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Producer’s Share of Retail Dollar

Since November last year we have been debating with the MLA how the calculations were worked on the producers’ share of the retail dollar.

The MLA’s figures simply didn’t and up and when we questioned the calculations used by the MLA the plot got thicker.

Report coming from the MLA AGM suggested that producers were getting a better share of the retail dollar according to 2003-2012 figures.

In 2003, according to the MLA, producers got 31% of the retail dollar and by 2012 the producers’ share had risen to 36.5%.

In November 2012 price of beef was sitting at $3.20. Subsequent correspondence with the MLA became apparent that the MLA was using old data. Using current data one could suggest that the price the producer receives, in fact, is less than 30% of the retail dollar. Amongst all this, MLA suggested that 57% of any carcass was saleable meat. ABA sources and trials suggested that the saleable meat of any given carcass was about 70% plus.

MLA says the producers’ share of the retail dollar is firmly grounded in methodology used by the US Department of agriculture. The indicators used include production figures and export values that have Australian dollar consumption and domestic expenditure.

Although all these factors are crucial to producers’ viability they have no relevance to producers’ share of the retail dollar. Take a carcass fetching $4.20 kilogram the producer may get in excess of $840 or 36.5%. However, if the price, as it is at present, dropped down to $3.00 for whatever reason and the retail hide offal by price stay the same then the producers share will drop to about$600 or %27. So, if retail prices stay the same then someone is picking up $240.

After the MLA’s quote of 57% yield the ABA arranged for a cut up of a 200 a kilogram carcass. While at the same time arranging for the University of Tasmania to be an independent auditor to ensure everything was done correctly. The whole thing was filmed professionally and all meat was sliced and diced and trimmed on trays as case ready meat. This allowed us to go and price all cuts of meat and trim at supermarket prices and ascertain the retail value plus we added $150 for hide and offal. End result $2180 saleable product and a 72% yield out of carcass leaving 56 kg of bones and fat. If we used MLA’s calculation then we would have ended up with 30 kg less saleable meat which of course at $15 a kilogram would mean $450 less saleable meat. For their part, MLA says that 57, 60 or 72% is really immaterial. From the ABA point of view, 15 kg of saleable meat for every hundred kilograms is crucial to any equation to work out what the producers’ share of the retail dollar is.

What the ABA has done is worked out a spreadsheet that can give producers an idea of the retail dollar that they are getting. The spreadsheet is designed so as a producer or observer can change weights and prices of carcass beef and then change prices of retail meat. The ABA feels that this will give a producer a better idea of what percentage of the retail value of a beast they are getting.

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hope that the MLA, with all its’ shiny exterior, will actually will get down and work with people like the ABA to get factual information out there that is not biased. And MLA words that we need to concentrate on what can be done to ensure as much of the consumer dollar passes back to the farm gate, allowing producers to reinvest in their production systems to keep feeding the Australian global population.

Link to Youtube video of Carcass Cutup: http://youtu.be/KY9lm9G22Eg

Download Excell Spreadsheet to calculate Producer’s Share: https://docs.google.com/file/d/0B7oOxj2DWz_yeVlHcDdzTzE1TWc/edit?usp=sharing

click the ‘Down Arrow’in top left corner to download a copy of spreadsheet calculator toyour computer to use.


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