There was a dramatic but widely-anticipated nine percent rise in cattle numbers on feed in the latest June ALFA/ MLA quarterly feedlot survey released yesterday.  

Numbers on feed across Australia have climbed to 873,000 head, influenced heavily by the impact of drought across large areas of western and northern Queensland, NSW and the NT, forcing producers to place cattle on feed as a finishing strategy, or sell cattle cheaply.

For the previous three years, feedlot numbers have fluctuated within a narrow band between 700,000 and 800,000 head, marking this latest figure as a substantial movement, and the highest activity recorded since the June quarter in 2006.

Australian Lot Feeders Association president Don Mackay said the quarterly survey result for the period ended June 30 resulted from a decline in feeder cattle prices as producers in several states destocked due to dry to desperately dry seasonal conditions.

“Feeder cattle prices started the June quarter with a continuation of the easing from the March quarter, before bottoming out in mid-May, and then recovering through June,” he said.

This price cycle has been clearly captured in Beef Central’s regular fortnightly grainfed trading budget, due to be compiled again soon.

The yearling steer (330-400kg liveweight) category averaged 167¢/kg for the quarter, back 5pc from the March quarter and 16pc year-on-year.

Reflecting the worst of the drought impact, Queensland feedlot numbers showed the largest rise last quarter, lifting 11pc to 523,400 head. It was the highest number on feed recorded in Queensland for two years, as dry conditions since early this year in the Northern Territory and the Western parts of the state led to higher turnoff.

Increases were also recorded in Victoria (26pc), South Australia (8pc) and WA (39pc) due to cheaper feeder cattle and/or grain -particularly when compared to the more northern states.

NSW lotfeeders were unable to take advantage of cheaper cattle from Queensland and the NT due mainly to transport costs, ALFA’s report suggested, with numbers unchanged at 240,000.

The strong rise in feeding activity in Queensland was also reflected in utilisation of available feedlot space, which increased to 83pc last quarter, from 71pc the quarter before.

In commercial terms, ninety percent capacity is considered to be effectively 'house full,' due to pen cleaning, maintance, individual pens not used to optimum capacity, and other issues. Nationally, utilisation of available feedlot space rose to 73pc, from 67pc three months earlier. 

Rises in feedgrain prices dampened further increases in cattle numbers on feed, particularly during the latter part of the quarter, with Darling Downs barley ($298/tonne), sorghum ($283/t) and wheat ($297/t) year-on-year prices up 49pc, 57pc and 39pc respectively.

Reflecting the lack of profitability in lotfeeding operations in recent times, influenced partly by these higher grain prices, overall feedlot capacity in Australia has declined by 75,000 head over the past 12 months, to 1.19 million head.

Much of that decline can be interpreted as smaller (less than 500 head, and 500-1000 head) 'opportunity' feedlots going into voluntary suspension under the National Feedlot Accreditation Scheme process.  A turnaround in lotfeeding fortunes would likely see those smaller lots re-activate, however.

Meat & Livestock Australia’s chief analyst Tim McRae said grainfed exports for the quarter were up 8pc compared to the corresponding period last year.

Total grainfed exports for 2012/13 were 198,000 tonnes, up 2pc year-on-year, and 5pc on the five-year average. Declines into Japan (back 6pc and Korea (-1pc) more than offset by significant increases to the EU and China (up 82pc and 429pc respectively).

An episode during the recent Brisbane Show’s commercial cattle competitions has rekindled a 25-year debate about the use of butt shape as a yield sorting tool in meatworks grid payment systems based on the industry’s AusMeat language.

What appeared to be an unusually large number of cattle competing in Brisbane’s large 100-day grainfed competition this month received substantial price discounts - as per the processor, JBS’s normal grid pricing structures - after being assigned D butt shapes as part of the killfloor assessment process.

Of 478 cattle entered in the grainfed performance class, 33 carcases, or 7 percent, received a D butt shape assignment. Four of the seven Shorthorn carcases from the pen which won the competition’s carcase quality division were in fact discounted on the basis of butt shape.

Given that these were ‘competition standard’ cattle from a broad assortment of breeds which excelled as a group in feedlot weightgain, chiller assessment and MSA-based carcase quality criteria, it was perhaps not surprising that exhibitors’ hackles were raised when grid payments were made.

Supporting the view of butt profile critics that the measurement has little predictive value in yield assessment was the finding that the 33 entries awarded a D but shape produced an average estimated lean meat yield of 59.6pc. A random sample of 34 C-butt entries fared worse, averaging 59.2pc ELMY.  To be fair, though, fat depth on the D-butt cattle ranged from 5-25mm, and they appeared to carry less fat, on average, than most C-butt entries. Fatness is also a major contributor to boning room yield.  

As will be described in a separate item published on Beef Central later today, concerns have been raised about the application of butt shape as a yield-predicting carcase sorting and payment tool off and on for much of the past 25 years.

For decades producers have levelled accusations at processors that the criteria’s primary use was as a ‘Weapon of Mass Discounting,” rather than any practical commercial value as a yield predictor.

Frequent stories over the years have told of large mobs of slaughter cattle being divided and sold two ways, only for starkly different butt shape assessments – and grid payments - to come back on kill sheets.

The key question in all this is: Are such episodes deliberate attempts by processors to secure their kill more cheaply through ‘vigorous’ application of butt discounts, or is it simply variability caused by the highly subjective nature of the assessment, carried out by AusMeat-accredited graders across the country?

As former CRC meat science head, Professor John Thompson, will suggest in more detail in a follow-up article tomorrow, butt shape has little or nothing to contribute as an indicator of carcase yield.

“AusMeat never had the evidence to support its adoption in the first place,” Prof Thompson said.

Even before the CRC was formed, he and fellow meat scientist Dr Drewe Ferguson showed as part of their early R&D work supporting the development of VIAscan, that butt profile had “absolutely no value” as a yield indicator.

Queensland domestic processor Terry Nolan, who is widely regarded for his meat science and carcase composition knowledge, said while a loose correlation may exist between butt shape and yield, it should not be looked at in isolation, but in connection with fat and bone.

“An E-butt dairy cow for example might yield only 58-60pc boning room dressing percentage, while a D-butt might be mid-60s, C’s 70+ and A’s high 70s. It’s probably wrong to suggest there’s no correlation at all, but it cannot be used in isolation,” he said.

“While it’s a crude measure, I believe butt profile still provides an indicator of yield, and has a legitimate place in the AusMeat language,” Mr Nolan said.

“But how that AusMeat language is used is up to the commercial parties. At no stage did AusMeat say that discounts or premiums have to be attached to butt shape results. It’s commercial parties that have taken it on board, but there would be plenty of boning rooms out there that would have clear evidence of yield differences between different butt shape groups. In simple terms, there’s no doubt that an A or B butt will yield better than a D or E,” he said.

He suggested that one of the reasons why butt shape had not aroused more attention recently was that the industry was now much more focussed on eating quality, rather than yield outcomes.

“I think some industry members are all-too-ready to jump onto something like butt shape as a discount tool, when really some of these attributes are designed to be nothing more than a communication mechanism in kill sheets back to the producer. If I wanted to buy a certain sort of animal to improve our boning room yield, I could go back to Nolans’ suppliers and encourage them to breed more B-butt cattle, and less D-butts. It’s a language, designed to help communicate a feedback message from processor to producer,” he said.

“Simply banning butt shape from the AusMeat language would be like removing words from the English dictionary because you don’t like them.” 

The justification for the assessment of butt shape was that it added to the yield predictability of a carcase, beyond what can be achieved with simple carcase weight/fat thickness/eye muscle area equations.

“But more and more, with the advent of MSA where eye muscle area assessment is compulsory, there is perhaps greater emphasis now on EMA rather than butt shape,” Nr Nolan said.

“The process has transitioned over the years from no yield consideration, to a deion using a butt shape silhouette, which then morphed into a multi-dimensional muscle-score type view, and on to today where EMA is the predominant yield indicator – plus, perhaps, a bit of butt shape.”

What has confounded a number of senior beef industry stakeholders spoken to by Beef Central about the Brisbane show outcome was that it is said to be ‘highly unusual’ to see any sort of significant numbers of D-butts to occur in grainfed cattle at all.    

In the case of Nolan Meats, killing domestic weight cattle only, the plant can often do an entire run of 60-70 day yearling steers and heifers without seeing a single D-butt shape recorded.

Subjectivity biggest challenge

One of the critical points about butt shape assessment is that it is easily the most subjective measurement taken by an AusMeat-accredited meatworks grader.

A widely respected senior livestock buyer who has bought cattle across eastern Australia for one of the nation’s largest processors for 25 years, told Beef Central that the primary issue surrounding butt shape was the consistency of application of the assessment by the graders, because it its subjectivity.

Looking at the AusMeat example carcase images published with this story, there is no question that only a fine line exists between a C and a D butt shape, when applied in silhouette. E-butts are largely a separate issue, being confined primarily to a few dairy steers, rather than beef animals, where their bone structure has a big bearing on yield potential.

The former livestock buyer spoken to by Beef Central said it was this inconsistency in grading performance that sowed the seeds of the notion among some producers that some processors were deliberately and methodically downgrading carcases to D-butts, to reduce livestock costs.

“I never saw any evidence of it over the 25 years I worked in the industry,” he said.

He pointed out however, that while grid price discounts also applied for overweight (making it impossible to get three rumps into the carton, for example) or under-fat (chiller burn risk on the butt cuts, making them unsuitable to pack), in all likelihood a D-butt shape carcase was still going to end up in the same carton as beef from A-C butts.

“To me, P8 fat depth remains a far better recognition of yield than butt shape,” he said. “There’s a really strong correlation between boning room yield and P8 fat – at least for animals up to 30mm of cover,” he said.

“In my opinion this episode with the Brisbane show cattle was a grading consistency problem, not an attempt by the processor to rip-off producers on price. Therefore it becomes an AusMeat problem, in addressing the lack of consistency between plants, and perhaps even between shifts in the same plant.”

“To suggest that a processor would try to pull such a price-discounting stunt during Brisbane show is ridiculous – why would they attract attention to themselves in the biggest public showcase of slaughter cattle in Australia?”  

“What AusMeat needs to work towards is a yield indicator that is more ive, and more reliable. If not, just use eye-muscle area and fat cover and leave it at that.”

To add to industry and producer confusion over butt shape, different processors exercise different payment/grid policies so far as the measurement is concerned. Here are three examples from grids from the nation’s largest processors:

• Teys Australia (all plants): The company says while D/E butt shape discounts are listed on grids, the discount is not activated unless the carcase first fails to meet minimum fat requirements. A carcase meeting the minimum requirement for fat depth (6mm in the case of 0-2 tooth cattle, 8mm for 4-tooth and over steer), does not attract butt shape discounts, even for D/E. For cattle that fail to meet the minimum fat requirement, butt shape penalties apply for D-E in steers, and E's in cows below 3mm of fat. Yearling steers below 6mm of fat with a D or E butt shape are discounted 25c/kg. Teys said it had adopted the policy because the butt shape assessment on the kill floor was extremely subjective, and was ‘very, very hard’ to deliver with any consistency.   

• Nippon Meat Packers Australia (Oakey, Borthwicks Mackay, Wingham): Policies vary a little from plant to plant. Oakey does not apply butt shape discounts at all, on grain or grassfed. Wingham’s grids all run from A-D butts as acceptable, with E's (mostly dairy) discounted 20c/kg across the board. Borthwicks is a little different, being similar to Teys, in not applying butt shape for cattle 7mm and above on carcases 280kg or better. Steer 6mm or less are regarded as secondary ox, attracting a 10c/kg discount; if they are D-butts as well, they attract no further discount. All E butts go into a manufacturing grade and price. Essentially Borthwicks is saying that if the carcase has acceptable fat cover, butt shape is irrelevant.

• JBS Australia (Northern division): Grids show optimum price on ox is for butts A-C for 0-4 tooth, with D-E butts discounted 20c/kg. In 6-tooth and older, A-D are accepted, with E discounted 10c. On yearlings 0-2 tooth, both grain and grass, A-C is the premium, with D attracting a 10c/kg discount. Cows grids are all A-D no discount, with discounts applied to E butts only. EU grassfed discounts on D-E butts 45c/kg.

Tomorrow on Beef Central: Is there a better solution for yield assessment/payment?

To better understand the presence of butt shape as a yield indicator in today’s AusMeat language, it’s worthwhile exploring the measurement’s origins, and the industry politics surrounding its introduction 25 years ago.

Beef Central yesterday published an introductory article outlining recently-revived concerns about the use of butt shape as a pricing tool in some processor grids, and possible reasons for apparent irregularity in butt shape assessment during grading (click here to view).

Later today, a third report will be filed, discussing prospects for a broader review of grading/carcase assessment systems, which some see as long overdue.  

The term butt shape probably had its origins in research conducted by the NSW Meat Authority in the mid-1980s, and it was promoted widely as a yield predictor during that era by the NSW Department of Agriculture.

When AusMeat came into existence in 1987, leading to the advent of killfloor and later chiller assessment as the standard form of carcase appraisal, the butt shape silhouette was immediately adopted as part of the industry language.

Stakeholders who were close to the formation and implementation of AusMeat in that era told Beef Central the then chief executive, John Hall, was under considerable pressure to deliver a working industry language within what was seen as an unrealistically short time.

The suggestion was that butt shape was included as a yield indicator without any great degree of scientific scrutiny, but simply because ‘it was out there, and it filled a hole.’    

Over the years NSW Department of Ag’s yield assessment focus has moved from a silhouette-based assessment to an overall muscle score based on assessment gauged from different directions. Other yield calculators like VIAscan were developed, but uptake was extremely limited.

While the AusMeat language’s butt shape is still based solely on a ‘profile’ or silhouette, devoid of fat, some stakeholders suggest AusMeat graders now drift between one and two dimensions in the assessment process.

Around the time of the industry’s first National Livestock Feedback Trial in 1988, questions started to be asked about the relevance and accuracy of butt profile as a measurement tool.

An early catalyst came when pen of Belmont Red cattle from Central Queensland won the overall competition, and scored at the top end of results in the full bone-out performed on all entries, while receiving a string of D-butt scores from AusMeat-accredited assessors on the kill floor.

The situation worsened when, for whatever reason, mandatory specifications set for the Korean export market adopted a maximum C-butt shape requirement from the AusMeat language on Australian carcases being sold into the Korean frozen quarter-beef export trade at that time.

While AusMeat suggests that requirement was set by the Korean authorities themselves, many believe it was ‘suggested and initiated’ by the Australian negotiators, as part of an attempt by AusMeat to add ‘legitimacy’ to the butt shape measurement.

Perceived interferences in commercial transactions like this were a major reason why many sectors of industry fell-out with AusMeat in its early days. Senior managers in AusMeat in that era privately said that they wished that butt shape had never found its way into the language, because it was increasingly seen as ‘undefendable’ from a performance standpoint.

Before long, however, butt shape started to appear in commercial processor grids for markets other than Korea. To this day, and despite the arrival of more accurate chiller assessment yield indicators like fat depth and eye muscle area, butt profile remains a voluntary AusMeat language deor for use by processors.

Opposition to butt shape hit a crescendo around 1990, when the measurement was widely condemned by disparate groups ranging from the Cattlemens Union and United Graziers Association to the Queensland National Party, as an unreliable and inappropriate yield indicator, especially when used in abattoir pricing schedules.

On the domestic market, in the days when butchers bought most of their beef in carcase form, butt shape came into vogue among some butchers, who would specify ‘C+ butt or better’ when ordering supplies, for example in an attempt to protect their yield performance. Today however, carcase beef has all but disappeared from the trade, but penalties still exist in some domestic grids for butt shape.   

Butt shape was also made a mandatory component of the carcase specifications for the National Carcase Branding Scheme (Gold, Purple and Bronze) for the domestic market. However in 1992 the AusMeat Board determined that butt shape was not a reliable indicator of saleable meat yield and effectively removed the assessment from the carcase specification requirements for all of the colour branding schemes.

At the time the AusMeat board acknowledged that butt shape was still being used in beef carcase specifications under agreement between buyer and seller (both export and domestic) and so determined if being used as part of any specification, its assessment should continue to be scored against the silhouettes and would remain within the language where it is used in some company specification, customer requirement or carcase price determinations.

The mandatory requirement on butt profile for Korea disappeared quickly following that market’s liberalisation in 2001, when frozen quarters were replaced by boxed beef.

Butt profile was also adopted for use into Japan, in the days of the fullset carcase trade, now long-gone. The only market-mandated butt profile requirement today is for the EU market, where A-C butts only qualify. Again, Beef Central was told that this requirement was proposed by the Australian negotiators during the market establishment process – not by their EU equivalents. 

Each time an Australian factory closes, we collectively lament the death of local manufacturing while politicians invariably declare they’ll do something to protect Australian jobs.

Unfortunately platitudes don’t change circumstances. Only real reform of our nation’s manufacturing ethos will ensure production lines continue.

The foundation of real reform is the recognition that the world has changed over the past few decades. Without this acknowledgment, we will continue to tinker around the edges of reform, while the world passes us by.

The evidence of the failure of Australian manufacturing to adapt to a changing world is clear and dramatic. From agriculture to household appliances and furniture, it’s not easy to find many products still made here.

Some say it doesn’t matter – that new industries are sprouting to replace what has gone. But this is too simplistic. Each time a manufacturing plant closes the effects are far-reaching.

Teys Australia employs 800 people at its beef processing plant in Beenleigh.

A recent independent economic survey found a further 4000 local jobs in the region rely on our plant, which also injects $250 million per year into the local economy. Multiply this across each town and city affected by a major closure and you will get closer to the true cost of Australia’s failure to adapt.

The beef processing industry is one of Australia’s largest manufacturing industries, with 2009-10 data showing the sector contributes $12 billion in gross domestic product and $5.5 billion in household income. This equates to around 109,000 full-time-equivalent jobs.

Given that we export the majority of our product, the future of beef processing should be secure. Yet Teys recently considered closing our Beenleigh plant, following a nine-year average return on our asset base of 2.8 per cent, shrinking to only 1 per cent over the past four years.

This sort of return on a $150 million investment does not make manufacturing viable. We would be better investing in other areas or putting the money in a savings account.

The possible closure was a result of a failure to negotiate a new enterprise bargaining agreement with the Australasian Meat Industry Employees Union (AMIEU).

The new EBA was vital to the future of this plant, which competes with much lower production and labour costs from overseas competitors.

To achieve the reform needed, workplace reform must be on the table. Some of the unrealistic conditions negotiated by unions in the past – within a different economic environment – contribute to the failure of manufacturing today.

Workplace reform doesn’t remove benefits – it simply acknowledges that a changing world necessitates a different approach.

• This is an abbreviated version of an opinion piece that first appeared in the Australian Financial Review. Click here to view full article.

AgForce Queensland has used the final day of its ’30 Issues in 30 Days’ campaign to reveal it regards as the single most important issue facing agriculture.

AgForce General President, Ian Burnett, said the issue did not criticise Government legislation, did not call for greater agreement with trade partners, did not centre on research and development and did not urge economic reform.  However, what it did do was show the important role primary producers play in the lives of every Australian, every day.

“On the final day of the ’30 Issues, 30 Days’ initiative I am happy to reveal ‘Every Family Needs a Farmer’ as the most important of the 30 issues identified by AgForce over the course of the last month,” Mr Burnett said.

“Some of these issues have been highly political, some highly scientific, some economic but this one is at heart of the success of our industry.

“We need Australians to recognise the important role our farmers play in providing food and clothing to our nation and to the world and to contributing to society and the economy.”

Mr Burnett said, after 29 days of identifying some difficult policies and challenges plaguing industry, he was proud to assure the community of primary producers’ lifelong commitment to providing the world’s safest and best quality product.

This commitment is demonstrated by key industry figures:

• There are approximately 134,000 farm businesses in Australia, 99 per cent of which are Australian owned;

• Each Australian farmer produces enough good to feed 600 people, 150 at home and 450 overseas;

• Australian farmers produce almost 93pc of Australia’s daily domestic food supply;

• The agricultural sector, at farm-gate, contributes three percent to Australia’s gross domestic product (GDP).  However, once value-added and including the value of all of the economic activities supporting agricultural production, the contribution to GDP is 12pc;

• The gross value of Australian farm production in 2009-10 was $48.7 billion;

• Australian farmers export around 60pc of what they grow and produce;

• Australia’s farm exports earned the country $32.5 billion in 2010-11 while the wide agriculture, fisheries and forestry sectors earn the country $36.2 billion in exports.

“Farming is not always the easiest job,” Mr Burnett said.

“There are droughts, there are floods, there is a high Australian dollar and low prices.

“But there are also good times and the satisfaction of knowing you are producing something that is helping your country to survive and grow.

“Most farmers I know wouldn’t have it any other way.”

AgForce's 30 issues in 30 days campaign is designed to draw the attention of decision makers to 30 of the most important issues impacting on the rural sector as Australia moves towards a Federal Election. For more information, and to view videos on key issues, click here

A total of 7500 head of cattle were penned at Roma’s Store Sale on Tuesday.

Weaners under 220kg topped at 208c/kg and averaged 161c/kg, while weaner steers in the 220-280kg range reached 200c/kg and averaged 164c/kg. Steers in the 280-350kg range reached 200c/kg and averaged 149c/kg, and steers in the 350-400kg range reached 177c/kg and averaged 155c/kg. Feeder steers in the 400-550kg range topping at 172c/kg and averaging 160c/kg.

Wallockatoo Pastoral Co, Wallockatoo, Wandoan, sold EU Santa-cross steers to 200c/kg for 298kg to return $596/head. The consignment averaged 198c for 241kg to make $478.

West Hill Trust, West Hill, Blackall, sold Santa steers to 197c for 207kg to return $409. The consignment averaged 191c for 198kg to make $378.

J & S Nichol, Ridgewell, Roma, sold Angus steers to 194c for 289kg to make $562.

W, P, & D Brumpton, Mitchell, sold Santa-cross steers to 186c for 212kg to return $396. The consignment averaged 175c for 230kg to make $403. The Santa-cross heifers hit 144c for 223kg to return $322. The consignment averaged 141c for 195kg to make $274.

B & N Bauer, Arlington, Augathella, sold Simmental-cross steers to 176c for 240kg to return $422. The consignment averaged 172c for 222kg to make $382. The Simmental-cross heifers reached 151c for 274kg to return $415. The consignment averaged 151c for 232kg to make $349.

M & L Huntly, Kilburnie, Muckadilla, sold EU Santa-cross steers to 175c for 243kg to return $426. The consignment averaged 171c for 240kg to make $410.

L R B Briscoe, Gooimbah, Injune, sold Santa-cross steers to 173c for 302kg to return $524. The consignment averaged 167c for 278kg to make $466.

G & M Rennick, Blairmack, Muckadilla, sold Santa-cross steers to 172c for 419kg to return $722. The consignment averaged 166c for 411kg to make $683.

K & R Burey, Yarara, St George, sold Santa-cross steers to 170c for 248kg to return $422. The consignment averaged 165c for 227kg to make $374.

J & A Loughnan, Bowan, Amby, sold EU Santa-cross steers to 165c for 517kg to return $854. The consignment averaged 165c for 502kg to make $830.

R Towne, Yuleba, sold Charbray steers to 165c for 403kg to return $666. The consignment averaged 162c for 367kg to make $595.

Ambo Grazing Co, Ambo Station, Longreach, sold Droughtmaster steers to 165c for 393kg to return $650. The consignment averaged 160c for 339kg to make $542.

G & J Bambling, Hazelmere, Aramac, sold Charolais-cross steers to 165c for 329kg to return $543. The consignment averaged 161c for 280kg to make $452. The Charolais-cross heifers sold to 148c for 290kg to return $430. The consignment averaged 147c for 270kg to make $398.

D & K Twist, Juandah Downs, Mungallala, sold Charolais-cross steers to 165c for 311kg to return $514. The consignment averaged 165c for 277kg to make $458.

B Rolfe, Marie Downs, Roma, sold Charolais-cross steers to 162c for 330kg to return $535. The Charolais-cross heifers sold to 159c for 347kg to return $553. The consignment averaged 148c for 320kg to make $472.

Heifers in the 350-450kg range reached 150/kg and averaged 131c/kg.

Heifers in the 280-350kg range topped at 159c/kg and averaged 131c/kg.

Heifers in the 220-280kg range topped at 152c/kg and averaged 137c/kg, while heifers under 220kg topped at 166c/kg and averaged 142c/kg.

J & P Lyle, Redbank, Roma, sold Charolais heifers to 151c for 217kg to return $328.

S & L Reiser, Tocal, Mitchell, sold Charbray heifers to 150c for 224kg to return $336.

Cows over 500kg hit 127c/kg and averaged 93c/kg, while cows 400-500kg topped at 122c/kg and averaged 86c/kg. Cows in the 300-400kg sold to 89c/kg and averaged 67c/kg.

Cows and calves N/A.

Bulls up to 400kg reached 150c/kg and average 115c/kg.

Source: Roma Saleyards. To view NLRS reports for sales around Australia click here to visit Beef Central's markets section. 

A practical one hour webinar session will be held later this month aiming to help beef producers better understand the real impact that pestivirus can have on their herds and providing guidance on developing systems to manage the disease.

Pestivirus, or Bovine Viral Diarrhoea Virus (BVDV), is a common virus of cattle which can cause pregnancy loss or poorly developed calves that go on to die or have a short life expectancy.

There are a number of common myths and misconceptions about the virus, however, which need to be addressed for producers to assess the individual risks faced within their herds.

Producers participating in the webinar, taking place for an hour from Noon on Friday, August 30, will hear from a panel of recognised experts on the productivity-damaging disease, and have the opportunity to engage in a question and answer session.

Presenting during the session will be:

• Professor Mike McGowan, from University of Queensland
• Dr Neil Farmer, a practising vet and cattleman from Comanche Grazing Co in Central Queensland
• Dr Alistair Smith, senior lecturer in animal science at Charles Sturt University; and
• Dr Lee Taylor, Zoetis technical manager.

The program will be moderated by Zoetis’s strategic technical manager Dr Neil Charman.  

The live webinar will be easily accessible on the day via Youtube from your farm office PC, or via one of ten ‘lives sites’ scattered across regional Queensland, where local producers can gather in a small audience, and interact with the panellists over the web.

This particular webinar program is tailored to northern beef production systems, which tend to be less intensively managed than those in southern Australian regions, and may require different approaches to pestivirus management.     

Producers interested in participating can register here, and a will be forwarded for viewing via Youtube from home, together with details about the ten regional group ‘live site’ gatherings being hosted by Zoetis Animal Health across Queensland.

Better understanding BVDV’s myths

Investment in preventative measures against pestivirus to help optimise the reproductive outcomes from heifers in northern breeding herds will be one of the themes discussed during the webinar.

One of the presenters, Dr Neil Farmer, from Comanche Grazing Co near Rockhampton, said that implementing better herd health management practices in maiden heifers can improve rates of conception and produce higher numbers of genetically superior calves on the ground.

“Protecting against pestivirus is important for the future of a herd and its ability to achieve optimum genetic gain,” he said.

“When producers invest heavily in top bulls, AI and the time and energy devoted to a breeding program, it can be devastating not to get a full crop of calves from maiden heifers,” Dr Farmer said.

“Even a small drop in conception and calving rates can have a significant negative impact on the bottom line, so it’s time for producers to challenge and dispel some of the misconceptions about pestivirus.”

The reproductive losses from pestivirus around joining or insemination may not be noticed until pregnancy testing or even weaning.

Webinar moderator Dr Neil Charman said this can even be the case when herds have been exposed to the virus, but individual animals fail to build immunity against the disease.

“While 90 percent of herds are estimated to have been exposed to the virus at some point in time, testing of individuals in a mob commonly shows mixed levels of immunity. This means that a proportion of the herd is at risk to the effects of pestivirus” Dr Charman said.

Myth 1: “I haven’t seen evidence of it, so it’s not there”

While the impact of pestivirus is extensive and is known to cause an increased risk of abortion or calves being born with abnormalities, in some cases there may no obvious signs.

“Pestivirus is an ongoing risk to herds but it can be hard to identify and easy to dismiss as a non-issue for some producers,” Dr Charman said.

“The reality is that it actually could be affecting the reproductive performance of heifers, but a producer’s ability to measure this effect depends on a number of issues, such as record-keeping and local benchmark data.”

“Take the example of a producer implementing an AI program. If a heifer gets infected around the time of AI, she may fail to conceive to the top AI bull she’s been inseminated with. Instead, she comes back to cycle some time down the track, and may get joined to the mop-up herd bull instead. It’s a lost opportunity in terms of genetic gain and early calving,” Dr Charman said.

Myth 2: “Running heifers with cows imparts protection”

Another myth is that producers believe that pestivirus can always be controlled by running cows with heifers. However Dr Charman says this is a flawed approach.

“There are a lot of pitfalls in establishing immunity in unexposed animals by running an infected animal with them. Producers need to know that the virus is being shed and is circulating in the mob, and they need to check that animals have developed an immune response after exposure. Both require testing,” he said.

Heifers may fail to get enough exposure and protection, and are still at risk of the disease.

“When you weigh up the cost of these tests, and the productive risk of failure to protect, it’s usually easier to just vaccinate,” Dr Charman said.

Vaccination is not only reliable, but simple. While other measures like auto vaccination have been used by producers, a vaccine provides optimal protection and decreases losses due to the virus. It has also been proven to stimulate immunity in all animals treated.

Dr Lee Taylor from Zoetis believes that because most control methods require high levels of farmer management, there is more room for failure.

“Vaccination is the easiest way to limit the threat of pestivirus and producers don’t have to rely on immunity from herd exposure to the virus,” Dr Taylor said.

“If producers build on the investment they have already made into their heifers by specifically protecting these high genetic value animals, they can give them the best chance of conception and produce a healthy calf first time, and every year after that,” he said.

Pestigard vaccine, developed in Australia specifically for Australian circumstances, can be integrated with other management practices and involves two doses prior to joining. The first shot can be administered between six months and six weeks before joining and then again two to four weeks before joining.

“A six month window in which to vaccinate prior to joining offers producers flexibility to fit around their own marking and weaning schedule. A single annual booster shot each year after that will maintain protection,” Dr Taylor said.

“Ideally the whole herd would be vaccinated, but the maiden heifers in a herd are a must-do. They are the most valuable part of the herd, and the most heartbreaking not to be able to get a calf from.”

For more information about Pestivirus, go to www.bvdvaustralia.com.au

Webinar details:

Subject: “Getting a handle on pestivirus/BVDV”

When: Noon-1pm, Friday, 30 August 2013

Access: Click here to register.

The Australian Agricultural Co has ended speculation about the future of its proposed Darwin abattoir, confirming to shareholders this afternoon that final stage funding approval had been granted, and the plant should be operational in the second half of next year.

The announcement from AA Co chair Don McGauchie was made during the company’s unusual  ‘transitional’ annual general meeting held in Brisbane this afternoon, only three months after the last AGM, as the company moves to a new 31 March yearly financial reporting cycle.

Mr McGauchie told the meeting that the board had given its approval for the final phase of the abattoir’s construction at a board meeting just prior to the AGM, meaning work could now be moved on site and construction completed.

The total capital cost has risen a little from earlier forecasts, now estimated at $91 million.

Mr McGauchie said while the board was fully committed to the concept of the abattoir, it had taken a ‘considered, staged and fiscally responsible’ approach to approvals for the construction.

Since the stage one civil works were completed earlier this year, a significant amount of time had been spent finalising design and specifications of the plant. 

Mr McGauchie said the Darwin project was an important part of AA Co’s clear focus on driving shareholder value by building a global, vertically integrated red meat supply chain, with particular focus on Asian markets, servicing the rising demand for red meat protein.

“Predictions from ABARES suggest that Australia will need to double its food production by 2050 to meet demand from the Asian region,” he told shareholders.

“This demand is coming from the emergence of an Asian mega middle class – which in the next 15 years alone will increase sixfold to 3.2 billion people, more than five times the total population of Europe and the US combined.”

“Their rising incomes mean an increased demand for better food, including red meat protein. This means a much bigger population will no longer be satisfied with essentially a subsistence carbohydrate diet.”

AA Co was committed to being a part of that ‘dining boom,’ he said.

However, it was important that in order to maximize shareholder value, the company must earn adequate returns on its assets.

“In order to achieve acceptable returns on invested capital, AA Co can no longer afford to merely be a primary producer, but must also touch as many parts of the supply chain as possible, including processing, value-adding and marketing, in order to capture available margin,” Mr McGauchie said.

The current price disparity between global beef and domestic livestock prices meant the company could no longer sit back and simply supply to third parties who were afforded the opportunity to capture this available margin.

“We must capture more of that margin ourselves, and the Darwin abattoir is a key part of that strategy,” he said.

“It will be a state-of-the-art facility, opening up new channels to international markets as well as reducing freight costs currently incurred by moving cattle from the north to eastern Australian abattoirs.”

The completion of the facility would go some way towards insulating AA Co from volatility in domestic and live export markets by accessing generally higher and more stable global beef prices, he said.

“It will also allow the company to control the supply chain so that we can market our beef to maximum advantage, including maximising the value of our genetics.”

Once fully operational, the abattoir was forecast to deliver a return on capital employed in excess of the company’s pre-tax cost of capital, Mr McGauchie said.

In April, AA Co announced that it intended to fund construction of the plant from its own balance sheet. Discussions were held with several potential investment partners, but the company decided in the end that none met the criteria the board had set, of being able to bring strategic benefits to the project rather than simply financing or off-take agreements.

Mr McGauchie told the meeting the board was yet to make a decision about the prospect of strengthening the balance sheet in advance of the Darwin project, which could include a capital raising.

• See this morning’s second AA Co AGM report, covering shareholder reaction to the Darwin announcement.

The Darwin abattoir project dominated question-time during AA Co’s annual general meeting this afternoon, following chairman Don McGauchie's earlier confirmation that the board had agreed to commit $91 million to the completion of the project.

Comments and questions from shareholders were divided fairly evenly between those which could be deemed to be ‘supportive’ of the investment, and those that were either critical or cautious.

Veteran western Queensland cattleman Noel Kennedy pulled no punches when he told the board that abattoirs in northern Australia did not have a great track record, rattling off a string of failures.

“I’d like to know what strategy the company has to make this Darwin abattoir profitable, when the track record of others has been so dismal. Labour, particularly in a remote area, transport/shipping and the seasonal nature of the north are all enormous challenges,” Mr Kennedy said.

“You paint a pretty black picture,” Mr McGauchie told him. “One would think we can’t get any cattle killed in this country at all. But the reality is that there are abattoirs that do very well in this country, and right now, with the differential between world beef prices and Australian cattle prices, it’s not a bad business to be in.”

“That changes of course, with profitability at other times in the farming part of the chain, and I’ve seen that in both cattle and sheep abattoirs across the country.”

Mr McGauchie also challenged Mr Kennedy’s notion that Darwin was ‘remote’, saying the reason AA Co had gone to Darwin was because it was a city with a rapidly growing population.

“We’ve looked closely at the labour issues, and we’re confident we can provide adequate labour out of Darwin for the plant,” he said. He later dismissed any notion that AA Co would use ‘fly-in, fly-out’ labour out of India.

Nor was there any intention to run the plant on a ‘seasonal’ basis, instead it would operate right throughout the year, with only normal maintenance closures.

“We’ll build it to be a year-round facility – supplied from our own strategically placed properties, which we plan to reinforce to guarantee supply at certain times of year, and cattle from other northern producers,” Mr McGauchie said.

Being on the railway line, it was possible for the plant to draw cattle from as far south as the Alice Springs district, which had completely different seasonal circumstances.

Quizzed about market destinations for the finished product, he said ‘the world’ would be AA Co’s target market. For starters, AA Co saw itself becoming the major supplier of meat into the Darwin market itself.

The company had also had ‘remarkable interest’ from a number of ‘very large’ organisations who were interested in off-take meat for the US market. Beef Central is aware that AA Co hosted a high-level procurement delegation from the Burger King chain in the US recently to its Darwin site. Burger King is second only in size to McDonalds in the quick service restaurant segment.

As mentioned in today’s separate AGM article, the Darwin output would also rely heavily on the Asian region, where very strong population and affluence growth was taking place.

“While we will primarily be targeting cows and bulls that are at the end of their working lives as slaughter animals, we will seek to have the abattoir set up in a way that allows us to kill for whatever markets might be out there, including Halal capacity and chilled/frozen,” Mr McGauchie said.

AA Co’s former general manager for genetics, Don Wyld, who has regularly asked tough questions of the board at AGMs since his retirement, also asked about the Darwin abattoir’s prospects.

He said he had read that Teys’s Beenleigh abattoir was returning 1.2pc on investment, now risen to 2.8pc, since the new workplace agreement with staff.

“They are very, very experienced operators. Is that the sort of return on investment we can expect from Darwin?” My Wyld asked.

Mr McGauchie said the reality was that the AA Co board was looking at a ‘very much higher’ return on investment than that. He would not be drawn on nominating a figure.

“There were plenty of people interested in investing in the Darwin project, but they did not bring what we were looking for to the project,” he said.     

Quoting US analyst Steve Kay’s recent column in Beef Central (click here to view), Mr Wyld said “the reality is that beef plants anywhere in the world are more expensive than ever to build and operate. Food safety costs are enormous, and every other cost from wages to energy and packaging keeps increasing. New plants all lose money for two years before possibly breaking even in the third. I wonder of the AA Co board has any idea how much money it could lose in Darwin.”

Mr McGauchie said the board intended not to lose any money in Darwin, and make the project a success.

“We have analysed this thing enormously. We’ve had a lot of expert advice from outside the business. We know Australia is a very expensive place to do almost anything, and Darwin is a particularly expensive place to do things. But our cattle are in the north, and that’s where they have to be processed. It’s a really expensive process to truck cattle from northern Australia to the east coast for processing, and we are in no doubt that we can make this work.”

Former AA Co boardmember, Peter Hughes, himself a beef producer from north Queensland, was more supportive of the board’s vision for Darwin and taking the company’s product to the world via vertical integration.

“Coming from the pastoral side, we really want to see AA Co do well – that’s the important thing,” Mr Hughes said.

“We don’t see you as a competitor, we see you as someone leading the way. One thing that really excites me about AA Co is the meat division. They produce everything from the highest quality beef in the world down to hamburger meat. In Australia, the number of international companies in the meat industry is getting smaller and smaller, and we desperately need a company like AA Co to lead the way.”

Mr McGauchie agreed, saying AA Co was fortunate to be in the position that every farmer in Australia wanted to be in.

“We’re big enough to vertically integrate. I’ve been in agricultural production for a very long time and it’s the dream of everybody. This is pretty much the only company in agriculture in Australia that can actually do that. We’re the ones that can make that work, and that’s why we are now moving into this strategy. It’s taken us a while to get into a position where we think we can execute it, but you are now starting to see it.”

Shareholder Michael Waterhouse questioned the board about the threat of takeover, given the low share price.

“I’ve watched Graincorp and others get taken over by big international conglomerates in the agricultural sector.

"While AA Co might have a great future, the issue I have is the big threat that hangs over it – especially with a $91 million abattoir expenditure funded out of operations – of takeover by large international (meat) conglomerates, because that’s who you’re intending to compete with. What you are building is exactly the sort of facility they are looking for, and they can get such assets very cheaply through depressed share price.

"How are you going to protect the shareholder over the coming two to three years, while all this is going on?” he asked.

“At the end of the day, the shares belong to the shareholders themselves, Mr McGauchie said. “They make the decision to sell or keep them, and it’s the same for every listed company.”

Farley departure raises little scrutiny

Surprisingly, Mr McGauchie fielded only a single shareholder question inquiring about the circumstances behind the recent sudden resignation of former chief executive, David Farley.

He dismissed it by saying the four years was in fact quite a long period of tenure for a chief executive, but added that the board had ‘said all that needed to be said’ in its earlier statement to the market.

“David had seen a turnaround for the company and put in place a strategy, and the board took the view that as that strategy goes forward, the company needs a different set of skills. David made the decision to leave the company fairly quickly, which we accommodated.”    

Earlier in his address, Mr McGauchie said the company required new skill-sets to lead it into its next phase of growth and maturity.

The company was now in the midst of a search for a new chief executive officer.

“We have so far received applications from – and identified - some very high-calibre candidates and we’re confident in concluding the process soon. The candidate we are looking for will have skills in both marketing and processing, as well as experience in a larger corporate setting, running multiple divisions,” he said.

“We are looking for someone who has a global mindset and an agri-business approach, not just a pure traditional agricultural approach.”

US researchers have found that genetic selection can increase iron concentration in beef, without compromising other carcase and palatability traits.

To combat iron deficiency, researchers have been looking for new ways to improve iron concentrations in food products.

In a new study led Dr Raluca Mateescu, associate professor at Oklahoma State University, researchers evaluated genes associated with mineral concentration in beef.

They found that producers can increase iron concentration in beef through genetic selection.

“Iron concentrations in beef could easily be enhanced by selection, allowing many consumers to increase their iron intake by simply eating beef from such animals,” said Dr Dorian Garrick, co-author of the study and animal science professor at Iowa State University.

De Meteescu said mineral concentration was an important issue for beef producers and consumers.

Compared with iron from plant sources, iron from meat products is easier for the human body to absorb.

In the study, researchers evaluated 2285 Angus-sired cattle.

After harvesting, they evaluated meat samples for nutrient content.

Dr Garrick said they genotyped the cattle for 50,000 markers spread across all 30 chromosome pairs. He said they were analysing the relationships between measures of performance and the genotypes.

This helped them identify genes associated with iron concentration.

The researchers evaluated the heritability of mineral concentration by looking at five generations of cattle.

Mateescu said iron had moderate heritability, which meant the trait could be successfully selected.

But selecting cattle for high iron concentration may take time. Dr Garrick said selecting a trait like iron concentration was more difficult than selecting a trait like growth performance.

Dr Garrick said beef producers can use genomic information of sires to naturally increase the concentrations of iron in beef.

Beef producers can manipulate the iron content of their product without having a negative impact on other carcass and palatability traits. Dr Garrick said the researchers will need to test other traits before iron concentration in muscle can become a candidate trait for selection.

The full article covering the research is titled “Genome-wide association study of concentration of iron and other minerals in longissimus muscle of Angus cattle.” It can be read in full at the journalofanimalscience.org.
 

A recent trip to China has helped a leading Queensland seedstock and stud cattle enterprise to identify a range of opportunities in the rapidly growing market.

David and Prue Bondfield, Palgrove Charolais, Dalveen, recently visited China with BDO China Advisory Services Lead Partner Dennis Lin.

Mr Bondfield said the decision to look to China for future growth had been a natural progression of existing expansion plans and was an opportunity to develop product knowledge at a consumer level.

“Traditionally, the main focus of Palgrove has been the supply of genetics and sale of bulls within Australia,” Mr Bondfield said.

“While we do already export cattle and genetics to other parts of the world, including Russia, North America and Thailand, we really see a positive future to grow our brand in China.

“Given the recent surge of beef exports to China over the past 12 months, we thought the timing was right to start cultivating long-term relationships in order to keep momentum going and further grow our brand off-shore.

“Our focus now is to continue to build the brand in China and work with our commercial clients in Australia to establish ‘Palgrove genetics’ beef products to supply to all Asian markets” he said.

Prue Bondfield said their recent trip to China with business and corporate advisory firm BDO had helped secure key contacts, and was paving the way for long-term partnerships at a business and government level.

“The challenge now faced is engaging directly with our contacts at a business level given the vast cultural, economical and political differences that exist between us,” Mrs Bondfield said.

She said the connections, knowledge and expertise provided by BDO had made the visit extremely productive.

“It’s not enough to simply be accompanied by a translator. You need someone who understands your business as well as the business environment in China.

“Business dealings in China are quite different to negotiations in Australia so you really do need someone to help you navigate through the intricacies of how Chinese business operates,” she said.

BDO China Advisory Services Lead Partner Dennis Lin, who accompanied the Bondfields on their recent trip to China, said he was thrilled to be assisting Palgrove in its expansion into Asia.

“It’s great to see Queensland farmers looking to China to secure solid trade and business partnerships for the long term,” Mr Lin said.

“While there are certainly a lot of opportunities currently on offer in China, it is imperative that business owners carefully build relationships through time, dedication and strategic planning in order to secure long-term partnerships.

“This may take anywhere from a few months to a few years – it all depends on the cultural, political and economic environment of the area you’re dealing with.

“The Bondfields are committed to meaningful relationships in China which will no doubt contribute to their future success,” he said.

The Bondfield family have been breeding stud cattle in Queensland for more than 40 years and are considered innovators amongst industry peers for their contribution to breed development.
Headquartered in Dalveen, Queensland, Palgrove Charolais is one of Australia’s leading seedstock producers and stud cattle breeders.

While rural issues have barely registered a blip on the Federal election radar to date, questions about which party has the best interests of the cattle industry at heart have generated some heat between the LNP and the Katter Australia Party this week. 

Queensland agriculture minister John McVeigh launched an attack on Bob Katter’s Katter Australia Party on Tuesday after it elected to direct preferences in four key Queensland seats to the Australian Labor Party.

“Swapping preferences with the Labor Party, the same party that destroyed the live cattle trade industry, which his own electorate relies on, smells of a desperate attempt by Bob Katter to do anything save his own political skin,” Mr McVeigh said.

The KAP fired back by accusing the LNP of trying to mislead voters and overlooking its own history in granting preference deals that helped long-time anti-live export campaigners the Greens to win a House of Representatives seat in the last election.

The KAP is giving its first preferences to Clive Palmer's Palmer United Party and other minor parties, and will direct preferences to the Liberal National Party in most Queensland seats.

However it has also confirmed it will trade preferences with the ALP in the Coalition-held electorates of Hinkler, Herbert and Flynn, as well as Labor's Capricornia, in a deal reportedly done to maximise the chances of KAP securing a Senate seat for its star candidate James Blundell at the expense of the Greens candidate. 

Mr McVeigh said the Northern Beef industry would be ‘absolutely outraged’ that Bob Katter was prepared to jump right back into bed with the Labor party.

“This is the same Labor Party that has brought so much distress and pain to our Northern Beef industry which is still reeling from that ridiculous decision to suspend the live cattle trade to Indonesia in 2011," Mr McVeigh said.

“It ripped the heart out of the northern cattle industry and the loss of live exports to Indonesia.

“The loss of market access and oversupply of cattle has, and  continues to put immense pressure on drought-stricken paddocks and cattle prices.”

He said the LNP had helped northern cattle producers by launching the Drought Relief Assistance Scheme; finalising the farm refinance package for Qld farmers; visiting Indonesia and opening Queensland Government office in Jakarta, reviewing vegetation management and land tenure; and developing a 30-year strategy for the industry.

Katter Australia Party president and Queensland member for Mount Isa Robbie Katter said Mr McVeigh should watch his own “glass house” before hurling misleading statements about preferences just to save his party’s vote in the bush.

“We will unashamedly maximise our chances for success in this election because the Liberal Party, the ALP and the rural branch of the Liberal Party have failed Australian agriculture dismally,” Mr Katter said.

“Both major parties have mercilessly imposed their free market ideologies on agricultural industries which has knocked them over one after the other.

“Something has to be done and we have to secure seats this election the best way possible.”

Mr Katter said that in accusing of KAP of doing deals that were in a slap in the face for agriculture, Mr McVeigh had conveniently forgotten his federal counterparts’ deals.

“The Coalition delivered the Greens’ Adam Bandt in the last election, plus a number of senate positions due to their preference deals.

“These are the same Greens that are still pushing for live export bans. Does that mean Mr McVeigh is against live cattle exports?

Mr Katter said the KAP had preferenced the Coalition over the ALP in the Senate in every state bar one.

“If anything there is a clear bias in the preferences towards the Coalition.  Any claim otherwise is just being dishonest with the public.

“As for action on the rural industry; we’ll stand on our record which includes forming the rural debt roundtable, initiating and organising the rural crisis summit in Richmond, the $420m debt relief package from the government, initiated action on National Parks grazing, initiating the Prickly Acacia forum, and meeting Indonesian officials in Normanton to work towards a resolution in the aftermath of the live cattle export ban.”

The Australian Agricultural Company says it now expects construction of its Darwin Abattoir to be completed in the second half of next year, after the company’s board gave the project final approval at a meeting in Brisbane today.

In a presentation to the company’s annual general meeting, AACo chairman Donald McGauchie said global opportunities reinforced the company’s strategy of moving from a pure producer to a vertically integrated processor and marketer.

The Darwin abattoir would play a critical role in realising those opportunities, by allowing AACo to capture global beef prices, which have been consistently higher than domestic beef prices.

Evidence of reduced domestic prices was borne out in the company’s trading figures for the quarter to June 30, during which time dry conditions have continued to worsen across much of company’s northern geographic footprint.

An operational update presented at today’s AGM showed AACo sold 99,654 in the quarter ended June 30, just over 30,000 head more than in the same period of last year.

However, the average price received for cattle sales in the quarter was $676 per head, compared to an average price of $967 in the corresponding quarter of the previous year.

That meant, despite selling far more cattle, AA Co’s total revenue for the period from cattle sales was $63.3 million, down by $3m on $66.3m earned from the sale of 68,860 head one year earlier.

Mr McGauchie reiterated earlier statements that the board was considering another possible capital raising process as one option to strengthen its balance sheet.

New skills would be required to lead the company into its next phase, with the search for a new chief executive officer to replace David Farley now underway.

• More details later following today’s AGM

A small, but vocal group of stakeholders, ranging from producers to meat scientists, support the view that it’s time to re-examine the industry’s AusMeat language and industry carcase assessment systems in general.

And the general opinion that’s being formed is that that process should not be confined to specific ‘problem areas’ like butt shape, but should examine the entire spectrum of carcase yield and quality indicators used across kill-floor, chiller assessment and MSA grading.

The apparent inconsistencies exposed in the application of the butt shape carcase measurement, resulting in championship-standard 100-day grainfed competition entries being heavily discounted on price (click here to view Beef Central’s earlier story), could become a broader catalyst for change, they believe.

One of the people supporting such a move is Central Queensland beef producer Ian McCamley, who has been a vocal opponent to the contradictions evident in the industry’s parallel carcase assessment systems applied under the AusMeat language, and more recently introduced MSA grading.

His particular grievance is over the inconsistencies evident between the use of AusMeat dentition (as an indicator of age/maturity, and hence likely quality/tenderness), and ossification, used for the same purpose under the parallel MSA system.

There have been numerous episodes where cattle have failed to grade on the basis of their dentition score, only to perform well within acceptable eating score boundaries under MSA, based on their ossification and overall meat quality scores. That costs their owners big discounts.

“In my view, it’s time to put a process in place to scrutinise Australia’s entire carcase appraisal/sorting methodology,” Mr McCamley said.

But rather than simply reviewing the existing appraisal/sorting tools like butt shape and dentition one-by-one, he suggests it may be better to start with a ‘blank sheet of paper’ approach.

“That means ignoring what we currently use, and simply consider what the modern Australian beef industry needs to achieve in carcase assessment and sorting tools, and then go out and determine the best ways to deliver it,” he said.

“It’s crazy that we are still using deors like butt profile that have been widely dismissed for years as irrelevant, by respected meat scientists like John Thompson and others.”

Mr McCamley said there had to be concerns where brand new export markets were being opened up for Australian beef, when antiquated and in some cases, scientifically-disproved AusMeat yield and quality assessment tools were being suggested and applied.

“They’ll say country X wants to buy Australian product, using this (AusMeat) language. But when you cross-examine them, you find that that was the only option provided to the customer in the first place. They have no particular interest in butt shape, or dentition as specific quality attributes – all they want is an assurance that the product they receive will eat to their expectations,” Mr McCamley said.

“Producers, ultimately, are the losers when that happens.”

Western Downs beef producer Lee McNicholl, who led the outcry over butt shape results and discounts seen in Brisbane Show’s recent grainfed competition, agrees with the need for a comprehensive review of the current assessment model.

“It is patently obvious that a thorough, ive meat science based review of AusMeat’s highly subjective beef carcase grading language is long overdue,” he said.

“Hard-pressed beef producers have had a gut-full of processors using AusMeat’s flawed, inaccurate system as a de facto ‘Weapon of Mass Discounting’ to unjustly discount their cattle,” Mr McNicholl said.

So who is ultimately responsible for the content in the AusMeat language?

The buck stops not with the AusMeat Ltd body itself (a joint venture under the control of a board appointed by MLA and AMPC, which is simply a service delivery provider along the same lines as MLA), but with the Australian Meat Industry Language and Standards Committee (AMILSC).

According to AusMeat literature, AMILSC provides advice to the AusMeat Ltd board on matters relating to the AusMeat National Accreditation Standards.

The AMILSC committee is made up of industry sectoral representatives. Membership includes:

• Australian Meat Industry Council
• Cattle Council of Australia
• Australian Lot Feeders Association
• Sheepmeat Council of Australia
• Australia Supermarkets Institute
• Australia Pork Ltd (the Ausmeat language also covers pork), and the
• Meat Standards Committee.

Significantly, AusMeat’s own literature says the committee “provides the forum for converting industry policy into practical, workable industry-owned national standards.”

Beef Central asked Cattle Council of Australia, which holds a seat on AMILSC, where it stood on the butt profile issue.  

“CCA does not have a policy on Butt Profile specifically,” Beef Central was told.

“There are a number of criteria placed on grids by various processors. As we invest more producer levies in MSA R&D, we are starting to learn that many of the traditional measurements are not as accurate or appropriate at determining carcass value as we once thought,” CCA said.

“As we develop new science and a greater understanding of what the consumer desires from their beef, it is becoming apparent that it may be time to review our measurements and make sure that there is a legitimate, science-based approach to them.”

AusMeat chief executive Ian King provided some background information on the language, at Beef Central’s request.

The document said the AusMeat Language was a “common language which uses ive deions to describe meat products accurately to meet market requirements both nationally and internationally.”

“The Language is the basis of a national uniform deion system based on ive carcase measurements used in the classification of Australian meat and livestock” the document said.

The Language includes the beef carcase evaluation (Chiller Assessment Program) and has been integrated within the Meat Standards Australia (MSA) grading system, where common measurements / assessments are used.

Mr King said over the years, and as recently as several years ago, the ‘industry’ (via the Australian meat industry language and standards committee) had undertaken reviews of the inclusion of butt shape within the Language.

“The industry decision to retain butt shape in the Language allows AusMeat to audit those (companies) that use the measurement, thus ensuring consistency of application. Therefore butt shape remains an optional slaughter floor carcase measurement,” Mr King said.

A well-informed producer who asked to remain anonymous said whilst the members of the AMILSC committee were the only people who could provide a solution to current perceived flaws, they remained ‘firmly devoted’ to the current model, in his opinion.

“The AMILSC has had the science at their fingertips for years, yet they remain completely unwilling to change some of the ridiculous unscientific AusMeat measurements.  It is becoming very clear that the stronger members on this committee (Beef Central interpreted that to mean processors) must sadly (for producers) believe that their own supply chains will be at risk if changes are made.”

While it is hard to find any industry stakeholders prepared to publicly defend butt shape, one large processor close to the AusMeat language process told Beef Central that while butt shape remained a crude (at best) indicator of carcase yield, it persisted in the language only because of the absence of anything better.

He conceded that the highly subjective nature of the assessment flew in the face of AusMeat’s claims, outlined above, that the language is based on ‘ive carcase measurements.’ 

Other criteria need close examination

In discussions with a range of respected industry stakeholders from across the supply chain about the butt profile issue this week, Beef Central has identified a number of other carcase assessment criteria that may be worthy of closer scrutiny under any industry review that should emerge.

Fat distribution:

Carcases are sometimes (perhaps infrequently) discounted on the basis of distribution of fat – not to be confused with outright fat depth. The justification for grid penalties has always been the potential impact on carcase value from ‘chiller burn’ caused by lack of protective fat cover over the hindquarter.

“Fat distribution, as a pricing tool, is something that needs review,” a leading processor said.

“Back in the 1990s, a lot of meat, especially in butcher shops, hung in chillers for days, meaning bare butts risked chiller burn. But today beef goes through the boning room and into a Cryovac bag within 20 hours of slaughter. Chiller burn is no longer an issue, especially with modern chiller designs, and the advent of spray chilling. And in the domestic market, butchers no longer buy body beef – everything is in cartons.”

P8 fat depth:

Former Beef CRC meat scientist Professor John Thompson said while butt shape was an obvious candidate for removal from the AusMeat language on the basis of its irrelevance as a yield indicator, the accuracy of the P8 location for fat depth measurement, over the alternate 12/13 rib location used overseas, was another area worthy of scrutiny.

“P8 was brought-in in Australia, because it was not supposed to have the same ‘fat tearing’ problems that 12/13 rib does,” he said.

Fat tearing, when the hide is mechanically-removed and pieces of fat under the skin surface peel away with it, can have a very large impact on grid pricing, based on minimum fat depth requirements set by processors. Some say the fat-tearing issue becomes greater the faster the chain speed in the plant: the bigger the plant, the faster the hide must be removed.

“But there’s abundant evidence that there’s just as much fat tearing going on over the P8 site as there is over the 12/13 rib site,” Prof Thompson said.

Different quartering sites for fat depth assessment are used in Japan (marbling motivated), North America and Europe.

Dentition versus ossification:

Prof Thompson agreed with Ian McCamley’s assessment that dentition also needs to come under closer scrutiny as a carcase sorting tool.

“Our CRC research shows that once we have graded a carcase using MSA criteria (including ossification), the further addition of dentition adds absolutely nothing to the quality prediction,” he said.

“And that applies to a whole range of cuts, from high to low connective tissue, and different cooking style applications. There is an argument that if dentition was better related to connective tissue cross-ing, then it should not be important in slow-cooking methods, but much more important in grilling cuts – but there’s no sign of that in research trials,” Prof Thompson said.

“Ossification, in conjunction with the MSA grading scheme, provides the best estimate of quality. Dentition adds absolutely nothing to the predictability, based on 7000 carcases in our last analysis.”

Prof Thompson agreed with the view that there was little point in launching a scientific review of the butt shape assessment in isolation from other traits.

“It would make little sense to just go in and clean-up the butt shape issue: far better to apply a broader scrutiny across the indicators used by the industry, and clean-out the lot, if need be,” he said. 

Are there solutions already out there?

While technologies are already in existence that have yield predictive ability – VIAscan cameras are a good example – it is not as simple as just adopting such systems in place of butt profile.

“VIAscan cameras are not necessarily any better. They never produced any 75pc yield cattle in their assessments, yet such cattle do exist. VIAscan tends to average everything out in the middle ranges,” a large domestic processor said.

“The push for a truly ive form of carcase yield assessment is still valid, it’s just that the industry has run into some dead-ends. VIAscan was a good concept, but it never quite got there. The calculations and predictions weren’t accurate enough, across a broad band of cattle types and degrees of finish,” he said.

Where some exciting new opportunities on yield assessment might lie is in some preliminary working being done by MLA’s Dr Alex Ball, Prof John Thompson and others looking at harnessing the ‘incredible computing power’ of off-the-shelf PlayStation-type gaming consoles to develop a carcase yield assessment tool with real accuracy, reliability and the ability to handle high meatworks chain speeds.

While it was still in its infancy, such technologies might emerge which could have the potential to replace the subjective grader assessment of butt shape, Prof Thompson said. The observations were based on computer-driven assessment of muscling, using thousands of images of carcases captured from different angles, with much greater and more accurate predictive capacity than a conventional butt profile assessment.

Commercial realities

One of the challenges with any review of industry quality and yield assessment indicators is the need to maintain commercial relevance, in the modern world of extremely large, high-throughput abattoirs.

Processors say there would be a host of problems associated with simply replacing dentition with ossification as a maturity assessment, for example.

One of the biggest challenges is that there are currently two competing grading/assessment systems operating simultaneously in many plants, and often with contradictory measurements. The AusMeat grading system operates on the killfloor and chiller (including amongst other measurements, dentition for age, and butt shape for yield), while MSA grading includes ossification for age/maturity, and EMA/fat depth for yield.

While for some, the simple answer might be to simply dispose of dentition and replace it with ossification, while replacing butt shape with EMA, commercial reality suggests it’s not that easy.

A large kill chain in an export abattoir can operate at 200+ bodies per hour. The typical rate of MSA assessment rate is around 46 bodies per hour. That would require another three or four MSA graders, and potential another bank of three or four chillers, just to keep up with the grading requirement if MSA was to be universally adopted.

“The list of ‘why not trys?’ can be as long as your arm,” a major processor contact told Beef Central.

“Why not pay on the yield of meat cut from every carcase? It sounds great, but in reality it is impossible to deliver in any high volume environment. In a practical sense, there are commercial reasons for and against each of those assessments, and why they are currently used.”

“Does a producer in a drought-affected corner of western Queensland who sees half his cattle score meat colours of 4 and high oss want full MSA chiller assessment applied to his cattle? Unlikely.”

The current grading system is far from perfect, but there are perfectly legitimate arguments for and against the current criteria in the system.”    

“As a processor, we’re not averse to change, but whatever options are proposed have to take into consideration that we need to make assessments at 200 bodies an hour.”

“Even if we went to full chiller assessment on every carcase, and payment based on boning room yield, there would be producers who would suffer financially, because just as many would be under the average as over it, and would receive less than what they currently do for their cattle.” 

A drought makes for lots of tough decisions to be made and as such, will test the capability of all people who find themselves managing a cattle business during dry times.

Some managers manage droughts much better than others. How a business survives a drought, and how fast the business gets back and up and running will often depend on the people in the management team in that business.

Benchmarking and analysis of grazing businesses reveal that there are significant differences in management performance between producers when it comes to negotiating through a challenging season.

During drought, management must address a whole range of challenges and important decisions can come pretty hard and fast. Some decisions involve probability or risk: Will it rain, when, how much?

Some decisions involve not having all the required information: Are southern restockers buying Brahman cross cattle in Dubbo?

Some decisions will test your team when game plans have to change: Will your people be happy if you shift from an agistment game-plan to a selling game?

Almost all major decisions during drought have a tough outcome, even some of the good decisions still represent losing thousands of dollars ... a week.

After Action Reviews

In order to be better prepared to manage drought, professional beef producers need all the management skills that they can get their hands on. One such tool that beef managers should consider is an After Action Review (AAR).

AARs were first used by the military, but nowadays they are used by strategically-minded managers in all types of business across the world.

The AAR is a strategic planning session that occurs after an event, where participants review what was intended to occur, what actually happened, why it happened and what was learned. The military started using AARs to review all operations and contact with the enemy, in order to ensure that any future such engagements improved and were more successful.

AAR theory gathers all the people in key strategic roles and those involved in the conduct of the operation to meet and discuss the success (or otherwise) of the operation.

Even in a beef business, where often the management team is relatively small - perhaps just a husband and wife - an AAR should be conducted. A powerful third person to this meeting would be anyone who was providing advice to the business during the drought.

There are many websites that advise what the agenda should be at an AAR meeting. Nevertheless here are some tips on how to make use of such meetings:

Hold the meeting soon after the event.

Perhaps when the bullfrogs are roaring and the radio has hourly cyclone alerts, grab your husband/wife and agree to write some notes about how to better handle the next drought. If you used a consultant or adviser, get them on the phone too.

AARs should be carried out immediately

AARs should be carried out whilst all of the participants are still available, and their memories are fresh. In large beef businesses or corporate, many staff will not be around for the next drought, so you need to tap their experiences while you can.

Create the right climate.

The ideal climate for an AAR to be successful is one of openness and commitment to learning. Everyone should participate in an atmosphere free from the concept of seniority or rank. AARs are learning events rather than critiques. They certainly should not be treated as personal performance evaluation.

Working in Groups

Proactive producer groups might wish to call a post-drought meeting to draw out the best learnings of all members. In my experience, these can be very powerful gatherings. Perhaps at these meetings, find or appoint a facilitator. The facilitator is not there to ‘have’ answers, but to help the team to ‘learn’ answers. People must be drawn out, both for their own learning and the group’s benefit.

Quantify your climate risk

Droughts are a very common and repeating feature in Australian agriculture, so what is the likelihood of you getting a failed season (less than 50pc of median growing season rainfall). Incorporate this likelihood into your planning.

Examine your pre-drought drought plan

Examine your pre-drought drought plan: ‘What was supposed to happen?’ Divide the drought into distinct stages, each of which had (or should have had) an identifiable ive, plan-of-action and time.

The cost of a delayed decision

Of particular importance in drought is the cost of a delayed decision. Whilst droughts can be devastating disasters, compared to fires and floods, they happen so slowly that procrastination and inaction becomes a deadly foe. Consider all the key turning points and ask if all major decisions were made on time. Discuss how the management team responded at each major turning point.

Discuss ‘what actually happened?’

This means understanding and agreeing about the facts of what happened. Remember, the aim is to identify the problems, not identify culprits or lay blame.

Compare the original plan with reality.

The real learning begins as the team compares the plan of what was supposed to happen to what actually happened and determines ‘Why were there differences?’ and ‘What did we learn?’ Identify and discuss successes and shortfalls. Put in place action plans to sustain the successes and to improve upon the shortfalls. Record the key points from the AAR meeting. Recording the key elements of an AAR clarifies what happened and compares it to what was supposed to happen. It facilitates sharing of learning experiences within the team. In busy beef businesses, where the next drought might be 10 years away, having a good set of notes may be the only way to preserve all the learnings.

Gathering vital information

Make sure the meeting includes discussion of the roles of advisors, planning tools, logistics, market information and the quality of sources of vital information used by the management team. Use the information and insight gleaned from your AAR, to improve your plan for the next drought. The minutes from the AAR only aim to improve your drought plan. As the great saying goes, “it is not the plan that counts, it is the planning.”

Final thoughts

The following are some AAR ‘winners’ that I gleaned recently from several proactive producers who are grappling with the current drought.

1. Our weaner supplement program got really expensive. ACTION: Buy cottonseed at low prices early in the season, store it at the gin, sell it if not needed.
2. The cattle market I sell into is adversely affected when large areas in my region get a failed wet season. I will watch more closely the wet season and when large numbers of cattle haven’t had a summer break by the half-way point. ACTION: I will commence booking some sales in much earlier to off-set the risks.
3. I took a bet on rain in March, in reality, we have a less than 10pc chance of greater than 50mm by then. ACTION: Rainman will be used to enhance my calculations of the chance of rain.
4. My backpacker-poddy calf strategy really worked.
5. The body truck that constantly broke down. ACTION: Shift purchase of new truck up the cap-ex list as soon as we have enough money in the New Year.
6. By hook or by crook, we will put weight on the joiner heifers, and we are.
7. Temperamental and unhandled cattle can’t be dropped off in a drover’s camp without considerable loss of animals and breakouts from our camps at night. We found it really hard at short notice to find that extra man that we needed whilst we waited for the mob to settle down.
8. We trucked so many cattle, our holding paddocks just packed it in, we found it really hard to handle the amount of hay we needed to truck cattle. ACTION: Keep holding paddocks in really good shape, don’t wear them out storing cattle for long periods at start of season.
9. This drought really tested the morale of our family. ACTION: To keep our sanity, we had monthly road parties with three of our neighbours, it was always good to get away, have a few beers and realise you weren’t the only poor blighter out there in the same circumstances.

• Bush Agribusiness will hold another series of its popular and informative BusinessEDGE workshops across regional Queensland during October. Dates and venues include Dalby Oct 10-11; St George Oct 14-15; Taroom Oct 28-29; Springsure Oct 30-31. Click here for more details.

The price of domestically-produced US fatty trim and the rate of US cow slaughter are likely to have a strong bearing on prices Australia receives for 90CL grinding beef into the US market over the remainder of the year.

That’s the view of US analysts Len Steiner and Steve Meyer, commenting in a recent weekly US imported beef report.

Steiner Consulting sees a number of factors impacting on the grinding beef business in the US in the short term.

“Imported grinding beef in the US is for the most part sold through foodservice outlets, especially some of the large fast food chain restaurants,” Len Steiner said.

“With lower prices for lean grinding beef, one would expect hamburger raw materials to be more competitive with chicken, and also present fast food buyers with the opportunity to book raw materials below last year’s costs,” he said.

However for a fast food operation, lean beef (90pc lean beef, or 90CL) makes up only 65pc of the meat-block (composition of the final burger pattie product). Fat trim sourced out of the domestic US grainfed industry is an important component, blended with imported lean 90CL to produce the ideal pattie formulation, often around 76CL.

Fat trim prices in the US have increased sharply, especially compared to a year ago, Steiner Consulting’s weekly reports point out.

The calculated 76CL meat-block value a week ago stood at US$1.653/lb, 8.7pc higher than where it sat a year ago.

“The overall meat-block price is notably higher than last year, even as the price of imported lean grinding beef is 5.9pc lower than a year ago, while the price of domestic 90CL beef is down 5.6pc compared to last year,” the report said.

The normal seasonal cycle sees the price of 50CL domestic US beef trend lower after September 1,  and some end-users likely did not want to build finished good inventory given current very high fat trim prices, Steiner said.

“They also would likely want to see fat trim prices decline before making further commitments for deliveries of imported beef in October and November.”

In past years, November has been a tricky period for US food service operators looking to build inventories going into the holidays.

“It remains to be seen if the much expected break in the price of 50CL beef materialises in the US market and if it does, how long it holds at those levels,” Steiner said.

“And while fat trim supplies are tight now, it is unlikely they will improve next year. A combination of sharply lower US cattle slaughter and flat growth in cattle weights will tend to limit fat trim availability.”

Japan is currently purchasing significantly more US short plate than it did in 2011 and 2012, which would further reduce the supply of grinding meat coming to market.

Another factor was US cow slaughter, which continues to track close to year-ago levels.

Reports from US cow producers continue to point to significant improvements in terms of feed supplies and pastures compared to a year ago, Steiner’s report said.

Lower grain prices and improvement in forage supplies had supported a rebound in US feeder cattle prices.

“At some point this will lead to fewer cows coming to market,” Steiner said.

US dairy cow slaughter is also likely to decline, and this will further limit the overall supply of cow grinding beef in the US. 

Latest listings on Jobs Central recruitment page:

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To access Jobs Central page, including full listings and job deions, click here.

KEEPING employees happy and motivated can be an elusive goal at times.

Employee engagement is sometimes overlooked as an aspect of retention - that’s because it is broader and more abstract than other metrics associated with retention such as compensation and benefits.

However, happy and motivated employees are closely associated and correlated with productivity, retention, and employee performance, and it applies as much in the agriculture sector as anywhere else.

It is especially important to keep employees happy and motivated during times of economic downturn. During these times, employers benefit from a drop in absenteeism, but the odds aren't solely in favour of the companies.

It is also important to understand that dissatisfied, disengaged workers show up more, which hurts productivity and the office stars may look to jump ship for companies that can better fulfil their needs.

Some common approaches can be easily implemented into an everyday business by keeping the communication going both ways and knowing your employees.

Presented here are some ideas on how to motivate employees:

Respect

It's important to remember that at the end of the day, your employees are people with lives and families.

"It comes down to treating them how you would want to be treated," director of specialist recruitment and labour hire firm, AWX, Cameron Dart said. "If they do a great job, let them know. If they make a mistake, let them know that they are human, and figure-out how to prevent it from happening again," he said.

Larger companies can reward its employees with year-end bonuses if the company has had a great year. Cultivating feelings of appreciation and respect ultimately contributes to the teamwork that helps the business thrive.

Small-business owners and employees all have to work together to succeed.

Getting to Know You

Managers need to maintain an organisational culture that keeps employees engaged. They should get to know the employees, find out what they like and don’t like about their job, and make necessary changes to foster an employee-friendly environment.

Make sure there's an open line of communication; get to know who your employees are, and what they want to achieve from the role. Be flexible and responsive and understand your employee issues or problems when they arise so it does not affect productivity.

"It's important to facilitate an open communication environment, because it helps keep that trust and respect factor," Mr Dart said.  

Know What Makes Them Tick

Be grateful for the employees you have. Again, get to know your employees to know what motivates them ... it all depends on what motivates your employees to get things done, increase productivity and retention.

Some employees like to hear praise for good work in front of co-workers, others may not want to be singled-out. The trick is knowing who appreciates what form of recognition. While bonuses have their place, not all employees are motivated simply by money. You can start with the little things to let them know they're appreciated—like buying coffee for them or being there to listen to concerns after a difficult day at work.

Build a Team

Businesses with a clear mission statement and business goals which are communicated to employees-make employees feel a part of a team.

Regularly monthly team meetings which review the mission statement and report on progress ensure transparency and team satisfaction. Other regular team-building activities that do not involve work are also a great way to get to know your staff such as group lunches, sporting teams, and offsite social gatherings.

"Work Hard – Play Hard is very important to our culture, so it’s important to take the opportunity to step away from the business and engage in team-building activities and social events to help galvanise a team, as opposed to a group of employees," Mr Dart said.

“Hiring employees who believe in the company's mission and product also goes a long way to motivating staff.”

Engagement

An engaged employee is happy to come to work, willing to help others, and enthusiastic about his or her job. A disengaged employee has negative reactions to the thought of coming to work, is not enjoyable to work with, and puts forth minimum effort on the job.

To keep employees engaged, managers must show their employees that they can be trusted, must be approachable, provide constructive feedback, and show their employees that they care about them. Make sure the work/tasks ahead are stimulating, and employees understand how their efforts contribute to the goals of the organisation. Engaging employees is an investment in the organisation.

The Australian Livestock and Rural Transporters Association (ALRTA) is calling on federal parties to commit to policies that deliver better road access for high-productivity vehicles and fairer road-user charges.

The ALRTA’s is seeking responses to its new ‘Getting Regional Australia ‘Back on the Road’’ strategy prior to the September 7 election.

ALRTA President Liz Schmidt said that the strategy is based around improving road access, fairer road user charging and injecting confidence into the regional business environment.

“Getting regional Australia back on the road requires a reinvigorated effort on three fronts,” said President Schmidt.

“We must improve road access for higher productivity vehicles such as b-doubles, b-triples and road trains if we are to safely and efficiently deal with a forecast doubling of the freight task by 2030.

“This will require bold changes to the way that road access decisions are made at all levels of government and significant changes to the way that critical infrastructure is planned and provided.

“We must improve the fairness of road user charging for heavy vehicles.

“Decreasing high upfront registration fees and proportionately increasing fuel-based charges will improve cash flow in small transport businesses, reduce cross subsidies between vehicle types and establish a closer relationship between the costs imposed on the road network and the charges levied on individual operators.

“It is also vital that the Federal Government acts to improve the business environment in which rural transport companies operate.

“Measures that would immediately improve business confidence include abolition of the carbon tax, a more reasonable approach to off-shore animal welfare issues, establishment of a national ramp standard and an investment incentive for small rural businesses,” said President Schmidt.

The ALRTA has written to key politicians on all sides of politics to provide a copy of our strategy and to seek information about policy positions impacting on the transport, agricultural and small business sectors.

The full strategy for Getting Regional Australia ‘Back on the Road’ is available at: www.alrta.org.au A one-page summary is included below.

Priority 1: Improving Road Access for High Productivity Vehicles Improved access can be achieved by:

• Recognising HPVs as a necessary part of addressing the freight challenge;
• Assessing and reporting on the current state of the road network;
• Integrating data collection, demand forecasting and decision making;
• Identifying and fixing critical infrastructure bottle necks;
• Improving the number, location and quality of HPV friendly rest areas;
• Demanding that incremental expansion of the HPV network is a key goal in network planning;
• Mandating the Ministerial Guidelines for road access decision making;
• Establishing an independent third-party to review access decisions. ?

Priority 2: Fairer Charging for Heavy Vehicles Fairer charging can be achieved by:

• Decreasing upfront registration fees and increasing the fuel-based road user charge.
• New measures to prevent the overcharging of road trains. ?

Priority 3: Enhancing the Rural and Small Business Environment An enhanced business environment can be achieved by:

• Establishing a national ramp standard for livestock loading.
• More reasonable responses to animal welfare incidents in overseas markets.
• Abolition of plans to impose a carbon tax on road transport from 1 July 2014.
• Rewarding transport operators for safety and environmental improvements.
• Providing targeted incentives to kick-start rural economies and small businesses. 

Source: ALRTA

MANAGING expectations about the fertility performance of Australian breeding heifers exported under a breeder protocol to Indonesia came into focus during yesterday’s IndOz Beef investment and trade forum held in Brisbane.

The forum, convened by Indonesia’s BKPM Investment Coordinating Board (effectively Indonesia’s version of AusTrade) attracted a wide range of high-level live export, meat processing, production and support sector stakeholders from across Australia and Indonesia.  

Indonesia’s director general of animal husbandry, Syukur Iwantoro, said many breeding heifers imported in earlier consignments some years ago had proven to be ‘unproductive’, and he asked why had Australia had sent poor-performing breeding cattle to Indonesia.

Any continuation could jeopardise any future trade in breeding animals, he suggested.

Meat & Livestock Australia managing director Scott Hansen told the meeting that there were still enormous gains to be made both in Australia and Indonesia from genetic selection for fertility in northern cattle.

“A strong feature of our research priorities is based around building higher reproductive performance in composite and Brahman cattle in northern Australia,” Mr Hansen said.

Santori’s Bruce Warren provided some further background to the fertility challenge in Indonesia.

Santori is a large vertically-integrated Indonesian cattle importer, lotfeeder, ‘breedlotter’, processor and wholesaler.  

“Under the conditions commonly seen in parts of northern Australia, the Brahman heifer is always difficult to get in calf,” he told the forum.

“She has the unique ability, if conditions and nutrition are poor, to temporarily shut-down her breeding ability to survive. In the NT, some farmers claim to get 70 percent calving rates in their herds, but when the rate of reconception is put under closer scrutiny, research shows the actual calving rate in the region is often more like 50pc. And to get that, those cattle are supplemented during dry times of year,” he said.

“When that animal goes to Indonesia, they have to put up with the additional challenge of high humidity and acclimatisation. If the nutrition in Indonesia is not adequate, the female will not cycle and get in calf.”

Mr Warren said this was an area that needed a lot more input from Australia – in helping provide guidance about what can be done to improve rates of fertility in Indonesia by better understanding the need for nutrition and management.

“In Indonesia’s native cattle like Bantang, calving rates are more like 30pc. The biggest problem in Indonesia is getting cattle to re-cycle, because of humidity and nutritional challenges,” he said.

“I don’t believe any Australian would have sent breeding cattle to Indonesia that were of inferior quality, or unfit for breeding purposes. It is simply the climatic transition, the humidity, and the nutritional circumstances they are placed under that is causing the problem.”

“As we have seen in Santori’s own breedlot in Indonesia, and the same in the NT, the big challenge is to get the heifer that has had her first calf pregnant again. I daresay there would be northern Australian cattlemen at this meeting who would say two calves every three years is doing really well.”

“That’s the issue, and where we are falling down is in not effectively communicating these messages. This is a constant problem for NT cattle farmers, and when the cattle are transported to Indonesia, it becomes an even bigger problem. We need to be there, side-by-side, helping understand the problem and finding solutions,” Mr Warren said.

Research project provides valuable guidance

Also commenting on the fertility performance challenge in imported breeding heifers in Indonesia was Peter Horne, from the Australian Centre for International Agricultural Research.

About two years ago Indonesia requested support from Australia on exactly these issues, Mr Horne said.

With funding from MLA, DAFF and other Australian government departments, a study has been going on, with collaboration from Indonesian research bodies, in Sumatra and East Java to determine whether Australian Brahman cross cattle can be effective and efficient reproductive animals in the Indonesian context.

The results after three years had shown that they can, but there are three key issues that need to be addressed:

• Nutrition is really the biggest challenge. The breeding animals need good energy intake in order to maintain reproductive ability. This has been the major constraint in those villages where breeding cattle have been consigned, but where it has been overcome, the Brahman breeding cattle had been quite productive.
• Oestrus detection has proven to be quite difficult in the Indonesian context, because many of the animals are mated via AI in the villages
• Post-partum anoestrus as a result of long lactation can also be a problem.

“It has been shown that farmers in Indonesia will readily adopt early weaning management of calves, so that post-partum anoestrus factor seems to be quite easily resolved,” Mr Horne said.

“If the two other issues – nutrition and oestrus detection in villages – can be managed, it has been demonstrated that these females can perform quite well, reproductively, in Indonesian conditions.”

The research was on-going, and would continue to provide valuable guidance, he said.

• Despite Indonesia’s desire to greatly expand its own cattle breeding capacity, it suspended breeder cattle imports last year over a perceived lack of pedigree information in Australian exports. The trade is yet to resume. 

Indonesian Government ministers have urged Australian businesses to seize the opportunity created by Indonesia’s booming economic progress to invest in the country’s cattle industry and beef supply chain.

It has been just over 12 months since Indonesian president Susilo Bambang Yudyhono visited Darwin and encouraged Australian investors to partner with Indonesian businesses to allow both countries to benefit from Indonesia’s drive to achieve food security and ultimately self-sufficiency.

While the sheer scale of the potential economic opportunities offered by Indonesia has created clear interest among Australian investors, and has prompted a number of trade-scoping visits to the country, the invitation has yet to yield any substantial new signs of investment.

Indonesia clearly wants that to change.

A two-day trade forum currently being hosted by the Indonesian Government’s investment promotion arm BKPM in Brisbane, which has brought together more than 60 Indonesian officials and a similar number of high-level Australian cattle and beef industry stakeholders, is evidence of its determination to see greater co-investment occur.

At the first day of the forum yesterday Indonesian Government ministers and officials highlighted the immense economic opportunities available in Indonesia and declared the country open for business to Australian investment.

BKPM deputy chairman Himawan Hariyoga said direct investment from Australia in Indonesia’s cattle and livestock industry totaled just $5.5m since 2006.  He noted this was particularly small given the size of the cattle and beef trade to country.

“Distinguished participants, I hope it becomes clear as to why we expect more direct investment from Australia, our main trade partner in the cattle business,” Mr Hariyoga said 

Long-term partnerships the key

While Indonesia is maintaining its ambitions to achieve self-sufficiency in beef production by 2014, its own figures show that its domestic production of 500,000t will fall short of expected consumption by 100,000t this year.

Once a proud beef exporter, the country’s expanding population, economic growth and increasing taste for beef have seen Indonesia’s production capacity lag behind consumption for some years.

Food security now stands as one of the single most important issues for Indonesia as its population rapidly expands.

Until June 2011 Australia was seen as a highly reliable trading partner, but that perception was shattered when the Gillard Government suddenly cut off supply of cattle to the country without warning in the wake of footage showing cattle being mistreated in Indonesian abattoirs.

Despite the heavy impact of that event on Australian-Indonesian relations, Indonesia still sees its near neighbor as the most logical and viable supplier cattle and beef to make up the shortfall between domestic supply and domestic consumption.

However, Indonesian speakers at yesterday’s forum were emphatic in their point that they do not just want to see the gap between supply and demand in future filled by short-term trading alone.

Rather, they want to see long-term, co-investment partnerships developed between Australian and Indonesian businesses, that they believe will deliver greater certainty to both countries.

Himawan Hariyoga described the forum as an ‘historic moment’ that brought hundreds of committed stakeholders together in a strong spirit of partnership to find solutions to the problems both countries were facing to develop investment cooperation.

Underlining the opportunities that exist, Indonesia’s vice minister for trade Bayu Krisnamurthi said that while many people’s view of Indonesia was limited to Jakarta and Bali, more than 50 mid-sized cities in Indonesia (of some 600 cities in total) were currently experiencing double digit growth.

“Now these 50 cities give us a distribution headache,” he explained. “It is not enough to just feed Jakarta and the price will be stable. No, we need to make sure that the supply has to come to all those cities, if not the national inflation will be affected.”

He said Indonesia’s growing middle class of 50 million people had high disposable income and “they are asking for more and more beef”.

Pinpointing the opportunities

So, more specifically, where do the opportunities for direct and co-investment lie?

In opening the forum Indonesian ambassador Nadjib Riphat Kesoema said the Indonesian Government saw three primary options: direct Australian investment in Indonesian cattle breeding and beef value-adding chains, direct Indonesian investment in Australian cattle country, and, Indonesia’s most preferred way, co-investment partnerships between Australian and Indonesian businesses in Indonesian production systems and supply chains.

BKPM deputy chair Himawan Hariyoga said investment opportunities could cover a wide range of businesses along the supply chain from breeding and cattle raising, cattle transportation and meat processing and distribution.

Indonesian vice minister for agriculture Rusman Heriawan said Indonesia had identified several investment opportunities in different regions.

These included the opportunity to develop beef cattle on pasture in eastern territories of Indonesia including NTT and Papua; the integration of beef cattle and oil palm plantations in western territories such as Kalimantan, and the integration of beef cattle and food crops in densely populated areas such as in Java.

Ambassador Kesoema encouraged Australian investment in Indonesian export abattoirs.

“As a prominent country, and trusted to conduct the Halal process, by Muslim countries around the world, Indonesia is ready to cooperate with you all in the export of beef and value-adding for goods to other countries. 

“This would be beneficial in terms of reducing costs of processing, Indonesia is the closest neighbor to Australia, so we stand ready to become a gateway for Australian export.

“Indonesia will be the natural gate for Australia to come to the ASEAN community with the population of 600 million people.”

Rewards versus risks

Indonesia needs food security, Australia needs market security. Finding mutually beneficial solutions involves weighing the rewards against the risks.

One of the key reasons Australian investors at yesterday’s forum gave to Beef Central to explain the lack of direct investment to date was the uncertainty they saw in making direct investments in Indonesia.

Sudden and unexpected changes in policy and regulation that can dramatically alter trade viability are chief among those concerns.

Highly visible examples in recent times include Indonesia’s sudden decision last year to require full pedigree information on commercial breeders, an unresolved issue which has seen thousands of imported females stranded for more than a year in Indonesian feedlots.

Added to that was the bureaucratic wrangle between Indonesian departments that left thousands of tonnes of Australian beef stranded on the wharf at Jakarta and denied access to the market, despite having all necessary import permits.

Both examples have cost the exporters involved, all private companies, hundreds of thousands of dollars.

Mr Hariyoga acknowledged in his address that doing business and investing in Indonesia was “not easy”.

“Quality of infrastructure, labour skills, corruption, clarity and consistency of policy and legal regulatory issues are among the concerns of investors,” he said.

“The Government has recognised these issues and is working hard to address them.

“Now the Government is undertaking policy and regulatory reforms to improve the investment environment in Indonesia to ensure investors that investment in Indonesia is profitable and sustainable, safe and comfortable.”

Several Australian speakers also outlined this country’s commitment to Indonesia as a supplier of cattle and beef and technical industry expertise including federal agriculture minister Joel Fitzgibbon, Queensland agriculture minister John McVeigh, Austrade general manager Jane Madden, Katter Australia Party leader Bob Katter and Meat & Livestock Australia managing director Scott Hansen.

The value in the forum has extended beyond the opportunity provided for stakeholders on both sides of the trade to better understand their counterparts’ needs, but in the numerous personal interactions and one-on-one meetings that have occurred inside and outside the forum between potential trading partners on both sides as the event has continued.

The forum continues today with speakers including the chair of Indonesia’s National Meat Processing Association Ishana Mahisa, Northern Territory Cattlemen’s Association president David Warriner and the head of the Oceanic Cattle Station Nissin Sunito.

Stay tuned to Beef Central for more reports from the Indoz Trade Forum