More proof needed to beef-up DEXA proposal

But more evidence is needed to convince producers and processors the technology can actually work for Australia’s beef sector, a new report says.

An independent review by EY of the proposed installation of DEXA in AUS-MEAT registered processing facilities, through a $150 million investment by Meat and Livestock Australia (MLA), has now been released.

In February, the Australian Meat Processor Corporation (AMPC) and the Australian Meat Industry Council (AMIC) co-commissioned EY to conduct the independent review of MLA’s DEXA proposal.

The review as spearheaded by former Federal Agricultural Department Secretary Andrew Metcalfe and an issues paper was released late last month foreshadowing some of the key findings.

AMPC Chairman Peter Noble said the primary purpose of the exercise was to conduct a fact based review of the MLA proposal and identify areas that needed further consideration and work out a plan, going forward.

Mr Noble said EY was commissioned to look at core aspects of the proposal like financing, strategic, commercial, operational, governance and implementation issues to install DEXA in 90 AUS-MEAT registered processing plants.

The report’s executive summary said feedback and engagement with various industry bodies, producers and processors, reiterated the need for more information through pilot programs in beef, to enable “evidence based decision making” by the broader industry and the processing sector, given their differing needs and business models.

“Key developments are showing that, while the use of DEXA as an objective measurement technology in beef appears to have promise, it has yet to be categorically proven that it can objectively measure carcases of all types and characteristics at line speeds,” it said.

“Additionally, the level of complexity and management surrounding both the use of the proposed DEXA technology in processing facilities and the ownership and use of the accompanying data produced, necessitates a significant level of structured oversight and governance.

“This would also include overseeing the collective negotiation of commercial use of data and IP.

“Furthermore, there are issues as to the level of IT infrastructure support (both hardware, and software) to manage, encrypt, transmit and analyse (calibrate and gather insights for industry wide use) the data that would be produced as a result of running DEXA in processing plants.”

The EY report looked at the financial, technical and governance arrangements of MLA’s proposal to try.

Mr Noble said the red meat industry “has spoken” with both producers and processors seeing many exciting benefits that OCM technologies could bring.

“EY has successfully delivered on this task and we stand ready with industry to provide the research, development and education in support of their voice and to answer the many questions raised by the review,” he said.

Mr Metcalfe said EY had engaged extensively with major industry bodies, independent experts, and directly with a number of large and small producers and processors, in compiling the report.

“We strongly recommend that these initiatives are taken forward as consultatively and collaboratively as possible given the significant transformational change that is being considered by the proposal,” he said.

AMPC said it was also encouraged by the MLA’s plans for a smaller $10 million roll-out of DEXA projects in four of its members processing plants funded by individual processor companies with matching government contributions.

The report also said the $150m MLA proposal to roll-out DEXA had an originally proposed a funding structure comprised of a government concessional loan, through the Commonwealth Regional Investment Corporation, to be underwritten by MLA and serviced through the apportionment of producer levies over the loan repayment period.

But it said the use of DEXA as the preferred OCM technique had received mixed levels of support from within the industry bodies and experts interviewed.

“While some specialists believe that technology needs to be proven for beef, a few industry bodies have come out in support of the implementation of the DEXA technology in its current form,” it said.

“For lamb, the mandate is more positive, with most stakeholders confident of successful use of DEXA for OCM.

“A few respondents have a view that processors should adopt OCM based on their business case viability, while others believe an industry-led rapid adoption is the way forward to prevent consolidation within the processors, mitigate issues with standardisation of grading and auditing requirements.

“On the use and ownership of any data generated should (the MLA proposal) be adopted, the interviews suggest that there needs to be greater clarity in the proposed arrangements of the data use.”

The report also said some stakeholders interviewed believed the proposal should explore alternative funding opportunities to help make the project sustainable in the long run.

“The specific producers and processors that we directly interviewed broadly consider that trials would provide both parties with informed and credible insights into the merits and relevance of DEXA technology to individual businesses,” it said.

“Producers have advised that they expect OCM technologies to increase objectivity and transparency of carcase measurement, overcome carcase grading and pricing frustrations, potentially contribute to the fine tuning of breeding strategies, and identify inefficient stock.

“Processors expect DEXA will enable optimised boning, potentially lifting the revenue from saleable meat to producers, and reducing the cost of processing.

“While many are scanning the international market for relevant technology, and a handful have decided DEXA is relevant to their business model, most processors we directly spoke with considered a thorough assessment of DEXA technology (including DEXA pilot installations) would represent a constructive step forward for all involved.”

Beef and sheepmeat producer groups have backed DEXA as has federal Agriculture and Water Resources Department Secretary Daryl Quinlivan.