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Print Friendly(Published in Beef Improvement News)
July/August and September/October 999
David Crombie took over from Bob Graham as chairman of Meat and Livestock Australia in May. Claire Braund caught up with the Managing Director of GRM International and rugby devotee on June 10th, on his way to join former Trade Minister Tim Fischer at a lamb rally in Harden.
Market Access
Q: How important is market access to MLA?
Market access is critical to what we do. We put in a huge effort into the 201 case and spent a lot of money doing our best to protect Australia’s lamb industry interests.
We see market access, building demand and improving supply as our three main charters.
Q: What has been your success in relation to market access for beef?
It’s hard to put a finger on success. We see MLA’s role as debunking all the myths, getting right through to facts and equipping our negotiators with information to argue our case. At a time of increasing nationalism and protectionism we have to fight to keep access opportunities open. Once the doors are open we can work with exporters to help them penetrate particular markets.
Funding
Q: Will the MLA be able to report to beef producers that the $83.9m spent in the past 12 months, $36m directly from their levies, has contributed in the long-term to improved industry profitability?
To put a straight financial justification against combined activities of MLA is almost impossible. We can’t guarantee the delivery of profits. What we can hopefully guarantee is that we have contributed to a better operating environment and provided the tools for individual producers to become more efficient and therefore more profitable. To say industry is more profitable or less unprofitable by this amount is hard to do across the entire industry.
Q: What level of detail will levy payers receive on the $83.9M spent in 1998/99?
There will be a full report at the program level and this will be sent to members, as will the annual accounts for MLA. The reports at the program level will cover 20 odd major programs. We will not be itemising the 400 odd projects. Producers are certainly entitled to see where their levy money is being spent.
Q: Is detailed reporting part of letting levy payers assess whether MLA has raised the bar for the industry?
There are a lot of things MLA does that individual producers don’t see - such as market access work. I guess the best analysis levy payers can make, is do they feel their business has benefited as a result of their levy payments. That assessment is made against a background of increasing real costs and diminishing real returns. The best measure for MLA is if levy payers say “I’m happy to pay my levy because I am getting value for money.” Quite often it’s not benefit, but the extent to which industry not gone backwards.
Q: How much did MLA realise from its recent sale of its premises in North Sydney and where will the money be spent?
When MLA was established it was given only minimal fixed assets (furniture etc). The Red Meat Advisory Council, on behalf of industry, owned the building at North Sydney and they have since sold it.
(Author’s note: This question was referred to the RMAC, which advised that the sale of the AMLC building in North Sydney realised more than $15million. The money was been put into one of several trust accounts overseen by the Red Meat Advisory Council. These trusts are known as the industry reserves and total around $40million following the 1997/98 restructure. The Red Meat Advisory Council is made up of the Chairman and Chief Executives of the peak councils and reports directly to the Minister for Agriculture.)
Industry
Q: There have been six peak councils, five companies and the Red Meat Advisory Council involved in running the beef and lamb industries over the past 12 months. Do you think after a year of operating that there might be too many chiefs and not enough Indians?
It is a very complicated structure that we have inherited. My view is that MLA has got to get up and run hard. The service delivery concept fine, but it is important that MLA gets out there and sells its story to shareholders.
Q: Did Bob Graham resign because of the complexity of the industry structure and difficulties in steering a course through large minefield of industry organisations?
Bob resigned for personal reasons and I respect that.
Q: After a year of operation can you describe MLA's relationship with Cattle Council?
I think what I would rather talk about is the future. MLA has to work hard on developing relationships with shareholders. While relationships with peak councils, other organisations that represent producers and other sectors industry are important, I make no apology that I will represent producer members of MLA.
Q: So your producer members come ahead of relationships with peak councils?
By definition any company has to be totally loyal and committed to its shareholders.
Q: Is the new structure working?
I would like to see it work better. Structures are fine, but in the final analysis it comes down to people. If you have people of goodwill who want to work together to deliver a better industry then that is what you will get. Don’t look to structures to deliver a better industry.
Q: Do you think complicated industry structures, now and in the past, have prevented producers from joining MLA?
I think you are absolutely right. I think the range of organisations they see out there confuses producers. What I would hope to do is create value for levy payers so they see MLA is doing the job relevant to improving their business.
Marketing
Q: What does the MLA Board see as the limits of its involvement in generic marketing campaigns?
Generic marketing was an appropriate tool at the time, but is a fairly blunt instrument to be using at the moment. The focus should change – we should be promoting into particular markets on a co-funding basis with particular exporters. We are into differentiating quality and identifying particular products with particular brands.
Is the current mince campaign based on a move towards brand marketing and consumer research?
The Australian domestic market is a mature market. The population is not increasing, nor is our real purchasing power. The size of the centre plate is static. We are in competition with other protein sources - chicken, pork, fish and pasta and a range of other meal options. Over the past 20 years our market share has been diminishing. We need to rebuild market share by winning market share from other meal alternatives.
Q: In the past, marketing strategies appear to have taken place in isolation and not been coordinated through to retail point of sale. Is the MLA addressing this?
The MLA has, is, and will address this issue. Consumers are saying they are looking for convenience, quality and enjoyment in their meal options. One of our initiatives was MSA, which is producing a product that better meets consumer expectations at the top end of the market. Another market segment is mince, which is beautiful product; nutritious, always tender, great for kids and able to utilise secondary cuts. We saw the mince campaign and the MSA campaign going well together.
Meat Standards Australia
Q: Are we ready for a national rollout of MSA? Have butchers and other point of sale representatives been adequately trained in customer service for the MSA product?
Commercialisation of the process has taken nine months since completion of the Brisbane trial. A lot of thought and extra development has occurred, particularly in relation to cuts based grading. The description of the MSA grading symbol has been moved from stars to a colour code. There has been a lot of consultation to commercialise MSA. We think it’s ready.
Q: Is MLA providing funds to train butchers?
Yes, there is a licensing procedure for MSA that involves training.
MSA is receiving a lot of media and industry attention. Are you afraid that it will be seen as a Messiah for the beef industry and risk failure when it does not live up to unrealistic expectations?
MLA is not in the business of providing profit to levy payers, MLA cannot create profit for its members. Hopefully we can create a better operating environment and provide some of the tools to help individual enterprises be more profitable. MSA is one of those tools. I have never promised anyone they will make more money as a result of being in MSA.
Q: The question for many levy paying beef producers is: How will the benefits of MSA be passed from retailers back to producers?
Let me ask the question a different way. Beef consumption has been decreasing on a regular basis since the 1970’s. It is estimated we are losing $80m in value each year on beef consumed in the domestic market. How long can we afford to do that? What MSA is doing is attempting to address that declining market share. Anything that we can do with MSA and with mince campaigns and with other smart activities like that have got to be better for our industry.
Q: Producers of consistently high quality beef that meets MSA standards are looking for an indication that they will be better off once MSA is introduced.
For those producers MSA is the right solution. We have had an industry run on averages for 200 years. What we are aiming to do is differentiate product so that someone who is producing a graded product into a successful brand will benefit as a result of increasing demand. If consumers like the product the people supplying it will benefit. I am not saying they will benefit evenly. I think the benefit is going to move backwards and forwards up and down the production chain. I will give no guarantee that producers are always going to get paid more.
Q: Some processors appear to be backing away from MSA. It is possible to make MSA work without total industry unanimity?
I don’t see it as the processors backing away from MSA. I see it as the processing peak councils saying they don’t want to put any more funds in at this stage. There are individual processors who see MSA as a great opportunity. Implementation has to be driven by individual enterprises.
Q: Is the MSA research publicly available to industry and levy payers?
All of the MSA science is on a database in Armidale, NSW. The intellectual property value of this is huge and belongs to the Australian beef industry. At the moment it is being used under MSA to develop better pathways and systems. That sort of data should be available to industry and will be in due course.
Research
Q: Where is the intellectual property accumulated in 10 years of operation by the MRC and AMLC?
Within MLA, which is the custodian of industry information.
Q: Can producers get access to this information?
I can’t see why (not). All the intellectual property of the AMLC and the MRC was transferred into MLA. To give an example, one of the first tasks of MSA was to delve through all material available on meat science as well as trawl worldwide. We found that there was a huge amount of data available but none of it was really commercially related. MSA enabled us to pull together all those diverse bits of technology into something that was useful to industry.
Q: Perhaps some of these industry resources need to be put on a publicly accessible on-line database so the value of the information can be seen and utilised?
I have no problem with that at all. To be quite candid the technology belongs to industry. I see one of the primary tasks of MLA is to make that available to industry.
Q: The MLA committed 49% of its operating budget to research and development this year, but little publicity has been given to anything outside MSA and some of the Marketlink activiteis? Has the MLA spent its full budget on research and what are some of the outcomes beside these two programs?
There are a whole range of research activities that are continuing. MSA has not taken over the whole of MLA’s activities. A number of programs have been slow getting away because this is the first year of operation. It is unlikely we will be spending the full R&D budget this year (98/99). We will roll a lot of activities into programs for next year. The other factor is that there has been a less than expected flow from the processing sector on joint funded projects and that means we haven’t been able to embark on those.
Q: How much money has the MLA received from the AMPC for joint projects?
AMPC has met its joint funding obligations to date. There have been delays on the joint projects and there have been some complications with both of us getting used to the new structures and the new ways of doing business. The AMPC core funding programs have been delayed and these will be underspent in 1998/99.
Q: Compared to when the MRC was in operation there appears to be little research information being published. Is the MLA dedicated to transposing research results to the industry?
There is certainly no intention to reduce flow of research information. Perhaps since MRC was a dedicated research organisation it had a better communication of its results. It is certainly the intention of MLA that we have that same level of transfer of information. If it’s not happening then it should happen, because R&D are a critical part of what we do. One of best vehicles of advising about R&D is Meat Profit Days.
Q: How will the research information be transposed to those producers who don’t attend Meat Profit Days?
The question is under review right now. MPD are one means of information transfer. There is however, a big backlog of R&D, which has been inherited by MLA and this needs to be made more user friendly. We are looking at using existing producer networks for the distribution of our reports and our libraries are currently being electronically catalogued for remote access. We are also looking at developing better websites and linking those to other sites to enable easier access.
Q: To improve the general standard in the industry do you need to be getting more information out to producers using technologies such as on-line?
We would hope all producers come to a MPD and become a member of MLA. Unfortunately a lot of producers don’t bother becoming involved in industry organisations, and that is their choice. MLA has 8000 members and would like to see a lot more. Those who do bother to join we will communicate with and help them.
Q: Do you think there needs to be greater commitment to backing-up on the success of the MPD and giving people access to research findings?
I am not going to defend what has been done, because it can always be done better. When you have a MPD the information is distributed and the opportunity lies with the producer to contact the researcher and get more information.