Hunt Partners | Industry Returns from Beef Grading Code

Potential Beef Industry Payout at Current Retail Prices from a Consumer Oriented National Beef Grading System

In calling for a national beef grading system, the Australian Consumer Association (ACA) have argued:

"Consumer confidence in quality is essential to repeat purchasing of a product, which in turn increases per capita domestic consumption and has a positive effect on the industry." (ACA 2003)

Similarly, the Meat Industry Strategic Plan 1996 found that:

Consumer’s willingness to keep on buying red meat is heavily influenced by their recent eating experience. Consistency and palatability are determinative factors in consumer decision-making.
By enhancing consumer confidence in the product, a system which provides correct information about eating performance can: (1) improve per capita consumption; and (2) attract a price premium.
A $1.2bn annual payout could be expected from a system that provides accurate eating quality information to consumers.

Increased Consumption

One extra average sized serve (187g according to MLA figures) every three weeks constitutes an additional 3.2kg per person* consumed annually. At the average retail price of $15.55/kg (source: MLA 2009) the increased consumption would yield an additional $1.079Bn annual return to the industry.

The additional retail consumption amounts to 4.9kg per person in carcase weight usage and would mean a 14% increase on 2008 figures from 35.6kg/person to 40.5kg/per person.

The MISP forecast envisages a slightly higher additional consumption, and can be met or exceeded if the extra serve is 250g. On this basis, annual per capita retail consumption would rise by 4.25kg and per capita carcase weight usage would rise by 6.67kg to 42.3kg.

At $15.55/kg or $3.89 per serve this would give an annual benefit to the industry of $1.443Bn.

Price Premium

Polkinghorne’s butchery is currently selling MSA four star rump at $40/kg. At $10 per serve, just one extra serve per person of this high quality meat every three weeks would give an annual payout of $3.7Bn.

* Population of Australia = 21 832 000