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MLA Managing Director David Palmer talks to producer advocates Robbie Tole (left) from Cressy, Tasmania, Karen O'Toole (right) from Hawkesdale, Victoria and James McKay (far right) from Lucindale, South Australia.
The underlying strength of Australia's red meat industry was evident during 2007–08 as it continued to deliver over 6.5 billion beef, lamb, mutton and goatmeat meals to consumers around the globe despite being buffeted by considerable economic and climatic pressures.
The industry's robust systems and innovation on and off-farm have enabled it to hold up, under the strain of a 70 per cent rise in the Australian dollar since 2001–02, unparalleled input costs and increased environmental scrutiny.
In partnership with industry and government, MLA continued to deliver services and solutions to improve market access, grow demand, increase competitiveness and sustainability and build the capability of our industry. This helped to stabilise Australia's position as the world's largest exporter of red meat and livestock.
IMPROVING MARKET ACCESS
Laboured progress in the World Trade Organization Doha Round during the year and the pending ratification of the US–Korea free trade agreement, heightened our efforts to communicate the importance and benefits of trade liberalisation to government in key markets including Japan and Korea.
To reinforce this importance, MLA staff from Japan and Sydney accompanied Prime Minister Kevin Rudd to Japan and Federal Agriculture Minister Tony Burke to Korea to meet with government and industry representatives.
Under an Australia–Chile free trade agreement during the year tariff barriers were eliminated, while our work with industry to meet Australian Government standards for the transport and care of cattle destined for Egypt resulted in the resumption of trade under a closed system.
GROWING DEMAND
Building our reputation as a supplier of tasty and consistent quality beef was a crucial foundation for our work in our three largest overseas markets during the year. Following the results of more than 520,000 consumer taste tests in Japan, Korea and the US a collaborative industry effort saw us take Meat Standards Australia offshore in the form of Eating Quality Assured (EQA).
In another significant enhancement we increased our attention on emerging markets to ensure Australia is positioned as a preferred supplier to countries such as Russia, Indonesia, China and the Middle East. We opened a new office in Moscow to keep ahead of trends and opportunities in this country of 140 million people. Indonesia's strengthened economy offered a real opportunity for both the Australian beef and live cattle trade. We undertook consumer research in the region to establish a platform for building demand for Australian boxed product in this market.
At home, we tapped into an emerging trend to cook from scratch with 'Beef – get into it', an integrated campaign to educate consumers on how to cook secondary cuts. We supported the launch of a new beef product—'Sizzle Steak'— a collaborative initiative to take secondary cuts to market in an easy-to-cook, economical format. Continued improvements in retail presentation and value adding also contributed to the $6.7 billion consumer expenditure on beef this year.
Sam Kekovich once again headed up our lamb marketing efforts driving the most successful retail sales of lamb during an Australia Day period. A new spring campaign 'Falling in Lamb' also helped propel consumer expenditure a further five per cent to a value of nearly $2.1 billion.
While the economic downturn has seen Australian consumers tighten household budgets and look for more economical food options, they remain concerned about their family's health and the environment.
In anticipation of the World Cancer Research Fund (WCRF) releasing a report that attempted to link red meat and cancer, we commissioned a new and independent scientific report during the year: The role of red meat in a healthy Australian diet. We countered the information in the WCRF report and communicated that red meat 3–4 times a week remains in line with Australian dietary guidelines.
The impact of red meat production on climate change was also in the headlines during the year. Unfortunately debate on the issue remains cloudy, misleading and certainly complex. While we do not have all the answers, MLA has invested research funds to produce science-based facts to inform public debate and policy discussions that will have significant implications for the industry's future.
ENHANCING COMPETITIVENESS AND SUSTAINABILITY
The operating environment for many in the industry has never been fiercer. Increasing oil, grain and fertiliser prices and ongoing cost pressures for processors who must continue to meet customer expectations mean all sectors of the industry have been under pressure.
Much of our investment in R&D tends to be long-term (five to 10 years or more) to ensure optimum results. During the year the outcomes from a number of these investments shed new light on how individual enterprises can perform more efficiently, more sustainably and make more money.
The Wambiana grazing trial in North Queensland identified medium stocking rates reduce resource risk, and added 70 per cent more cash surplus, while the five year Grain & Graze project engaged over 6,000 producers and delivered technologies to increase profits by an average of nine per cent while improving land condition.
DNA technologies in genetic improvement programs validated new beef markers for tenderness. We also identified and released new Australian Sheep Breeding Values for ease of lambing and gestation length to improve lamb survival.
In the processing sector, our focus on enhancing eating quality, increasing yields, labour saving and improved safety saw the development of new low-cost meat electronics to reduce eating quality variation in beef and sheepmeat.
INCREASING INDUSTRY CAPABILITY
In collaboration with industry and government, we directly engaged over 15,000 producers across the country in face-to-face learning initiatives during the year. These included More Beef from Pastures, Meat Profit Days and Beef-Up forums, as well as Grain & Graze and Evergraze regional activities. In a key program for Australian sheep producers, we joined forces with Australian Wool Innovation to develop and launch Making More From Sheep, a best practice package of information, tools and learning opportunities.
We launched three episodes of feedbackTV – a DVD mailed out with MLA's member magazine feedback. This new communication channel signposts MLA members to the latest on-farm R&D, marketing and market access activities.
THE BUDGET
We commenced the year with significant uncertainty regarding levy income and reserves due to the impact of the prolonged drought on livestock transactions, particularly research and development funds being below benchmark levels. As a result we took a conservative approach to expenditure in setting the budget for the year.
The last quarter of 2007-08 saw levy income for grassfed cattle, mutton and lamb come in above expectation and this, along with a controlled expenditure program, delivered a surplus of $5.8 million for the year.
Revenue totalled $162.9 million for the year, compared with $161.8 million for 2006-07, an increase of $1.1 million with levy income down $4.3 million offset by an increase in other income of $5.4 million. Total expenditure for 2007-08 was $157.1 million – a decrease of 1.5% on 2006-07 ($159.5 million).
OUR PEOPLE
The professionalism, enthusiasm and commitment of our people are a fundamental pillar of our success. I would like to take this opportunity to acknowledge their dedication that contributes to making the Australian red meat and livestock industry a proud and resourceful business. Their efforts in 2007–08 are reflected throughout the website.
ON THE HORIZON
It was a volatile year for the industry with increased pressure on producers to produce more from less in an environmentally sustainable way. There was also pressure on processors and exporters to compete in an increasingly aggressive global marketplace.
Priorities for next year include:
- targeted environmental research to position the industry well for policy development to mitigate methane emissions
- active and persistent representation of industry priorities for trade agreements with key Asian markets
- delivery of even more advanced animal genetic information.
We value the advice and direction from our stakeholders, particularly industry peak councils, and the Australian and state governments. These important partnerships are crucial for MLA to continue to deliver results for our industry.
David Palmer
Managing Director
