Grading systems and regulatory environment
All beef is graded according to a range of Australian and international
standards as set out in the Handbook of Australian Meat published by Aus-Meat
Limited. These standards grade beef according to a number of quality-related
traits including the cut, age, sex and fat depth. These standards also specify:
country of origin;
the company which packed the product.
Other standards include Aus-Meat's quality standards including the
Pasturefed Cattle Assurance Scheme (PCAS) and the Meat Standards Australia
(MSA) certification that guarantees eating quality. In addition, a number of
companies have their own certifications. The second largest processor in Australia,
Teys purchases PCAS-certified cattle while the country's largest processor, JBS
has its own grass-fed certification for its Great Southern brand.
As a three-year process, organic certification is the strictest and most
difficult to obtain. At the same time, there are different certifications for
different markets such as the US and EU.
While these various standards and certifications add value to the beef produced
through them, the point was made in evidence that:
All these different certifications makes it much more
difficult for producers to supply multiple processors with certified beef as
they require multiple certifications and audits.
Meat Standards Australia
Australia's two beef grading systems are MSA and Aus-Meat Language.
At present, MSA is only used in the Australian domestic market. MSA beef
carcases are graded on the proportion of Bos indicus breed, maturity,
marbling, meat colour and pH and fat distribution. Producers of MSA beef are
required to certify cattle are handled to minimise stress prior to slaughter as
stress has a negative impact on meat eating quality.
MSA sets the standards in relation to fat depth, fat colour, marbling
and other indicators relating to eating quality. One of the concerns raised in
relation to MSA is that the separate company specifications such as that of
detention and P8 fat which overlay MSA. The risk for producers is that cattle
may have met the MSA standards but not the company standards.
Producers suggested that when producers do not meet the company standards, they
do not get paid for the MSA even if they have met the MSA standards.
The Australian Beef Association (ABA) argued MSA grading was 'hopelessly
According to CCA, MSA requires immediate and continual development as producers
are currently receiving discounts based on company specifications that have no
relevance to consumer requirements 'resulting in high eating quality products
not receiving their full market value, as determined by consumers'.
Teys Australia argued that:
It is clear from Teys' perspective that supplier confidence
in industry developed grading systems is at an all-time low. It is time these
systems were made more objective, transparent and verifiable given their
importance in determining producer returns.
Submitters suggested that as measurement is subjective, disputing a
grading is made more difficult, providing scope for 'the interpretation of an
individual classifier or skewed for monetary gain'.
Mrs Maureen Cottam raised a concern that graders were, in many cases,
internally trained and assessed as well as being paid by their employer, the
processor, who does not necessarily promote the commercial transparency that
would satisfy a producer. Therefore, as Mrs Cottam argued, there is risk of a conflict
of interest within the current system.
Many producers made a similar point. Processing companies provide their
own graders of carcases who are effectively company employees. This means that
MSA grading can amount to a task effectively performed by abattoir owners who
have a 'vested interest in downgrading carcasses'.
Some suggested that the graders should report to government authority as
a means of enhancing the integrity and transparency of the grading process.
Others argued that independent graders should be employed by a third party to
grade and supervise payment for carcases.
Similarly, Mrs Cottam recommended the establishment of an independent beef
grading system whereby the employment and registration of meat graders would
operate under a statutory authority.
Mr John Carpenter suggested that the MSA beef grading system be
transferred from MLA to the department where it could be 'independently and
He also made the point that MSA does not exist for the exclusive benefit of
producers, processors or retailers but rather, should focus entirely on
MSA carcase feedback
Beef producer, Mrs Cottam noted that as meat will naturally change
colour, the timeframe of this change and other variables that affect grading
are not in the control of the producer. Therefore, the producer is not
privileged to the very information which determines their monetary return for
She suggested that producers of MSA beef were hampered in their efforts to
deliver a high quality beef product by a lack of adequate feedback from
Mr Gary Warren noted that processors will never articulate why the
cattle did not meet the company standard but simply report 'does not meet
Further, evidence to the committee also suggested that the MSA carcase feedback
sheet omits the MSA grader's registered number, thereby reflecting a lack of
The MSA requirements for handling cattle require that cattle sold
through an MSA accredited saleyard should be processed within 36 hours of
dispatch from the farm.
However, according to evidence before the committee, the time of kill is not
documented on feedback sheets. Mrs Cottam informed the committee that producers
have suffered financial loss as a result of the down-grading of their carcases
to non-MSA status. Yet, no predisposing factor was offered such as protracted
She suggested that the feedback sheets should provide the following information
which should be electronically recorded at the time that the carcase is
MSA grader's registered number or RFID number;
time of kill;
live weight of individual animal at the point of kill;
fat, meat colour/standard MSA requirement;
dressing out percentage of individual animals.
As a joint venture between Meat and Livestock Australia (MLA) and the Australian
Meat Producers Corporation (AMPC), Aus-Meat is responsible for the development
and use of meat language. It is mandatory for all Aus-Meat accredited abattoirs
to pay on HSCW and Aus-Meat standard carcase trim. They must also provide
Questions regarding the independence of Aus-Meat were raised by many
producers who suggested that it was heavily influenced, if not dominated by, processors.
It was argued that such dominance ensures that processors are able to exert a
major influence over the manner in which meat is graded. In fact, some argued
that through their influence over Aus-Meat, processors effectively
self-regulate meat grading.
A prime example of this influence was that of Aus-Meat assessors who are
employed by processors and audited by Aus-Meat every eight weeks.
The consequences of this circular relationship which were summed up by Mr Blair
and Mrs Josie Angus:
The ownership of Ausmeat by processors has also created
market access issues (eg EU not recognising Ausmeat graders as independent). It
is vital that we move back to having some independent oversight in plants.
The issue of influence was particularly concerning to some submitters
who noted the extensive role that Aus-Meat plays in relation to many aspects of
processing. As a case in point, approval from Aus-Meat has to be sought when a
new processing facility is established to approve operating arrangements.
While meat companies are subject to up to 12 Aus-Meat audits a year,
including 10 unannounced audits, concerns were raised regarding the
relationship between processors, meat retailers, the Aus-Meat carcase assessment
process and its internal auditing program. Livestock SA, for example, suggested
the need for transparency in the relationship between these groups in the
processing industry given that there appear to be 'inconsistencies in the
carcass grading system'.
It was also argued that processors have 'undue influence' over MLA.
While the part ownership of Aus-Meat by MLA should provide producers with a
greater voice and influence, it was argued that MLA was not producer-driven.
The ABA explained its view:
Some people believe that the Processors have undue influence
over the MLA, and that this is one of the areas where they exploit that power.
Others believe that MLA is run by the processors, and therefore AusMeat, and
its meat language and specifications controls are controlled by the processors.
On their website, AusMeat states they are responsible for
establishing and maintaining industry standards for meat production. This is a
very powerful and influential role, and it is like having the goanna in charge
of the henhouse.
It should be noted that the issue of producer representation and the
structure of MLA was explored in considerable depth by the committee during its
inquiry into the grass-fed cattle levies and addressed by the committee's
recommendations regarding greater producer representation.
Australian Meat Industry Language
and Standards Committee
A number of submitters raised concerns about the influence of processors
in relation to Aus-Meat. The membership of the Australian Meat Industry
Language and Standards Committee (AMILSC) was used as a case in point.
AMILSC is responsible to advise the Aus-Meat board on matters relating
to the Aus-Meat National Accreditation Standards. It has the authority to block
any initiatives that emerge from the white paper review process.
The CEO of Aus-Meat, Mr Ian King informed the committee that Aus-Meat
was a third-party independent body which sets the standards for the industry
including the sanctions process. In fact, he noted that it was the AMILSC which
both drives the standards and changes in implementation.
The committee has the authority to withdraw Aus-Meat accreditation which would
put a processor out of business for a period of time, given that under the
licence conditions issued by the government, without Aus-Meat accreditation, a
company does not have a licence to export.
Under the red meat Memorandum of Agreement (MOU), AMILSC is chaired by a
person appointed by Aus-Meat, while the CEO of Aus-Meat serves as a member of
the committee. The remaining ten members from the industry include:
Australian Meat Industry Council (AMIC) – four nominees;
Cattle Council of Australia (CCA)– one nominee;
Sheepmeat Council of Australia – one nominee;
Australian Lot Feeders' Association (ALFA) – one nominee;
Australian Supermarkets Institute – one nominee;
Australian Pork Limited – one nominee; and
Primary Industries Ministerial Council – one nominee.
The MOU specifies that decisions of the committee 'will be made by
Reflecting on the fact that the composition of the AMILSC offered beef
producers' only one representative, Mr Hill argued that:
Even if the producers get together and say, 'Okay, this is
something that we think needs to be put through as language and standards', if
AMIC decide they want to block it, they have the voting power. That is the big
block we have at the minute. We are not able to actually get a voting influence
to change anything.
According to Mr King, any changes to AMILSC's composition (which has
remained unchanged for the past 23 years) would have to be taken up by the
industry or the parties to the respective MOUs with the Commonwealth.
Noting concerns regarding the level of producer representation on the
committee, Mr King observed that there were no such concerns raised until about
18 months ago. Furthermore:
Why, at the beginning, were there more processors than
producers? I can only answer that on the basis that I believe that the original
impact of AUS‑MEAT, the authority for uniform specifications and what
needed to be done, was impacting on the processing sector. 
Mr King recognised, however, that Aus-Meat and AMILSC activities are now
far broader than they were when first established. They now incorporate on-farm
processes and quality management systems on farms which has resulted in 'some
discontent or some concern about a potential block in terms of standards'.
Nevertheless, he continued:
In my 23 years I have not missed one committee meeting and I
can only say, again, that we have only ever once had a vote. It has always been
by consensus, and it has always gone back to the peak industry councils before
standards have been set and approved.
However, producers argued that reform is now required. CCA suggested that
a focus on post-farm-gate operations, and an inability to keep pace with
industry developments, has resulted in producers 'losing connection with their
jointly owned service provider'.
The end result is that Aus-Meat has not provided a fair platform for the over
the hook pricing. Furthermore, it was argued that the regulatory environment is
one which offers significant barriers to entry for new players.
Mr Gregory Chappell explained some of the problems:
The problem, I think, that we face with AUS-MEAT today is the
fact that it was designed as a tool to communicate consumer requirement for
beef back through the processor to the producer and to provide an open channel
of communication that also provided market signals as to what was happening
domestically and internationally with beef. One of the problems that have
happened is that that particular tool has not remained flexible. It has become
a bureaucracy. It is now controlled.
Concerns raised in relation to the Aus-Meat grading system included there
currently being no existing requirements for processors to publicly release
yield figures. They are, in effect, the final arbiters in all matters regarding
quality and yield. Producers have no recourse or right to object or dispute
processors' measurements. Therefore, the view was put by the VFF that Aus-Meat
should become an independent entity tasked with introducing transparency into
Similarly, NSW Farmers' Association argued that Aus-Meat should be
industry-owned and independent of the processors to ensure appropriate
Yet, when questioned about the lack of confidence in the grading system,
Mr King informed the committee that Aus-Meat has not been provided with
any concrete evidence. He noted that when Aus-Meat had followed up on concerns
that had been brought to its attention, it was found that they were based on
hearsay rather than reality. Mr King upheld the view that complaints usually
related to the grid rather than the grading system. He expressed confidence
that the grading system was performing well.
Independent grading and the United
In the United States (US), grading language and specification controls
are owned and managed by a department whereby the government provides
independent graders to all meat processing works throughout the country. In
contrast, the processing companies in Australia provide their own graders.
As explored in the previous chapter, many producers argued that the
current standard carcass trim exceeded the intention of the definition.
In this regard, ABA noted the distinction between the US and Australian rules. It
explained that Australian processors negotiated to have it legislated that they
could remove about eight per cent of 'trim' from every carcass on top of the
practice of removing blood, hide, offal and bone. This was to be a basic trim
around the edge of the carcass. Yet, ABA noted, this has grown to be a major
trimming of all fats and 'edge' meat.
In the US by contrast, the channel and other fats are left on the
carcass before the carcass goes to scale while US producers are paid an
allowance for hide and offal etc.
When this is all calculated out across weights (lbs. versus
kilos) and across values ($Aus v $USA) we find that in the States, their
cattlemen are receiving 55% of the total retail dollar.
If we use the same formula within the Australian cattle market,
we find that our producers are only getting about 26% of the total retail
dollar. That is: the money the animal makes (the producer receives) when it
becomes a carcass...compared to the money the whole carcass makes when it is cut
up and sold as cuts in the stores.
Under the US system, the grading of beef carcasses is a voluntary
service of its Department of Agriculture (USDA) and the packer-processor is
charged for the service. The point was made that under this structure:
The grader works independently of both the processor and the
producer. This independent grading can only add to the confidence in the
product by the consumer both at domestic and global level.
Mr Stephen Kelly from AMIC informed the committee that if a producer believed
that the standard trim was not being applied, they could complain to Aus-Meat. He
told the committee that anonymity would be assured as the abattoir and the
abattoir owner would not know where the complaint came from. Thereafter,
Aus-Meat would perform branded audits and could attend abattoirs at short
notice to inspect the trim procedure.
To investigate a complaint, Mr King stated that Aus-Meat would require
both the feedback sheet and some evidence that there is an issue before it can
follow up. However, he asserted that 'quite often', complaints are not related
to the grading but rather a misunderstanding about how the price grid operates.
He further observed that 'producers do not understand the feedback sheets' and
'do not fully understand the grading' and would be penalised if they do not
meet the specification or the standard.
Mr King concluded that when a producer submits a complaint to Aus-Meat, in nine
out of ten instances, the complaint will relate to a 'misinterpretation of the
However, Mr Ian McCamley explained that producers don't generally
complain to Aus-Meat regarding 'dubious' grading results for a range of
Firstly they fear retribution from their processor if they
'dob them in'. They feel they can't afford to upset their livestock buyer and
be left unable to get a booking. Secondly there is a large time lag between the
grading, the producer reading their [sic] feedback, realising they have a
downgrading issue, then contacting AusMeat. There is no point in AusMeat going
to the plant at that stage as any evidence will be long gone. AusMeat believe
that past grading problems will be solved by AusMeat making an appointment with
the processor to see the producer's next mob of cattle graded. Obviously to suggest
this action will resolve a producer's downgrading issues is naive at best!
Beef language review
The Aus-Meat language was designed approximately 20 years ago, primarily
for use as a trade language.
Mr Carpenter described Aus-Meat language as 'subjective, confusing and
under the iron fisted control of the processors'. He suggested that it should
have been abolished with the introduction of MSA.
Similarly, ABA noted that Aus-Meat language uses 'totally inexplicable grading
classifications such as Y, YP, YG, PR and A' whereby 'A' beef is harvested from
animals of eight teeth and older rather than the best or number one.
While 'A grade' in the US is 9–30 months of age, in Australia 'A' means the
Concerns went to the use of dentition within the beef language which is
'not based on current scientific evidence' and serves as an unreliable
indicator of age and eating quality.
Mr Hill suggested that the current beef language is based more on a trade
description than quality description as it is based on dentition ciphers that
are used as age and quality measures but which are not supported by current
These views were supported by other producers.
Mr Hill continued:
Other measures that producers see as little more than discounting
tools, such as Butt Shape, P8 fat are not used in beef carcase grading anywhere
else in the World. The Australian red meat industry at great cost has developed
the world’s leading science based eating quality system, Meat Standards
Australia (MSA) allows cuts to be graded on a consumer requirement basis,
although the MSA quality mark is used domestically, it has not been used in
export product since the equivalent system, Eating Quality Assured (EQA) was
withdrawn in 2011.
Similar concerns were raised in relation to butt shape and meat colour. According
to CCA, as an eating quality, meat colour has no relevance.
The current beef language requires immediate and continual
development. Producers are currently receiving discounts based on company
specifications that have no relevance to consumer requirements resulting in
high eating quality products not receiving their full market value, as
determined by consumers. This is distorting key market indicators that need to
be corrected to ensure that the whole beef supply chain is driven in a
productive and progressive direction.
In recognition of the need for reform to beef language and transition to
value‑based marketing, CCA, AMIC and ALFA directed MLA and AMPC to
commission a white paper. The final draft of the Australian beef language
'white paper' was released in January 2016 and contained a series of
recommendations, grouped under seven themes, with an indicative timeframe. The
white paper recognised the 'strong and universal support for the development
and application of objective measurement tools, tempered to an extent by a
perceived lack of delivery from previous technologies and concerns regarding
costs, particularly for smaller operators'.
In April 2016, MLA was awarded a $4.8 million grant to develop new
technology involving ex-rays and infrared spectroscopy, to measure meat yield
and identify traits that would help predict eating quality of meat cuts.
Regulations and regulatory environment
The Australian Livestock and Property Agents Association made the point
that each jurisdiction in Australia has a different regulatory environment
surrounding livestock, and the implementation and interpretation of the
National Livestock Identification Scheme (NLIS) varies across jurisdictions.
Furthermore, regulations vary across states with regard to Property
Identification Codes (PICs). Such differences across the regulatory regime were
questioned on the basis that livestock cross borders.
According to the SCA, the Australian meat and livestock industry is one
of the most high regulated production, processing, retail and export chains in
Australia. It noted that:
While some regulations are valuable, others are onerous, have
little or no marginal benefit, are inconsistent, impose unnecessarily high
compliance costs and can impair the productivity and competitiveness of
enterprises, supply chains and the broader industry. Each jurisdiction in
Australia has a different regulatory environment for livestock. For producers
this can mean confusion, extra costs, or reduced competition for their
The regulations placed on abattoirs were also highlighted. The
Department of Industry and Science noted that parts of the red meat processing
regulatory environment may actually be stifling innovation and inhibiting new
entrants to the supply chain – particularly small to medium enterprises. It was
Despite their being an Australian Standard for the production
of meat and establishing meat processing facilities, there is a range of other
relevant regulatory requirements for establishing a meat processing facility
food safety and hazard control,
and other operational hygiene requirements;
waste disposal and management;
access to portable water;
necessary qualifications of
slaughter staff; and
other environmental considerations
such as biodiversity protection or development activities determined to be
At the same time, however, each state and territory has its own
regulations, guidelines and/or procedures and responsibilities which cross a
number of portfolios such as health, environment, and agriculture as well as an
agency charged with enforcement of primary production and processing
In addition, the extent of assistance and guidance provided by state and
territory authorities to investors wanting to set up a processing business
varies. Then there are local council planning requirements which must be met
and can include a variety of measures relating to noise, odour, urban
encroachment, and transport considerations.
The Department of Industry and Science concluded that the complexities
of the regulatory environment, along with the variability across jurisdictions
can prove difficult to navigate and be a 'cumulative time impost'. It was
argued that these types of issues could become factors in making the decision
not to pursue establishing a small meat processing facility. This is
particularly the case where the initiative is pursued as an additional vertical
integration to the existing business of producing and managing livestock.
Evidence to the committee from some producers also highlighted the
comprehensive requirements that are placed on prospective abattoirs as well as
the requirements on existing abattoirs seeking to change categories from
domestic to export.
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