1. "National beef grading will drive down the price of domestic beef."
What they mean to say is that beef grades will drive down the price of poor quality beef currently presented as good quality to consumers.
Lower quality beef constitutes a minority of the total beef product sold domestically. The Senate committee found that it was not surprising that the sellers of beef onto the lower end of the market do not want to pay for a government imposed grading system that highlights the low quality of their product relative to better quality offerings.
The US hamburger market underpins the price of cow Beef, so at worst sellers of old cow beef are looking at losing their domestic premium for cow beef prime cuts that are dumped onto the Australian market.
By contrast, MSA graded beef currently sells at a substantial premium. Rod Polkinghorne, founder of MSA, told the Senate Inquiry that MSA grades result in a $150 to $300 premium per beast. Others have estimated the retail premium on a whole carcass basis for MSA graded carcasses at 39c per kilo.
The issue is whether the reduced profits of a minority of producers should stand as an obstacle to correcting a market failure affecting the industry as a whole. When the interests of consumers are also taken into account, the protection of minority cow beef sellers is unsustainable.
2. "More regulation equals more red tape and should be avoided."
The proposed national grading system will be voluntary but if a retailer adopts the grading code and cheats they will be prosecuted.
The Senate committee recommends AUS-MEAT standards, which are underpinned by legislation, be extended to apply to all domestic producers.
The AUS-MEAT standards are underpinned by federal legislation and industry is adamant that AUS-MEAT legislative underpinning remain in order to maintain the integrity of the AUS- MEAT trading language.
3. "If it ain’t broke don’t fix it - our voluntary eating quality industry codes (the budget beef retail code and MSA) are good enough."
Around 30% of table beef sold to Australian consumers comes from old cows. The voluntary retail agreement for beef from animals with 8 teeth was agreed to by industry in 2002 to forestall the pending introduction of cow beef truth in labeling legislation by the NSW state government. The introduction of voluntary codes are frequently agreed to by industry to forestall regulation.
The Senate committee found that the use of ‘budget’ to describe beef from old cows was at best confusing and worst misleading and said that if industry failed to remove the budget beef description it would legislate to ensure that beef from 8 tooth cows were labeled “old cow beef”.
The committee also found that the current arrangements leaves consumers in a position where eating quality con not be identified until the product is paid for and eaten, and that systematised grading of all beef products would give consumers the necessary confidence in its reliability.
Cattle graded under MSA must come from MSA accredited properties. Currently only 12,500 out of 160, 000 cattle properties are MSA accredited. Last year just over 800,000 out of approximately 3,000,000 head of cattle destined for the domestic market were MSA graded.
For a grading system to be effective all the product needs to be graded. Otherwise the poor quality beef will continue bring down the price of the good quality beef.
4. "Australian beef consumption has stabilised because eating quality standards have improved because of MSA science."
Australians eat 20% less beef today than they did 25 years ago. Per capita consumption in Australia this century is 4% less than in the 1990s and 15% less than the 1980s.
Beef consumption has risen or been maintained in countries with beef grading or slaughter age legislation and fallen in countries such as Australia and New Zealand with no system or with voluntary systems only.
5. "Overall domestic beef consumption by value or volume has remained steady or increased since the 1990s."
The increase in the volume of beef sales is the result of the increase in Australia’s population.
The increase in the value of the sales is the result of increased retail prices charged to consumers.
Prices received by producers for cattle have declined since the 1990s. In real terms the EYCI in May 2009 was 18% below the level that it was 10 years earlier.
6. "The cost of grading and audits will be too high."
In 1996 the Meat Industry Strategy Plan forecast a $1.2bn annual payout to industry from a system which graded eating quality to consumers.
80% of beef sold onto the Australian market is already AUS-MEAT assessed. Auditing costs, will be marginal compared to the potential benefits.
7. "Export markets set the price for the Australian domestic market, so you can’t get a premium price for a premium product."
This argument is put forward by exporters who want to be able to dump low grade beef onto the domestic market if export markets collapse..
Abattoirs currently achieve a premium for MSA graded beef of at least 39c per kilo.
8. "Prime cuts cut from cast for age cows eat well."
Prime cuts from older cows will only make MSA grades if they are vacuum pack aged for 35 to 85 days. But there is currently no audit system to ensure that retailers don’t sell the old cow product earlier.
9. "We will support a voluntary agreement but do not support legislative underpinning."
If the signatories to a voluntary system really intended to comply they would not object to regulations that will impose penalties if they cheat.
The AUS-MEAT system, which under the Senate committee’s recommendation should apply to all domestic producers, is underpinned by legislation and industry is adamant that legislative underpinning remain in order to maintain the integrity of the AUS-MEAT trading language.
10. "The concept of regulated meat grades are outdated. Industry has moved on and the future is branded beef underpinned by MSA."
The Branded Beef Association, which represents the branded beef sector of the industry, supports a national beef grading system that accounts for and describes the entire product. A system that meets the MSA specifications and then ascribes grades/descriptors to the product that does not meet MSA requirements.
11. "We support national lamb grading standards but oppose national beef grading standards."
The same principles apply to national lamb and beef grading standards. It is accepted in relation to lamb that retailers should not be allowed to cheat and misrepresent their product to consumers. Consumers of beef deserve the same protection.