Stanley Vale Merino Stud - News & Views

An assessment of price transparency in the beef supply chain

03 August 2015

This research project, An assessment of price transparency in the beef supply chain, was initiated by the Cattle Council of Australia last year to consider options for increasing price transparency after concerns were raised that a lack of price information along the beef value chain, coinciding with some of the lowest farm gate returns, was affecting marketing and investment decisions in the beef industry.

The project also responds to Recommendation Seven from the Senate Inquiry into Industry Structures and Systems Governing Levies on Grassfed Cattle.

Progress update

 The project will shortly complete its fifth milestone which will identify potential options to deliver greater price transparency at points along the supply chain. This milestone will identify any major obstacles and solutions (eg sourcing data, costs, data availability, legal or regulatory barriers etc) to implementing these options. 

Based on the findings in milestone five, the project may then proceed to a full cost benefit analysis of options to deliver improvements in price transparency. A final report is expected in late September 2015.
The options being considered are:

Mandatory price reporting system as per US industry, in place since 1999. In the US, federally inspected processors are required to report: the prices for each type of cattle purchase; the quantity of cattle purchased on a live weight and dressed weight basis; and a range of the estimated live weights, the quality grades, and applicable premiums and discounts as well as the terms of trade.

Reporting is to the USDA, who use it to generate a range of information for industry. The legislated system very is rigid and difficult to modify. It is also extremely costly. The project will report on the pros and cons of a similar system in Australia.

Voluntary price reporting arrangements at select points on the supply chain as follows: Use of Australian free on board and cost insurance freight Customs data to build a beef carcase cut-out report by category, and show the approximate returns on specific livestock categories. Using retailer and home scan data to develop a domestic carcase cut-out model to estimate returns from animals processed for the domestic market. An online board developed to show final OTH sales results. Data would be submitted voluntarily and confidentially by processors or by producers, to build a sufficiently large data set to allow aggregation and averaging of grid prices. These could be generated on a regional basis without disclosing an individual businesses grid prices. Enhanced MLA and commercial market reporting and intelligence services

Industry issues research project process

The project is administered by MLA, under the industry issues and research program – where MLA commissions independent and apolitical research to inform industry on priority issues and support policy development through the peak industry councils.

The project was awarded through a tender process to AGINFO with the assessment and review panel consisting of two Cattle Council of Australia producer representatives and one Cattle Council of Australia staff member, an independent producer stakeholder, an ABARES economist and MLA staff.

Cattle Council of Australia, as the peak industry council for grassfed cattle producers, has been involved in development of this project including participation in a tender assessment panel to appoint the consultants.



Rate this blog entry:
Analyst predicts wool prices to remain high in sho...
Derwent Valley farmers want more transparency over...