Recently I read that the US had passed a livestock reporting law. In 1914 the Federal government in the US commenced funding for price reporting. Until 1999 most market reporting for livestock and meat had relied on voluntary participation by market participants. Popular support by market participants led, in 1999, to the passage of the livestock mandatory reporting act which replaced the voluntary reporting system with a mandatory system for livestock and meat. Questions were raised by policymakers, and others, in the discussion over the acts renewal as to the effectiveness of a mandatory reporting system. It seems mandatory price reporting for many has enhanced the transparency and accuracy of reporting prices whilst increasing the amount of timeliness of information in need of areas. Evidence indicates a significant change into weekly price dispersion associated with public reported fat cattle grid premiums and discounts occurring. It was reported in the US that the results are compatible with weekly dispersion levels. Discounts and premiums are drawn together to give sample pricing.
The latest bill appears to be a confirmation that the previous legislation is working and stays in place for another 5 years. One of the interesting things that caught my eye was the correlation of average trim loss across processors.
The report seeks to analyse the techniques that would assist the beef industry in improving procedures for uniformity and transparency in how loss is discounted (in dollars per hundred pound carcass weight by different processors and Packers).
When we have a look at the rules governing Australian slaughtering, one may realise just how far behind the US producer Australian producers are in the legislation that governs what happens at the slaughterhouse. It appears to me that US producers are so much better off than the Australian producers. The fact is in Australia with trim variation nobody knows what the variation in trim is between processors; however I think most producers would be staggered if they knew what trimming before the scales actually was.
Recently I spoke to an agent who volunteered that he spent a lot of time watching his clients’ cattle being processed. When I asked him about trim before the scales, he stated that he had never seen it. When he saw the look of disbelief on my face, he went on to say that he would not have a business if he saw trimming before the scales and it was extremely common.
I have watched with interest as Rob Moore has talked about the Stockyard and Packers Act and how it should be adopted in Australia. Rob had everything but the kitchen sink thrown at him, but continues to stick to his belief and I for one applaud his internal fortitude and i feel the beef industry is inclined to vilify anybody that thinks outside the square.
The present system is nothing but staggering in the fact that producers have little rights and the processors seem to have most to say and arrange things to suit themselves. People may point to AusMeat as being the policeman, if this is the theory it is not working in practice A great example is a 600 kg live beast in the US one could expect at 63% dressing percentage 378 kg of carcass beef in Australia we would hope to get 52% or 312 kg a difference of 66 kg or $330. No wonder the processing sector will fight tooth and nail to keep the present conditions that we see in the Australian processing sector, whilst keeping any talk of adopting USDA style system well buried.
Until we can bring about change the beef industry will continue to suffer the consequences of short term gain for long term pain. If producers don’t get a price that reflects the cost of production the whole chain will collapse.