MISP Data & Insights report v2€¦ · rather to identify current state knowledge, issues, and gaps, that inform the future strategic focus for the sector. 2. Purpose This document

MISP Data & Insights Report – working draft 2

Date: 10 May 2019 Intent: For feedback & comment Distribution: RMAC Board & CE0s, Core Design Team

Consultation Draft

DRAFT

Data & Insights Report


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MLA Disclaimer

Care is taken to ensure the accuracy of the information contained in this publication. However MLA cannot accept responsibility for the accuracy or completeness of the information or opinions contained in the publication. You should make your own enquiries before making decisions concerning your interests. MLA accepts no liability for any losses incurred if you rely solely on this publication. Information contained in this publication is obtained from a variety of third party sources. To the best of MLA’s knowledge the information accurately depicts existing and likely future market demand. However, MLA has not verified all third party information, and forecasts and projections are imprecise and subject to a high degree of uncertainty. MLA makes no representations and to the extent permitted by law excludes all warranties in relation to the information contained in this publication. MLA is not liable to you or to any third party for any losses, costs or expenses, including any direct, indirect, incidental, consequential, special or exemplary damages or lost profit, resulting from any use or misuse of the information contained in this publication.

CONTENTS

1. Background .................................................................................................................................................................................................. 4

2. Purpose ........................................................................................................................................................................................................ 4

3. Megatrends impacting global meat & food industries ................................................................................................................................. 6

4. Australian Red Meat Production .................................................................................................................................................................. 8

5. Markets & Consumers ................................................................................................................................................................................ 10

6. Industry strategies & structures ................................................................................................................................................................. 15

7. Trade & market access ............................................................................................................................................................................... 19

8. Animal Welfare .......................................................................................................................................................................................... 20

9. Sustainability, environment, biosecurity & climate ................................................................................................................................... 23

10. Value Chain ............................................................................................................................................................................................ 24

11. Research, Innovation and Adoption ....................................................................................................................................................... 28

12. Capability development & leadership .................................................................................................................................................... 30


1. Background

A foundational component to developing MISP 2030 is robust, factual analysis of the sector’s current state and key issues and drivers. The Australian Red Meat Sector has significant scale, infrastructure, and reach, producing a large volume of reporting, analysis and forecasting. It is not the role or intention of the MISP project to conduct first principles research on specific topic areas nor to review every report available, rather to identify current state knowledge, issues, and gaps, that inform the future strategic focus for the sector.

2. Purpose

This document is intended as a project resource and is not for external release. Its purpose is to summarise key insights from the significant number of reports either provided to, or sourced by, the MISP team. These are grouped within this document according to a data framework (see Figure 1) and information is provided as to the reference and summary data either drawn directly or summarised from the source. It should be noted that this framework has been developed to support the collection and curation of reports for this analysis and is not intended to reflect the strategic themes of the MISP as they may be finally identified and communicated. This development of MISP’s ‘strategic pillars’ will be determined in the co-design sessions with industry participants over the coming months. This document also contains insights relevant to MISP development (see red italics), where report references are grouped with an insight statement as to what this data could mean for MISP. It should be noted that this document does not include data obtained from interviews and workshops held during the MISP development process. It is solely dedicated to the published literature and commentary available. The ‘triangulation’ of this report data with the other research sources for the purpose of validation is a core tool in the MISP design process and will be completed as an input to the futuring phase of the project to be undertaken in May / June 2019.

3. Acknowledgement

The MISP project team gratefully acknowledge the provision of industry reports from RMAC members that formed part of the dataset for this issues review.


Figure 1: Data framework

MISP Data framework

Process• Collect, collate and

maintain a database of reports and publications within key MISP focus areas

• Review reports, draw key insights and maintain references to source

• Outputs from data review are an input into strategy co-design alongside interview and workshop processes

Purpose:A foundational component of developing MISP 2030 is robust, factual analysis of sector current state and key issue drivers. The Australian Red Meat Sector has significant scale, infrastructure, and reach, producing a large volume of reporting, analysis and forecasting. The purpose of the framework outlined here is to define areas of focus where the MISP project will seek and collate information for insights to support MISP 2030 development. It is not the role or intention of the project to conduct first principles research or review every report available, rather to identify current state knowledge, issues, and gaps, that inform future strategic focus for the sector.

Mega trends -global meat &

food

• Population• Food demand• Food trends• Animal agriculture• Global meat trends

Australian red meat

production

• Production by species

• Region• Forecasts

Markets & Consumers

• Market mix • Key market factors• Consumption• Forecasts• Alternative

proteins

Industry strategies structures

• Sector stakeholder mapping

• Strategy reports• National, regional• Collaboration case

studies

Trade & Market Access

• Access issues• Tariff rate Quotas

(TRQs)• Country Specific

Tariff Rate Quotas (CSTRQs)

• Non Tariff Barriers (NTBs)

Research & Innovation

• R&D processes• Innovation

systems• Case studies

Value Chain

• Digital disruption• Future value chain

models• Blockchain etc

Sustainability, Environment &

Climate

• Production impacts of climate change

• Carbon• Water• Domestic and

consumer drivers

Animal Welfare

• Current drivers –domestic & consumer

• Legislative & regulatory

• Scenarios

The focus areas above signify categories within which the MISP project will collate and summarise key current state insights.

Output

• Research report • Data visualisation

Capability development &

adoption

• Practice change and adoption

• Critical skills for the future


4. Megatrends impacting global meat & food industries Summary

• While it is easy to be driven by a near-term focus, i.e. the shorter-term issues that confront each part of the industry on a day-to-day basis, there are significant external drivers shaping global economic, social, and cultural contexts, impacting consumer behaviours and attitudes (megatrends). The pace at which these trends develop, and impact is accelerating. The red meat industry needs an increasingly aligned view of, and response to, these global trends.

• Given the majority export focus of the Australian red meat sector it is important to consider megatrends within specific market contexts. For example, when viewed through a consumer ‘lens’ environmental and animal welfare claims have greater or lesser significance across the range of Australian market destinations. That said, social license with the Australian public to produce in, and export from Australia requires understanding and balancing of Australian domestic drivers and international market requirements.

Insight Data Source

Total world meat consumption is increasing steadily, driven largely by population growth. Increased demand for protein is more than could be sustainably delivered by the global red meat industry – alternative proteins will have a necessary role

Over the last two decades, total global consumption increased at an average rate of 2% per year for sheepmeat, 1% for beef, 4% for poultry and 2% for pork

OECD / FAO - MLA

The world will have 9.7 billion people to feed and clothe by 2050 FAO Future of Food and Agriculture 2017

A 70% increase in global food production is required to feed the global population by 2050

FAO Future of Food and Agriculture 2017

An ageing population, with a threefold increase in people over 80 by 2050, will create new food requirements

“Innovation must address requirements of older consumers – it is a global challenge” - foodnavigator.com

Increased demand for food and pressure on resources to produce it i.e. water, soil etc are at or near the top of every ‘future trend’ list

Rapid urbanisation in developing countries means greater numbers of people are moving to energy/protein dense diets

Megatrends – Investing in the Future – RBC Wealth Management

To meet for increasing population and shifting diets, the world will need to produce 70% more food calories in 2050 than it did in 2006. The rise in per capita food consumption will further contribute to the increase in global demand for food By 2050, it is estimated that almost 50% of the world’s population will live in ‘water-stressed’ areas—a huge risk to predicted growth for


developing economies Other key trends include demographic changes. From an ageing population and a surge in urbanisation to the rise of the middle class in emerging markets, these long-term trends affect food and water consumption, that in turn have consequences for the environment and technology

Growing global population is creating rapid shifts in balance of market power. How might we respond and balance new market opportunities, while maintaining and protecting established markets?

While ‘developing markets’ are predicted to grow substantially in population (primarily India and Africa), many developed markets’ populations are predicted to remain static. As growth declines in developed markets, the emerging markets will gain more and more economic and political power and influence, along with a new generation of consumers, the ‘Millennials’

The Future of Meat – Beef + Lamb New Zealand

Capital investment inflows to ‘AgTech’, ‘Alt Protein’ and ‘Food Tech’ are increasing on a massive scale. A broad spectrum of investor capital from around the world is accelerating innovation in food and agriculture but Australia risks falling behind through a lack of access to capital through agricultural investment products.

Australian agriculture lacks the patient domestic institutional capital and sovereign support of the leading ag nations. Historically, Australian super funds have been reluctant to invest in the sector (only 0.3% of total assets vs ~1% in US) due to issues of investable scale, liquidity, risk-return tolerance and experience. Foreign investors have helped bridge this gap, but face rising pressure from the Foreign Investment Review Board and the Australian public, who question alignment with national interest (note sales of Cubby Station, S. Kidman & Co., Van Diemen’s Land Co. etc.). This capital shortage means Australia must close a funding gap of over $100bn just to maintain its current share of global food exports by 2025

Sovereign Fund for Sustainable Agriculture – The Future Fund for the Bush. QIC. Dec 2018

In the US plant-based protein alternative companies have attracted $16 billion in investment during the last 10 years, including venture capital funding and acquisitions. In 2017 and 2018 alone, some $13 billion was invested in the category, according to new reports from The Good Food Institute. Last year, investors poured $673 million of investment into alternative meat, egg, and dairy startups. An explanation for the increasing investor interest could be the uptick in retail sales of plant-based meat, which grew 23% between 2017 and 2018 and exceeded $760 million.

AgFundernews.com – May 2019

‘Big foods,’ venture capitalists and investors are increasing both the size and speed of their investment in alternative protein, helping ensure it will only be a matter of time before further technical breakthroughs, mass production and scale are achieved



The US food tech scene shows no sign of slowing down as food start-ups raised over $750M in 2017. The trend in alternative protein start-ups is to “keep investing”, suggesting key milestones are being hit & investor confidence is growing

5. Australian Red Meat Production Summary • Persistent dry conditions are impacting producers’ ability to respond to strong global demand signals in both sheepmeat and beef. Under normal

production conditions producers would have entered a period of herd and flock rebuilding, given the market conditions. Initial progress in cattle herd rebuilding has stalled due to the dry conditions and there has been little evidence of any sheep flock rebuilding.

Insight Data Source

While having a small proportion of total global livestock numbers, Australia is a key player in global meat exports

Australia is the world’s: • Largest sheepmeat exporter • Third largest beef exporter • Largest goat meat exporter

Global Trade Atlas / DAWR - MLA

The red meat sector is the 6th largest Australian export industry with significant scale, infrastructure and participants

• $65bn in industry turnover (down 4% yr/yr) • $13.3bn in exports • 82,500 businesses • 438,100 people employed

Ernst & Young, IBISWorld, Global Trade Atlas - MLA

Australian cattle herd rebuilding is stalling due to further dry conditions. However, demand remains strong and should underpin export pricing

The Australian cattle herd was 26.2 million head at 30 June 2017 – up 4.8% year-on-year

ABARES - MLA

90% of the herd comprised beef cattle, while 10% were dairy cattle ABARES - MLA In 2019 the national herd is expected to fall to its lowest levels since the mid-1990s. The dry conditions that swept across NSW and south-west Queensland have undone much of the rebuild achieved since the 2013–2015 drought

MLA Cattle Projections 2019


The Australian sheep flock is currently constrained by dry conditions and would otherwise be rebuilding in size, driven by firm international demand and pricing

The national flock is estimated to have declined by over 4 million head, or 6.1%, by mid-2018 and is forecast to experience a further decline of 3.7% to mid-2019 as many producers are forced to continue destocking as they wait for a turnaround in the weather. Longer term, high prices across both sheepmeat and wool provide a strong incentive for producers to rebuild their heavily depleted breeding flocks once conditions allow The poor conditions that marred 2018 will have a significant impact on sheepmeat supply in 2019, with the lamb slaughter forecast to be its lowest since 2012. Dry conditions underpin the forecast for a 7% decline in lamb slaughter in 2019, to 21.2 million head In the year ahead, many producers will be hoping for some consistent rainfall to help alleviate the pressures associated with high feed costs. A fall in slaughter and carcase weights drives the 7% forecast decline in lamb production for 2019 to 475,000 tonnes carcase weight (cwt). Mutton production will likely see a steeper drop of 16% to 188,000 tonnes cwt

MLA Sheep Projections 2019

The mix of grain-fed feedlot cattle and pasture raised cattle is changing driven by climatic conditions in Australia and strong Nth Asian demand for grain-fed product. There are system and infrastructure issues to consider if this trend becomes the new normal

Record numbers of cattle on feed, driven by dry conditions and low grain prices, have begun to decline as feed costs increase

MLA Cattle Projections 2019

2018 was a significant year for the grain-fed production system, which has played an important role in managing seasonal variability and enabling the continued delivery of high-quality beef to global customers. 2018 was the first time in history that cattle on feed remained above one million head for the entire year, with unprecedented numbers of cattle on feed recorded in both the June quarter (1.120 million head) and September (1.126 million head) Supporting this trend, grain-fed beef exports broke 300,000 tonnes shipped weight for the first time in a calendar year, reflecting record production and continued demand for high quality Australian beef in Asian markets. Feedlot utilisation was >85% for the majority of the year

MLA / ALFA feedlot survey


6. Markets & Consumers Summary • With more than 100 export destinations around the world and an increasingly diverse mix of consumer preferences both within and across markets, it is

more important than ever to deeply understand market drivers and be able to communicate these up and down the red meat value chain.

Insight Data Source

Global red meat demand continues to grow. How might Australia continue to diversify and pursue the highest value markets e.g. EU/UK lamb market?

• Australia’s red meat and live exports generated $13.3 billion last year • Australia’s market diversification promotes competition among export

markets for Australia’s range of red meat products and livestock • Australia is in a prime position to take advantage of global growth in red

meat consumption. Australian red meat is currently exported and enjoyed in more than 100 countries around the world

Regional market rankings (2017 data):

Beef Lamb/Mutton Goat 1. Japan 2. United States 3. South Korea 4. China 5. Indonesia

1. China 2. United States 3. UAE 4. Malaysia 5. Saudi Arabia

1. Nth America 2. Nth Asia

MLA State of the Industry 2018

How might we position Australian Beef as a premium protein within a changing and complex global food market?

The outlook for global beef consumption is positive, largely underpinned by growth in population and household wealth in developing markets, particularly Asia. While Australian beef faces a number of headwinds, particularly around remaining price competitive, there are many opportunities for targeted growth Growing household incomes are providing many consumers the ability to increase protein consumption, with those shifting into the middle-upper income brackets often seeking to improve the quality of meat they consume • In developed markets, consumers are seeking differentiated segments

within the beef category – such as grass-fed and grain-fed product, certified breeds or raising claims

Global Beef Markets Snapshot - MLA 2019


• In many mature markets, growing consumer interest and awareness of provenance, sustainability, animal welfare, food safety and traceability provide messaging/positioning opportunities for Australian beef brands and underpin ambitious industry-wide programs for Australia to differentiate itself

• The high price of beef, compared to competitor proteins such as chicken and pork, will continue to test growth and keep the category sensitive to economic conditions and consumer purchasing power

• Growing production and exports from key competitors, particularly the US and Brazil, will intensify competition in coming years, especially in Asian markets

How might we maintain and grow existing sheepmeat markets while developing new growth in markets where per capita sheepmeat consumption is low?

The outlook for global sheepmeat consumption is positive, driven largely by growth in population and household wealth in developing markets. While sheepmeat is experiencing some challenges, particularly around affordability and familiarity, there are many opportunities for targeted growth • Global sheepmeat consumption will benefit from expected population and

economic growth, with eight of Australia’s top 10 sheepmeat markets expecting gross domestic product growth over 2% in the coming year

• Growth is highest in Asia, the Middle East and Africa, where sheepmeat is more widely consumed and a greater number of consumers are shifting into the middle-upper income bracket and seeking higher quality meat

• In most developed markets, sheepmeat remains a niche protein with low per capita consumption, which can be considered both a challenge and opportunity, especially in wealthier markets like the US

• Sheepmeat’s high price, compared to competitor proteins such as chicken and pork, will continue to challenge growth and make demand susceptible to economic shocks

• Messaging around provenance, sustainability, animal welfare, along with food integrity and transparency, are opportunities for Australian brands to consider targeted consumer communication.

• Australia has only one major export competitor – New Zealand - whose production is forecast to flat line in coming years. This will provide opportunities for Australia to capture a greater share of high value global markets

Global Sheepmeat Markets Snapshot - MLA 2019


• China, the world’s largest producer and consumer of sheepmeat, has emerged to become the leading importer over the last decade and has underpinned the recent rise in global prices. China’s domestic production is cyclical and a downturn in import demand would impact global markets

How might we develop higher value markets for Australian goatmeat?

Goatmeat is widely consumed around the world but remains a largely niche part of many consumers' diets, in demand mostly among key ethnic segments. Per capita consumption varies greatly between countries and is largely underpinned by local production as well as tradition. While population growth and increasing household wealth provide a broadly positive outlook for global meat consumption, Australian goatmeat needs to overcome some 'key barriers to purchase' to tap into opportunities in developed markets • Goatmeat, when compared to other proteins, has the advantage of no

religious taboos and, in some cultures, has a unique role in religious and traditional family events

• Its niche status can be considered a challenge, but also an opportunity in markets where there is potential to ‘dial up’ health and nutritional credentials

• Consumers’ lack of familiarity with goatmeat and consequent low confidence preparing it, remain challenges for goatmeat across many markets

• Australian goatmeat production and exports are exposed to the somewhat volatile supply of the rangeland goat flock and seasonal conditions

• Goatmeat is considered most suitable for slow, wet cooking methods like curry, and as such is strongly associated with Indian, Pakistani and Nepalese cuisines. On menus, goat is often interchangeable with sheepmeat and other red meats

Global Goatmeat Markets Snapshot - MLA 2019

The development of alternative proteins to red meat is accelerating rapidly towards market scale with growing consumer support and investment. How might we position Australian red meat in future as the natural, premium, sustainable, eating experience?

The food industry, including grocery and dining, all believe alternative proteins are in demand and it is only a matter of time before they achieve mass production to facilitate wider distribution and more competitive pricing. In addition, the casual dining and fast food industry have indicated that once sufficient volumes are available and when consumer demand hits critical mass, there is significant potential for them to shift their menus and widely offer these products as alternatives



Key themes with respect to alterative proteins include: 1. Global and Govt. institutions have put the impact of meat consumption

on the agenda 2. There is growing support for a plant protein based diet from the

medical profession 3. The flow of capital into alternative protein isn’t slowing down 4. The technology to produce a consumer ready alternative protein

burger is here and is pushing for commercial scale 5. A new set of influencers are creating a new cultural narrative around

meat 6. Millennials eating patterns are reshaping the food industry 7. The market is responding to consumer demand for new products and

services

Changing market responses to ethical drivers will require more market specific analysis and reporting to support in-market positioning. Effective intelligence back through the value chain will be required to support more agile alignment of production, processing, marketing and delivery systems

The number of ethical claims in meat, poultry, fish, eggs and meat substitutes (e.g. plastic packaging, environment or animal friendly) has increased significantly over the last 5 years The rise of ‘ethical claims’ and

their marketing potential across categories – FoodNavigator.com What makes a food brand ethical? Mintel 2018 Ethical food & drink – Mintel 2019

UK sales of ethical food and drink have increased 43% over five years (to 2018) to 8.2 billion pounds in value. These are made up of a range of ethical certified products. But while ethical food and drink is growing in popularity, Mintel research reveals that cost is a significant barrier, as seven in ten (70%) UK adults say that eating sustainably/ethically is harder when money is tight. Confusion is having an impact too, as six in ten (60%) UK adults say that it is difficult to know the differences between the various sustainable/ethical schemes. While consumers across age groups are increasingly concerned about animal welfare, younger generations are particularly passionate about the issue. Millennials and Gen Zs show a willingness to apply more rigorous moral standards to their food choices than older generations, driving interest in ‘virtuous’ diets.


How might we convey fact-based messaging on our integrity of production in the face of activism?

There is considerable (and growing) focus in the literature focused on the environmental impact of how food is produced and distributed, especially red meat and pork. This focus aligns with growing advocacy among activist environmental groups. They seek to draw community and policy maker attention to the environmental impact of producing, distributing, and consuming some foods, including red meat

MLA Data sources

Might we keep animal welfare out of trade policy agreements by adopting transparent systems partnered between regulators and industry?

Animal welfare in the food supply chain continues to be a theme in the international literature. In the literature, animal welfare is analysed as a community concern, and a concern of food and health ethicists. Elements of the literature note that the trade policies of some economies, and industries in those economies, have required some changes in how meat is produced, including policy that may prevent import of sheep products from markets in which mulesing of sheep is practiced, for example.

Who are our meat ‘cheerleaders’?

The influence of ‘celebrities’ on what individuals eat and how food is prepared, including ‘celebrity chefs’ and ‘lifestyle gurus’, most of whom have no nutrition or scientific training, is a theme in the literature (confirmed during stakeholder interviews)

How might we better understand the role and potential for social media in influencing consumer views over meat

Consumer and citizen behaviour across social media platforms have amplified discussion about food and nutrition online, including uninformed claims about food and nutrition across the world, creating competition with evidence-based food and nutrition content There is considerable opportunity for food and nutrition stakeholders to better understand the influence of social media content on consumer and community food and dietary choices The qualities of meat as part of a healthy diet continue to be debated across the literature. While some of the literature raises concern about the negative health outcomes related to eating red meat – processed and unprocessed – the nutrition and health benefits of lean red meat in human diets is a strong theme

What could a ‘grand narrative’ look like? Perhaps partnering with competitors in this evidence base?

Analysis of the literature (confirmed during some stakeholder interviews) concludes that a “Grand Narrative” about the role of lean, red meat in healthy, balanced diets is not evident. Because of this, and the disrupted news media and information environment upended by the global use of social media


platforms, there is an opportunity for such a narrative to be crafted and anchored in the evidence-base. A Grand Narrative for red meat (which we note is not a ‘PR’ campaign) may become more pressing as the connectivity between activist groups opposed to red meat production and consumption is being facilitated by the access and use of social media platforms

7. Industry strategies & structures Summary • This section references reports that, in some form, make reference to future strategy for the Australian Red Meat Industry

Insight Data Source

MISP 2020 was completed in 2014. The majority of the strategic drivers identified in MISP2020 hold true after five years although the emphasis on social license issues around animal welfare and environment has increased sharply and the potential disruption from alternative proteins has emerged from nothing during this period

MISP 2020 identified four key pillars with associated economic modelling to identify the future benefits of delivering against the plan. MISP 2020 forecast an additional $13bn in additional net value to be derived by 2030 through a combination of avoidance of $6.2bn of downside risk and realisation of $6.6bn in upside opportunity.

PILLAR

Baseline Downside

risk Upside

opportunity

Net MISP benefits

$m $m $m $m BCR

Consumer and community support 48,320

48,320

-3,898 220 4,118 13.4

Market growth and diversification -277 2,966 3,192 5.4

Supply chain efficiency and integrity -2,086 1,361 3,447 6.4

Productivity and profitability 0 2,113 2,113 6.9

TOTAL PLAN -6,211 6,660 12,871 7.4

RMAC – Meat Industry Strategic Plan 2020 - MISP

BISP2020 is the grass-fed beef industry’s response to MISP2020 and not intended to simply mirror all the activities and actions listed for the red meat industry. BISP2020 emphasises the need to implement significant changes that


The development of separate but aligned strategies for beef, sheep and goat industries was part of the previous MISP ‘architecture’. How might we simplify the red meat strategic landscape for MISP2030?

will help to maximise the value from industry-funded services and reposition the industry for long-term profitability. Achieving these changes requires strong leadership and a new level of collaboration across value chains. It involves the peak industry councils leading by example with adherence to clear roles and responsibilities by all parties Top priority areas identified in BISP2020 were:

1. Market and promote Australian beef-export markets 2. Welfare of animals within our care 3. Optimising product quality and cost efficiency 4. Building industry capability

Beef Industry Strategic Plan (BISP) 2020

The SISP 2020 plan describes the priority activities that need to be undertaken over the next five years to ensure the sheep industry’s vision is achieved. From these, the following outcomes are the most critical:

1. Systems in place that allow information flowing up and down the value chain to aid decision making and improve quality at all stages

2. Reduced losses in the national flock including marking rates increased by 5 percentage points and ewe mortality rates decreased by 1 percentage point

3. The successful definition and marketing of a yearling product: 1.39 million head underpinned by Meat Standards Australia (MSA) without compromising the lamb category

4. Improved access of Australian sheepmeat to key global markets: new market opportunities valued at $61 million by 2020 and $334 million by 2030

5. The establishment of a collaborative sheep innovation centre to succeed the Sheep CRC in 2019

6. Continuous improvement in product quality: quality increased by 2 MSA consumer points by 2020 whilst maintaining or improving lean meat yield

Sheep Industry Strategic Plan (SISP) - 2020

The Australian goatmeat and livestock industry will have a secure future as an innovative, profitable and resilient world leader in goat production, through:

1. Effective, visionary industry leadership supporting cultural change 2. Stabilisation of the supply base 3. Development of strong, efficient supply chains

Goatmeat & Livestock Industry strategy


4. Maintaining and improving market access KPIs to support the assessment of progress are:

1. By 2017, novel and cost-effective solutions identified to assist producers in increasing business skills and capacity to profitably and practically apply new research and development

2. 40% of producers who have participated in programs to improve their business practices have demonstrated their intent to change and the impact measured

3. On-farm production systems understood and benchmarking undertaken at an industry level

4. By 2020, achieve productivity growth above baseline levels of 0.5%

The issues of strategy and structure for the Australian Red Meat Industry are closely linked. Both are required to ensure the ability to respond to today’s challenges. How might we portray these as ‘two sides of the same coin’ – delivering a better red meat future?

The Green Paper represents the findings of the Red Meat Reform Taskforce on industry views such as to how to build a better future for Australia’s red meat industry through reforms to the Red Meat Memorandum of Understanding (the MoU) and the associated architecture (or industry arrangements) of the red meat industry There is a growing recognition from players in the red meat value chain, from paddock to plate, that the industry could do better and take a bold leap forward – that it can take control and shape its own future rather than respond reactively to events and challenges that may force others to take control The current governance arrangements appear to accept unnecessary divisions between supply chain participants While research and development in the red meat sector are world class, the relative investment in relation to comparable industries is relatively low and declining. This is significantly reflected in low adoption rates for innovation The key question for the red meat industry to answer is whether the Red Meat MoU remains fit for purpose, and how is it to be maintained for the next 20 years

Towards a better red meat future – A green paper for the Red Meat MOU


If the many industry bodies, companies, and private individuals that support the industry through activities such as research and development, marketing and advocacy do not have a clear and agreed framework and narrative for how to work together to advance its future, the industry is unlikely to achieve its growth objectives The Taskforce has formed the view that change in the industry and the markets it services will be significant and are likely to accelerate in the next two decades, therefore, a “do-nothing” option may not be sustainable. It has identified four options for consideration: • Option 1: Improvements to existing MoU - This option would involve

contemporary redrafting, specific and piecemeal changes to the MOU • Option 2: Law of the jungle - The MOU is no longer required, and RMAC, as

custodian of the MoU, is consigned to history • Option 3: Merging of the functions of service providers and peak industry

councils with access to levy funds and representation • Option 4: Revitalised red meat industry led by a new organisation

A potential change in Government in the May Australian federal election will present opportunities for the red meat sector to increase engagement.

A Shorten Labor Government will develop and implement a Strategic Red Meat Industry Plan. The key objectives of the plan will be reducing costs and improving the sector’s international competitiveness, increasing domestic processing capacity, security of product supply, and the availability of an appropriately skilled workforce. Input from key stakeholders will be critical to the success of the plan. Through our consultations with key stakeholders Labor has identified the following challenges: • Increasing competition in global markets • Tariff and non-tariff barriers to trade • Australia’s climatic conditions • Securing producer returns sufficient to maintain supply • Workforce and cost issues in the processing sector • Productivity performance • Growing and maintaining Australia’s herd size in a more challenging

climate and potentially, declining natural resource base • Rising community animal welfare expectations • Changing consumer preferences

Australian Labour Party – Red Meat Strategy Discussion Paper - 2019


These consultations have also identified opportunities including: • Rising demand for high quality, clean, green, safe and ethically produced

red meat product and Australia’s reputation for providing that product • Our existing market access framework • Potential spare capacity in Australia’s meat processing sector • A well developed and funded research and development architecture • Significant experience and knowledge in both the production and

processing sectors, backed by a strong research architecture

8. Trade & market access Summary • Access to international markets is a critical factor in the future success of the industry. Changing global trade alliances, geopolitics, and consumer

influences on production practices create risk and uncertainty. Efforts to improve market access have delivered significant benefits to the industry over recent years. Increased stakeholder recognition and support for market access activities will be an ongoing and increasingly important success factor for the future.

Insight Data Source

Free Trade Agreements are expected to deliver billions in benefits over the next 20 years

The industry is continuing to benefit from the significant gains made in free trade agreements (FTAs) with China, Japan and Korea


Brexit represents an opportunity to negotiate Australian red meat access to the UK and develop a new trade agreement with the EU, where meat trade access has seen little or no liberalisation in 40 years

MLA Market Access

Non-tariff barriers continue to add significant cost to the Australian Industry

Non-tariff barriers (NTBs) impose significant costs on the Australian red meat and livestock industry. They reduce trade volumes and/or diminish product returns with the annual negative impact value estimated to be approximately $2.5 billion (reduced from 3.4bn as published due to progress in the Middle East and Indonesia)


Priority NTBs include: • accreditation of additional export establishments to supply China • access for chilled product into China



• shelf-life conditions in the Middle East • global Halal issues

9. Animal Welfare Summary • Animal rights activism and a move towards greater societal awareness of animal welfare has become the primary issue for the industry to address. • The industry is moving to adopt more transparent and independently validated welfare systems. • Live export is the primary focus for the animal welfare debate but this is extending to feedlots and processors.

Insight Data Source

While a very large public issue, animal welfare concerns have not impacted meat consumption in Australia. Price has however

Australian meat consumers most commonly reported reducing consumption of beef in the last 12 months (30 per cent); followed by lamb (22 per cent), pork (14 per cent) and chicken (8 per cent). The following factors were associated with reductions in meat consumption: concerns regarding price and personal health; age and household income; and food choice motivations related to personal benefits, social factors and food production and origin. Main reasons motivating meat-avoidance were concerns regarding animal welfare, health and environmental protection.

Is anti-consumption driving meat consumption changes in Australia? - Malek, Umberger & Goddard, University of Adelaide

AHA have a stakeholder role and should be engaged in the MISP

Animal Health Australia’s (AHA) role in the animal welfare continuum is contained to issues that may impact on animal production, trade and market access and community social licence

The Role of Animal Health Australia in Livestock Welfare – AHA fact sheet

Are AHA members (the industry) sufficiently engaging AHA as a participant in developing sector wide, coordinated animal welfare initiatives?

AHA’s functions in animal welfare: • To provide leadership through collaboration and coordination to

facilitate solutions for livestock welfare issues where requested by members

• To manage collaborative projects for livestock welfare on behalf of members

• To contribute to the development and communication of livestock welfare policy initiatives by members

An independent panel recommends a significant move to change from a mortality

The report recommended that in moving from a heat stress risk assessment (HSRA) framework focused on mortality to one focused on animal welfare,


measure to a temperature based KPI for live sheep exports

wet bulb temperature (WBT) should be used as the criterion to ensure exported sheep do not suffer poor welfare outcomes due to excessive heat load. This is the best criterion because WBT most closely influences the physiological impacts of heat load on the animal, and because there is more data available documenting animal responses to varying WBTs than for other criteria. The recommended WBT limit for a standardised shipper sheep (56 kg adult Merino wether, body condition score 3, zone 3, winter acclimatised, recently shorn) is 28oC. This threshold is based on the data evaluated by the panel that consistently indicates an unrelenting challenge to homeostasis once sheep are exposed to WBTs above this value. This limit conforms closely with the heat stress threshold derived, but not currently utilised, in the industry heat stress risk assessment model. This provides a straightforward means of implementation, including calculated adjustments within the model for different classes of sheep based on breed, bodyweight, body condition, wool length and acclimatisation.

Heat Stress Risk Assessment Draft Report by the Independent Heat Stress Risk Assessment Technical Reference Panel December 2018

Sheep live export viability remains in doubt as the industry debates the use of a wet bulb temperature limit (see above) for shipments to the Middle East

Live sheep exports from Australia to the Middle East would be formally banned in June, July and August in 2019, as part of proposed conditions released for comment by the Department of Agriculture and Water Resources. A proposed order prohibiting sheep exports from June to August is consistent with the three-month moratorium suggested by the Australian Livestock Exporters Council late last year. The conditions also require vessels to record on-board wet bulb temperatures, as the industry debates the validity of a 28oC wet bulb temperature upper threshold on Middle East shipments

New conditions on Middle East live sheep exports proposed – SheepCentral.Com March 2019

Public concern over animal welfare requires a strategy that is a combination of doing the right things and being more transparent. This must be broader than just a focus on the live export trade

Consistently meeting the needs of consumers and the broader public while maintaining a sustainable industry will be an ongoing challenge. Hence there is an urgent need for open and transparent management that provides good animal welfare outcomes and demonstrates aligned values around the care of animals

Development & assessment of livestock welfare indicators – Wickham, Fleming & Collins,

Currently only two indicators are used by industry or stakeholders – on board mortality, and non-compliance with ESCAS (Exporter Supply Chain


Assurance Scheme). These are too broad in nature, do not demonstrate enough commitment to the welfare of the animals involved and are taken too late in the supply chain process to enable change for a current shipment of stock. Furthermore, the public are seeking more information about the supply chain and voyage conditions as they demonstrate a heightened concern for all animals in the primary production system, and those in particular in the live export industry (LEI). The industry can address these concerns by providing more transparency and increased monitoring of welfare as demand for ethical production systems will increase.

Murdock University, MLA & Livecorp Feb 2017

Our recommendation is to value add to current practice carried out during transport and in lairage by establishing a benchmarking system (QA dashboard)

Industry assurance systems should be responsive to changing public and consumer expectations, providing discoverable evidence for awareness and communication of performance

In 2011, the Australian Government introduced a new regulatory framework for the live export industry that covers the entire export supply chain in overseas market places from the point of disembarkation to the point of slaughter. The Exporter Supply Chain Assurance System (ESCAS) places the responsibility on Australian exporters to maintain control and traceability of livestock and to ensure measurable animal welfare outcomes in-market

Livestock Global Assurance Programme – LGAP. Summary to final report. MLA & Livecorp

Livestock Global Assurance Programme (LGAP) has been designed to provide assurances that animals continue to be treated in accordance with the ESCAS Animal Welfare Standards for Australian livestock, from discharge up to and including the point of slaughter in-market. LGAP is not proposed to be a form of self-regulation and is not intended to dilute ESCAS which remains the ongoing regulatory framework for livestock exported from Australia covering animal welfare from discharge in-market to the point of slaughter. Rather, LGAP has been developed to strengthen the assurance sought through ESCAS and strengthen the commitment, oversight and management of welfare more proportionately along the supply chain through operators (i.e. exporters and importers) and facilities (i.e. feedlots, farms and abattoirs)


10. Sustainability, environment, biosecurity & climate Summary • Issues of climate change, environment and biosecurity are closely linked • These are of increasing significance overall, but vary between markets

Insight Data Source Climate change will further alter production systems in Australia. There will be more pressure to finish animals in fed systems. How might we increase resilience to weather impacts and variability?

A predicted increase in temperatures of 1.0-2.5°C in Australia by 2070. Wet years are likely to become less frequent and dry years and droughts more frequent

CSIRO - How is climate likely to change in the future?

The Australian Red Meat Industry could be the global exemplar of alignment with the FAO’s vision for sustainable food and agriculture – the UN sustainable development goals

The report details a vision for sustainable food and agriculture, by mainstreaming sustainable food and agriculture through five key principles:

1. Increase productivity, employment and value addition in food systems

2. Protect and enhance natural resources 3. Improve livelihoods and foster inclusive economic growth 4. Enhance the resilience of people, communities and ecosystems 5. Adapt governance to new challenges

Transforming Food & Agriculture to achieve the SDG’s – 20 interconnected actions to guide decision makers - FAO 2018

The Australian Beef Sustainability Framework provides a model for expansion and broader value chain integration.

Definition: Sustainability is the production of beef in a manner that is socially, environmentally and economically responsible. We do this through the care of natural resources, people and the community, the health and welfare of animals, and the drive for continuous improvement Six focus areas have been identified by the Beef Sustainability Framework from 23 wider priorities

1. Animal husbandry techniques These techniques include castration, horn removal (dehorning), branding, and ear marking. The industry aims to find alternatives to invasive practices (i.e. breeding selection for the polled gene) and where practicable administer pain relief before carrying out necessary husbandry procedures

2. Profitability across value chain To be economically sustainable the industry must generate a positive rate of return over the long-term on all capital used in cattle raising and beef

Australian Beef Sustainability Annual Update - 2018


production. Rate of return is measured by a rolling average of farm business profit, total factor productivity across the value chain and cost of production

3. Balance of tree and grass cover Well-managed landscapes and cattle production are not considered mutually exclusive. The beef industry is working to ensure protection of high-value conservation to better understand and capture mutually beneficial practices

4. Antimicrobial stewardship Maintaining the efficacy of antimicrobials so that infections in humans and animals remain treatable is of critical importance. Antimicrobial stewardship aims to improve the safe and appropriate use of antibiotics, reduce patient harm, and decrease the incidence of antimicrobial resistance

5. Manage climate change risk This covers greenhouse gases emitted along the beef value chain, including methane through cattle digestion, fertiliser application and fossil fuel use (both on-farm and in processing), measured by kg CO2e emitted when raising and processing beef, and carbon capture and sequestration

6. Health and safety of people in the industry In recognition of the significance of the wellbeing and safety of those working in the beef industry, the SSG added a sixth priority area for action

11. Value Chain Summary

• More market connected and responsive value chains are driving the global food industry. • Recognising the complexity of the red meat value chain, across seasons, markets, and consumers is vital.

Insight Data Source

The impact of ongoing dry conditions and the risks to the live export industry would have a major impact on existing value chains if realised

The live cattle export trade contributes a vital element to regional economies across cattle production regions, with particular importance in the Northern Territory and north of Western Australia. The vast area of Northern Australia is well suited to breeding cattle, but has limited capacity to fatten cattle

Value analysis of the Australian live cattle trade - key highlights


In contrast, the fertile area of South East Asia has the ability to fatten cattle, but limited space with which to breed cattle. The export of live cattle from Northern Australia to South East Asia aligns with each region’s natural advantage. It allows tropical breeds that are well suited to the Northern Australian climate to be delivered into an Asian market that has a preference for this type of breed, to the benefit of all supply chain participants When drought arrives, Australian cattle farmers become extremely vulnerable and are often faced with a ‘must sell’ scenario. The live export sector contributes to the effective management of the resulting destocking program Over the long term, live exports as a percentage of slaughter rests between 8 – 12%. During the severe drought of 2014/15, Australian cattle farmers aggressively destocked the herd. While slaughter levels increased to maximum capacity, live export also played its part, increasing to 15.4% as a percentage of cattle slaughtered. As a competitive buyer within the beef supply chain, the live export industry is able to support domestic cattle prices at times when the market is saturated with stock, providing an alternative sales outlet for Australian farmers liquidating their herd The live cattle export trade sustains a raft of industry support services including veterinary, transport and agency businesses. This is identified across Australia but is particularly important in the vast expanse of Northern Australia where services are separated by often significant distances. Any reduction in the trade would place enormous pressure on the continuation of these services, particularly in remote communities where the live cattle export sector is the only, or one of the few, industries offering employment opportunities, particularly in indigenous communities

Increased use of technology and data within the value chain will improve responsiveness and reward adopters

Key trends include: • Producers will operate within sophisticated value chains • Production will be driven by branded products and potentially more

locked into the “BRAND”

From Big Data to Big Decisions – MLA, Abares 2016


• Successful producers will: o Manage and utilise information to make informed decisions o Embrace technology changes o Manage more animals with less labour

• This will challenge the traditions of livestock production and the basis of value chain competition

The vast geographic extent of the Australian red meat industry requires new and ongoing investment in transport infrastructure to remain competitive

The efficiency of the transport supply chain is a source of major Australian export price advantage if planning, infrastructure investment and regulations are optimally aligned. Conversely, overall sector competitiveness suffers greatly from poor transport outcomes ROAD: Road freight is the dominant land transport mode for livestock and meat products. In many places road freight inefficiencies can be overcome by innovative new vehicles such as the A-Double truck trailer combination. While the vehicles are available, regulatory and investment barriers to road access block the productivity on offer: insufficient matching of the latest high-productivity vehicles with appropriate road networks is a significant drain on productivity. In many instances, State and local governments continue to oversee safety and productivity-sapping breaks in network interoperability via inconsistent vehicle access regulations PORT: Seaports and the shipping interface are critical infrastructure and at risk of monopoly pricing abuse, in line with recent ACCC comments. Road and rail approaches to seaports constitute the largest single cost to moving a container through the port. Where road freight deliveries to ships do not arrive at optimal weights, significant productivity is lost. This places obligations on government to retrofit key supply chains to accommodate the highest productivity vehicles. Some of these projects are likely to be worthy of consideration as national priority projects RAIL: Rail remains an important freight mode especially in Queensland and to major seaports. The viability of inland rail for the industry will rest on matching this rail with highest productivity road freight connections, as well as resolving the direct full cost recovery pricing of interstate road freight operating on highways in direct competition with Inland Rail

Australia’s red meat freight supply chain: Challenges to sector productivity, opportunities for planning and investment reform: A report for Meat and Livestock Australia in alliance with AMPC/RMAC September 2017


AIR: Airfreight is a growing part of the export value chain but experiences less physical supply chain pressures but relies heavily on efficient customs and related processes Recommendations:

1. In the short term, resolution of many smaller-scale supply chain problems in regional areas can be achieved through reinstatement of programs which fund transport improvements with strong economic credentials across local government boundaries. The former Auslink Strategic Regional Program was a successful and worthwhile template in this respect and should be reinstated

2. In the longer term, a three-step process encompassing all transport modes for the Commonwealth in relation to the livestock and red meat supply chain should be enshrined in the National Freight and Supply Chain Strategy with respect to agrifood growth:

• First, identify and publish the key red meat networks, efficient network breakages that exist in them and examine better solutions for these tasks at an infrastructure and regulatory level - including new investment models to overcome the problem

• CSIRO’s Transit model can and should play a larger role in developing better infrastructure solutions in the supply chain in support of this objective

• Match highest-productivity and safety freight vehicles to upgraded key networks without network breakages wherever possible. In road freight, such breakages should be viewed in the same way as damaging ‘break of gauge’ rail inefficiencies and resolved accordingly wherever possible

New technologies have potential to deliver benefits across a number of issue areas – i.e. productivity, profitability and animal welfare

GPS tracking devices were deployed on a small number of animals in larger herds or flocks across seven extensive grazing operations. Five case studies explored the impact in relation to livestock management and two explored value in other parts of the industry. Producer and industry partners collaborated with the research team to analyse the data and convert it into

Demonstrating the value of animal location and behavior data in the red meat value chain - CQUniversity and ACIL Allen - MLA


meaningful information which demonstrated how these systems might be used to bring value to these operations Across all the case studies a number of key applications were commonly reported with the understanding of long-term spatial landscape utilisation considered universally valuable. Other applications of potential value involved the detection of important animal health and behaviour issues Each industry participant had unique issues that they considered important and for which they considered a live location, behaviour and state system (LBS)could provide alerts from which they could derive financial benefit. Producers also articulated the potential non-financial value around “peace-of-mind” which LBS systems might provide them. The value of LBS systems to provide an impact into social perceptions of animal welfare was also commonly reported

12. Research, Innovation and Adoption Summary

• Thin capital markets for investment, and low adoption rates for new (or even old) technology are significant issues for the industry to address

Insight Data Source

Large Investment inflows from outside of the traditional sector will drive changes in scale, innovation and market responsiveness

The Agtech sector continues to draw record investment as VCs and other investors seek to finance solutions to the growing issue of food security amid a rapidly growing global population VCs are particularly attracted to technology and innovation that helps provide more scale, sustainability and predictability in agriculture, a sector known for its unpredictable weather and market volatility

KPMG – venture pulse - 2018

How the industry adopts a new, fit-for-future, integrated approach to innovation will be critical to delivering transformation through

Ag Innovation recommendations:


the MISP. This will need to consider the overall ecosystem, funding, collaborative practices, adoption processes, and infrastructure for innovation from farm to fork

1. Strengthening ecosystem leadership, cohesion and culture: Stronger ecosystem leadership and cohesion across Australian agricultural innovation will generate greater and more diverse outcomes, driving our global competitiveness through clear strategic direction and increased collaboration

2. Funding and investment: Growing and improving the balance of investments will help the Australian agricultural innovation system to deliver both incremental and transformational innovation by addressing cross-commodity challenges, and targeting economic, environmental and social outcomes

3. World-class innovation practices: Establishing world-class innovation practices through collaboration, entrepreneurship and ambition will be critical in order to maximise opportunities from investment in agricultural innovation

4. Strengthening regions: In the future, regions will play a greater role in Australian agricultural innovation, to fully realise its benefits and maximise our innovation uptake

5. Next generation innovation platform: Improving the foundations of Australian agricultural innovation, including data, physical infrastructure and the regulatory environment, will support the transformation of our agricultural sector into the future

Agricultural Innovation – A National Approach to Grow Australia’s Future – EY 2019

A new approach to adoption and uptake is required to keep pace with innovation and demonstrate connection to market needs

Clear end-to-end adoption pathways enable the innovation system to be more responsive to end user needs and foster an environment where ideas are applied to real situations Lack of information and uncertainty about benefits of innovation is a barrier to adoption Introduce requirements for research funding applications to include commercial and adoption outcomes Strengthen the extension and adoption of innovation by enhancing farming systems groups


13. Capability development & leadership Summary

• There are capability shortages in all parts of the industry from farm to market, that unless addressed will limit industry growth

Insight Data Source

Labour shortages are a critical concern for both the livestock production and red meat processing sectors

Beef and sheep producers confirmed that shortfalls in labour represented one of their primary concerns for the year ahead Most Australian meat processing plants are operating at 90% of capacity or less. The aim of these plants is to operate at 100% capacity, but this would require almost 3,000 extra workers

NFF survey AMIC survey

Capability gaps are limiting industry potential throughout the value chain

Build capability to better inform decision-making and increase the speed of innovation and adoption

Agricultural Innovation – A National Approach to Grow Australia’s Future – EY 2019

Encourage diversity of capability and promote the future of the agriculture sector to improve innovation outcomes Foundational capability gaps at both commercial and farming levels are inhibiting agility and resilience

A new approach to adoption and uptake is required to keep pace with innovation and demonstrate connection to market needs

Clear end-to-end adoption pathways enable the innovation system to be more responsive to end user needs and foster an environment where ideas are applied to real situations Lack of information and uncertainty about benefits of innovation is a barrier to adoption Introduce requirements for research funding applications to include commercial and adoption outcomes Strengthen the extension and adoption of innovation by enhancing farming systems groups

There are many capability building activities already within the red meat industry but future needs suggest much more is required in the areas of collaboration, and innovation

A recent review undertaken across all RDCs suggests that programs focused on the following factors will be vital to future capacity building efforts:

• Collaboration: o Agricultural success will increasingly be driven by effective

collaboration, by bringing together people with complementary skill sets

• External disciplines:

Delivering learning and development opportunities across the Rural Research & Development Corporation landscape – Rural RDC Prospectus 2018-19


o With its increasing complexity, the agriculture sector needs to attract people from disciplines outside agriculture, such as IT, engineering, finance and design

• Services sector: o As an outcome of the two previous trends, the agricultural

services sector will continue to grow in scale and importance. To be effective, these services will need people with agricultural expertise and leadership skills

• Innovation pathways o To support farm innovation, RDCs need to find new ways to

help producers respond to changing technology and markets • Corporate Partnerships

o Corporate supporters want access to potential employees and/or service providers, and leadership networks

Documents

MISP Data & Insights report v2€¦ · rather to identify current state knowledge, issues, and gaps, that inform the future strategic focus for the sector. 2. Purpose This document