-Study to evaluate the feasibility of an industry-wide installation of DEXA technology into processor plants-
-AMPC & AMIC support the introduction of proven carcase measurement technology that delivers tangible benefits for members and the industry-
The Australian Meat Processor Corporation (AMPC) and Australian Meat Industry Council (AMIC) have appointed Ernst & Young to undertake an independent review into the introduction of objective carcase measurement technology and its application in the red meat processing industry.
The review will provide analysis and recommendations on whether investment in Dual Energy X-ray Absorptiometry (DEXA) technology is a prudent operational and commercial decision for processors. The review will evaluate all strategic, technical, financial, commercial, operational, governance, and implementation aspects of Project 150.
Project 150 is the Meat and Livestock Association (MLA) plan announced in November last year to pursue a $150 million industry-wide installation of Objective Carcase Measurement (OCM) technology, underpinned by DEXA to all AUS-MEAT accredited plants by 2020.
AMPC Chairman Peter Noble said that AMPC had commissioned an independent review because it has a responsibility to its members to ensure that investments made on their behalf are thoroughly evaluated and deliver commercial benefits to the industry.
“Without adequate consultation, cost-benefit analysis or due diligence there can be no level of comfort in investing substantial industry funds in DEXA technology which is yet to be sufficiently proven,” he said.
“We take our obligation very seriously to provide members with a comprehensive fact-based approach to investment decisions to ensure their funds are spent in ways which will benefit them and the industry.”
Mr Noble said that AMPC has already invested and committed to invest $6.6m of processor levy funds in jointly-funded projects related to carcase measurement technologies, highlighting the processing sector’s support.
AMIC Chairman Lachie Hart said that a capital investment of this scale that is without appropriate governance, consultation and feasibility assessments could encumber an industry already facing unprecedented cost pressures related to regulation, utilities, livestock, and labour.
“Until our members can be confident that this technology will provide a more independent and accurate way to grade and price carcases, we risk undermining the integrity of the cattle pricing process,” Mr Hart said. “If we get it wrong, it would be a costly and backward step.”
“At this early stage of its development, it would not be prudent to unilaterally roll out DEXA technology across the whole of industry,” he said.
The independent review and the trials being undertaken by Teys Australia will better inform the industry as to the merits of the technology and provide the necessary confidence to make an investment decision.
The independent review will be led by Andrew Metcalfe AO who has extensive experience in the sector and was the lead partner on our recent report on Strategic Risks Facing the Red Meat Industry.
EY have identified a team with key skills, knowledge and resources to undertake the review, including an international expert familiar with DEXA technology and its application across multiple industries.
The findings of the report are anticipated to be publicly available in April 2017.