MLA has just released their latest findings on the beef producers’ share of the retail dollar. They maintain it calculates to be 32.6%.
It is unknown what calculations they use, however the devil is in the detail.
Do these calculations: a 400kg beast at $1.95 would mean the producer would get $780. When the beast is slaughtered, MLA’s figures would expect 55% of the original animal into carcass, or 220kg.
A 220kg carcass at 70% saleable meat would mean 154kg of saleable meat, leaving 66kg of bone and fat.
We are told that saleable meat averages $16.33 across all cuts, so that would make a retail value of $2514, and that gives the producer about 31% of the final retail dollar.
I’m not privy to the MLA’s information that they use to come up with these figures, but what interests me more is the value of all the by-products that comes off all the types of animals: hide, tongue, heart, liver, cheek, tripe, vessels and tubing, blood, foetal blood, calf leather, bone and fat, etc… the list goes on.
If I took an educated guess I may come to the conclusion that the total value of by-products from the average animal was in excess of $200. The total value of that beast would then increase to $2714 and would mean the producer was only getting about 28% of the final value of the beast.
(This week it was announced that offal prices have gone through the roof, and we all know that for the past two years the processors have sold more tonnage of Aussie beef for more money than ever before, and demand is continuing. This has all been helped, no doubt, by the marketing and research done by MLA with producers’ dollars…..and producers are still getting 1980 prices for their cattle)
Of course when the Eastern Standard Indicator, bought out by the MLA, suggested that cattle prices were $2.80 per kilogram dressed weight, the returns to the farmer would have been a pathetic share of any dollar.
In 2007 Coles submitted to the ACCC that the producer was getting 54% of the retail price! The ACCC did not check the figures and accepted them as fact. No beef representative organisation like Cattle Council, the State Farm Organisations, NFF, or anyone except the ABA had anything to say against these completely farcical figures.
Sometime later, one politician at the time, who chaired a parliamentary committee, wrote in his summary that the producer was getting between half and two thirds of the retail dollar. Again, no one except ABA challenged this mis-stated fact.
The MLA said it wasn’t their problem and wasn’t their role at that stage to actually find any figures! MLA’s real problem is that it serves five Masters – known as the Red Meat Advisory Council or RMAC – and those 5 masters have conflicting needs which are producers, processors, live exporting, feed lotting, and sheep meats. The Senate Inquiry saw immediately that this would not work and called for the abolition of RMAC as it served no purpose.
For their part CCA suggested they didn’t have the funding to carry out any research.
Two years ago MLA came out with their first set of figures suggesting the producer was getting 38% of the retail dollar. The ABA then arranged for the University of Tasmania to oversee the slaughter and cutting up of a 220kg animal, to establish who got what share of the retail dollar. It was also to establish how much the average carcass yielded in saleable meat.
This trial clearly showed that the yield of the carcass was 70% of saleable meats, and 30% of fat and bone. The MLA contended, on their first attempt at explaining the retail dollar share that each animal yielded of 55% saleable meat yield. Their latest figures showed a 68.7% yield. They seem to have some difficulty in determining the specifications within their modelling.
When producers are finally successful in gaining control of their grass fed levies, one of the first things that must happen is that they carry out a professional review of who gets what share of the total cake.
Supermarkets and processors know to the last cent who gets what share of the total pie, and how much every cut, every cost, every store costs them. Until producers have that sort of information, they will always be on the back foot.