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Norton Questions the Withdrawal of $1m Funding for Domestic Marketing

Money AUD

Norton Questions the Withdrawal of $1m Funding for Domestic Marketing

 

Managing director for Meat and Livestock Australia, Richard Norton questioned processors motives in the withdrawal of $1 million worth of funding from domestic marketing, for 2018-2019.   In Mr Norton’s words, “the processors don’t believe it is a priority.”

MLA say, it is too critical an issue to slip through the cracks and in consultation with Cattle Council, MLA will pick up the funding deficit for the next 12 months. 

Mr Norton goes on to say, ” the domestic market is under enormous pressure, because of farm gate prices.”

To me, this means more than ever, the need to promote the benefits of red meat in our domestic market, which remains our largest market, by value.

MLA says, “the beef market share of all meat protein sales has remained at 36%, and the processing sector’s withdrawal is going to hit the small independent retail butchers around Australia”.

Back in 1998, when MLA came into being; the domestic market consumed 40 kg of beef now we are looking at a fraction over 24 kg of beef.   While we consumed 110 kilograms of meat in 1998 we are still consuming roughly about the same; however, chicken consumption has gone through the roof and pork has also overtaken beef.  I am a little bit confused as to how then, beef retains 36% of protein sales.

In 2013-14 producers received record lows for their cattle, and yet we saw no discounting in the price of retail beef.  2016 saw record high prices paid and we had supermarkets saying they would absorb some of the extra costs.  2018 and once again,  we see prices are starting to come back dramatically.

Australian Beef Association drew up a spreadsheet to give an idea of the value of a carcass at the retail level.  ACCC commented that the only thing wrong was,  we didn’t add supermarket costs. However, I would ask ACCC,  if they knew what the costs of production were,  with continued increases every year.

In 2000 MLAs,  Meat Standards Australias business plan suggested that MSA would stop the alarming slide in beef consumption.  Now in 2018 and $300 million later,  the slide continues, and we still keep bumbling along with the same marketing and continued excuses as to why we should spend more and more on marketing when clearly,  it is not working.

In the past four years, MLA has added 30 to 40% of the value of beef sales, and we are asking consumers to pay more for a product.    As the prices have come off the boil for producers, retailers have kept the value of retail beef sales up, which of course means more profit for them.  However, with “price” being the defining factor, consumers will buy less beef, down goes consumption!

One processor remarked, “despite the large size of MLAs budget for domestic marketing,  in recent years red meat consumption continued to fall and had yet to bottom out.

Processors continue to question the value of MLAs marketing and the cost of their international offices. They are not the only ones.

To me everybody has missed the point, processors and others in the supply chain can withdraw, or are not obliged to pay anything towards marketing, and under the present structure, producers are expected to do the paying and do little of the saying.

To my way of thinking the person that sells iron ore would not be expected to fund the marketing of steel, or have I got it wrong?


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