EY’s Second Issues Paper highlights key issues for Red Meat Industry DEXA proposal

EY has today issued a second Issues Paper as part of its Independent Review into the MLA’s proposed investment in Dual Energy X-Ray Absorptiometry (DEXA) technology provided in response to the ACCC’s findings. It raises key issues for further industry comment on whether it represents an appropriate operational and commercial decision for red meat industry participants.

The second Issues Paper has been developed after substantive engagement with industry stakeholders including producers and processors, both large and small, various peak industry councils, providers of OCM technology and other interested parties. It has identified key issues and called for further stakeholder comments before finalising its report.

According to the second Issues Paper, early engagement with both producers and processors on the industry proposal may be out of sync with the way producers and processor go about their own business decision making.

Six key issues have emerged from EY’s qualitative research among both producers and processors:

1. Carcase grading and pricing has been an ongoing source of frustration to producers in ‘over the hooks’ sales to processors.
2. OCM and related technologies are seen by producers as much-needed tools to increase the objectivity and transparency of carcase measurement.
3. While processors are concerned that DEXA technology is only a quantitative assessment which may lead to producers pursuing a “yield over quality approach” and suggest that producers are already well educated in the importance of meat quality factors.
4. Confidence that DEXA technology may deliver suggested industry developments is only moderate among both producers and processors.
5. Producers and processors both view capital investment (like that in DEXA technology) as a means to deliver their own business strategy and to activate their business model, and should not be government intervened.
6. Almost all producers and processors are concerned about the application of DEXA technology in beef which is still being trialled and are calling for pilot programs to generate reliable empirical data to take place before significant industry expenditure is undertaken, as a more prudent approach than suggested.

AMPC Chairman, Peter Noble responded to the second issues paper, saying:

 “We look forward to the EY’s final report, this second issues paper outlines the key issues for our industries consideration, and we encourage the wider industry input into these questions raised,” Mr Noble said.

EY Independent Review Leader Andrew Metcalfe AO said that he has had good engagement from the industry. He welcomes feedback on the second Issues Paper released today and encourages more stakeholders to come forward and contribute to the process.

EY's second issues paper can be accessed here.

The final EY independent report will be published later this month.