The Aggregate Economic Benefits to the Australian Beef Industry from the Adoption of Meat Standards Australia: updated to 2010/11

Abstract

Meat and Livestock Australia and the Cooperative Research Centre for Cattle and Meat Quality funded a major R&D program in the mid 1990s to investigate the relationships between observable beef and cattle characteristics, cooking methods and consumer appreciation of beef palatability. Out of this R&D program grew the Meat Standards Australia (MSA) voluntary meat grading system which was aimed primarily at providing an accurate prediction of beef eating quality for the domestic market. The MSA system commenced operations in 1999/2000. The gross benefits associated with using the MSA system were quantified by using data on the number of carcases graded and certified, a survey of retailers and wholesalers based on prices for MSA graded beef (3 star or better) versus ungraded beef, and market reports of prices paid for MSA quality cattle versus non-MSA quality cattle. Over the period 2004/05 to 2010/11, beef consumers across Australia were prepared to pay on average $0.30/kg extra for MSA branded beef on a carcass weight equivalent basis to guarantee tenderness. This beef is primarily sold through independent butcher shops, although one of the major supermarket chains has now started selling MSA branded beef. The retailers kept about $0.06/kg and paid their wholesale suppliers the remaining $0.24/kg to source MSA compliant cattle and MSA graded carcasses. About $0.13/kg was passed back to cattle producers on average. The cumulative retail-level economic benefit of the MSA system to 2010/11 is estimated to be around $523 million, with a current annual benefit of around $77 million over the past three years. After accounting for all the costs of development and implementation, net benefits are at least $200 million.