and priced all individual cuts then multiplied them by each weight, for example mince 39.10 kg multiplied by $14 equals $547, in value rump 8.4 kg selling at $20 a kilogram brings in $168. Hides may bring $40 a piece, hearts, tongues, livers, tails all bring a price that can vary. Add to that, some people export offal and some retailers may find it of little value.
Now we have established beyond reasonable doubt what percentage of the retail dollar is saleable meat and what we get out of each cut we find ourselves in a position where we can do a spread sheet to accurately predict what each part of the chain gets what. To achieve this we have made such a spread sheet that can be interchanged; all relevant factors affecting the outcome can be modified to suit.
The supermarkets go to great lengths to tell the ACCC about the quality of the cattle they buy at a premium price grain fed etc. Is it a fact that the supermarkets buy box meat from processors and that box meat may have come from cattle that the supermarket buyer would never buy? Furthermore could it be possible that the box meat and meat obtained from grain fed carcass and box meat are mixed and sold as a superior product.