Research & Development

New MLA CEO on value-based marketing and sustainability

Jon Condon July 22, 2024

FRESHLY-minted Meat & Livestock Australia chief executive Michael Crowley last week gave his first real industry-facing address since taking up his position last month.

MLA CEO Michael Crowley.

Regarded as a safe set of hands when appointed to the position in April, Mr Crowley gave a confident, well-reasoned and well-informed address during a Queensland Rural Press Club lunch in Brisbane.

Despite strong competition from the Australian newspaper’s Global Food Forum being staged in Brisbane the same day (Beef Central’s James Nason moderated a session  at the GFF, see separate report) Mr Crowley’s Press Club presentation still pulled a healthy audience of 160 industry stakeholders, keen to get a first-read on his thoughts and vision for the red meat industry’s future.

His presentation, and comprehensive responses to a series of questions, clearly reflected his depth of knowledge and understanding of topics and challenges in which MLA is heavily invested. Clearly, Mr Crowley has hit the ground running.

Using the value-chain lens

He told yesterday’s audience that the big opportunity for the red meat industry was to make investment judgements through the lens of the value chain – and where value could be created and captured for everyone along the supply chain.

“It’s about looking at the consumer as the starting point. Consumer and customer insights will drive the way brands set up their specifications; the brand specifications will drive pricing signals for the production sector; and the production sector will then respond – breeding, feeding and finishing animals with a market destination in mind,” he said.

“As an industry we’ve done pretty well over the years, investing in driving productivity, innovation, and objective measurement, for example, focussing on where the efficiencies can be found. But I think we can go to the next level, and create and capture more value from each animal. I feel like we are leaving too much money on the table.”

He said the industry was not starting from scratch in this pursuit. The red meat industry Strategic Plan 2030 had set a ten-year time horizon.

“We’re now approaching the mid-point of that ten year plan,” Mr Crowley said.

“But one of the first jobs I have to do is lead the development of MLA’s next five-year strategic plan. We now have the opportunity to reflect on the assumptions we made in the last exercise back in 2019; where we are in 2024; and what we think the future looks like in 2030.

“We need to look at where we need to pivot; where we need to go harder; and where we may need to find new sources of investment. Are we supporting the peak industry councils with policy settings? Have we got everyone aligned with the plan, going forward?” he asked.

Feedback and feed forward

Mr Crowley said the red meat industry already had programs that were “performing incredibly well, driven by incredibly dedicated people who are highly skilled, who love what they do, and are delivering results.”

“However I see some pretty big opportunities. One of the features that will enable that value-creation and capture is the seamless transfer of information along the supply chain.

“We’ve done a pretty good job of delivering feedback back to the last owner of the animal, but a lot of barriers have been put up as to why that information can’t go back to the breeder.

“If we think about carcase data going back to the last owner of that animal, that’s great – but how does the person making the original genetic selection decision – that sets that animal’s potential up for life – get access to that animal’s actual performance on the hooks? We still have a bit of a gap there, across beef, sheepmeat and goatmeat industries.”

Mr Crowley said the industry also had the opportunity to better utilise technologies like genomics to feed genetic potential of animals forward along the production chain.

“I’ve also had many conversations about ‘other credentials’ in our production systems that need to support how we deliver data and evidence that we are meeting those specifications, and the expectations of our customers, through the supply chain. It’s about credentialing those livestock, and having the information flowing forward with them, so that they can be valued appropriately on a liveweight basis as well.”

“We are investing heavily in the NLIS database redevelopment, which will deliver the systems to enable us to do all that,” he said.

While a number of objective measurement technologies had now been developed, in some cases replacing human graders, the industry still lacked the ‘value proposition’ in how to move the value.

“The technology itself is only one part of the picture. How does it save money, reduce time and cost, and deliver the transparency and value proposition, going forward?” Mr Crowley asked.

“We’re looking at eating quality, yield, the feedbase, and I’d like to see more investment in objective measurement in the live animal side, as well as post-slaughter,” he said.

Productivity-driven sustainability

Moving to sustainability and environmental issues, Mr Crowley said there was a lot of talk about sustainability from an environmental context as well as animal welfare credentials.

“Both are going to be very important,” he said. “But its very interesting when you get into how to solve those challenges, because it is productivity related, a lot of the time.”

“Think about having a highly-fertile beef herd or sheep flock. All of a sudden, it reduces emissions intensity per kilo of production; we have less ‘passengers’ in the system; we can drive efficiency in our production systems and optimise production for the environment in which we operate; and can reduce the days to slaughter.”

Visiting Ireland some years ago, Mr Crowley said he saw newspaper headlines proclaiming that the Irish beef industry had to halve its number of cows, ‘for the benefit of the planet.’

“I met with the Irish beef industry’s geneticists, who worked out that if they could reduce days to slaughter by 80 days, it would be the equivalent of reducing Ireland’s national beef herd by 250,000 cows,” he said.

“So productivity can be a significant part of the solution, and our red meat and livestock sector can position itself as a significant part of the solution. That’s pretty exciting stuff, I think.”

This objective would also drive commercialisation of technology, in areas like feed additives, he said.

“I think we will be in a position where we can look at soil health, improving pasture productivity, improving animal performance – while it just so happens that we are reducing emissions intensity and storing more carbon in the soil at the same time. It’s all productivity driven, so that it doesn’t just become a cost, but carries a significant benefit out the other side.”

Mr Crowley said MLA would continue to drive investments that “absolutely nail the big impacts,” and put the producer first, as the recipient of those benefits.

“I also think we’ll be seeing marketing programs that create pull-through – and those marketing programs will connect with our R&D – packaging up all of the great work being done in the on-farm production sector, working with brand owners, customers, consumers and the broader community to position our industry at another level,” he said.

The red meat industry could be a significant part of the solution, he said.

“I saw a fantastic stat recently, out of MLA’s consumer insights work. ‘Strong’ is the new ‘skinny’, and 88pc of people increasing their intake of red meat are doing it for health and nutrition reasons. That is just phenomenal.”

Industry’s long held VBM vision

Channelling  a long-held vision across the red meat industry, Mr Crowley said all of this sounded a lot like Value-Based Marketing (VBM).

“I look forward to testing this, a lot further, as we go through the upcoming strategic planning process.”

He elaborated on the quest for VBM during a later Q&A session, where QRIDA’s Brendan Egan asked what the industry’s big goals would be in the upcoming five-year strategic planning process.

“One of the biggest changes, that is pretty hard for MLA to really incentivise to happen, is moving from price averaging for livestock to outcome based individual livestock pricing,” Mr Crowley said.

“To me, value-based marketing pulls everything (industry’s investment in R&D) together,” he said.

“When you think about what the big incentives are and what drives behaviour, its about what you get paid for your livestock.

“That’s where I think we will create a value proposition for objective measurement technology – quality and yield, plus another component which is harder to value – brand equity.”

“Go into a wholesaler in Brisbane and you can find two MSA-graded striploins, both with the same eating quality, and one can be $10/kg more than the other. That’s brand equity, right there.”

“And those cattle producers supplying those brands are getting paid very differently, as well. So some supply chains are closer to value-based pricing than others – but that’s where I think we will see change.

“When there is a ‘first-mover’ who is releasing grids on both quality and meat yield, and then setting some brand specs to hit, it will change the behaviour.

“On average, the suppliers to that program might not be paid any different, but the animals that are worth more will make more, and the animals worth less will get less. However, where I’m comfortable with that is that it will see a shift in producing more of those animals that are worth more to the customer, and worth more in your production system at home.

“That’s where VBM will work. If it means that someone wins and someone loses, it won’t work – so that’s where we have to get the value proposition right.”

“VBM – that’s the one big objective I’d like to achieve in five years’ time. If we get there, I’d be happy,” he said.

Questions

Press Club attendees pursued a range of topics during questiontime, including CN30 objectives (see today’s separate story), traceability, and new red meat product creation.

Red Meat Advisory Council chairman John McKillop asked Mr Crowley how he saw the interaction between MLA and peak councils/industry bodies.

“It’s really important that we are clear on MLA’s role, and the role of the industry bodies,” Mr Crowley said.

“We can’t legally get involved in the policy space, and that isn’t going to change. Our remit is very clearly around marketing and R&D. However we can do policy R&D, supporting the peak industry councils to form good policy – MLA is sitting on a lot of information that helps inform those policy decisions.

“Yes we have seen some changes, such as the arrival of Cattle Australia as the new grassfed production sector, which has changed the dynamic a little, from where I sat before (Mr Crowley previously served up to 2023 as MLA R&D manager), but I don’t see the role more broadly of the peak industry bodies changing that much.

“The peak councils’ role is also very clear, and how we work together, through strategy, alignment of priorities that we can go and execute with full industry support is really important to make sure we are successful in executing those plans.”

Another question asked about moving more product from the commodity end of the spectrum to higher valued niches.

“The fact is, we need customers for all red meat produced out of Australia, but it’s perhaps a different context domestically than it is in international markets,” Mr Crowley said.

“The cheapest commodity Australian product you could buy still has value, and we can think about how we increase the value of that through food safety, shelf-life, and our industry systems that still underpin how to differentiate even our lower value items.”

“There’s also opportunities, that we may be exploring through CSIRO, in how we create new products that we might not have thought of before, that might significantly increase the value of those low value items.

But equally, Australia could only feed so many people, he said.

“For ease of numbers, let’s say Australia can feed 100 million people. We’re exporting roughly 75pc of our production, so after feeding everybody in Australia, we should be targeting those people who value our product the most – not only in those markets, but those market segments and channels within global markets to maximise value.

“Yes, we have variation in the products we produce. We’d like to continually pick up the bottom end and shift the bell curve, which we do see, measured through the eating quality program.

But equally, Australia is very fortunate in its market access that we can find a home for everything, and we need to make sure that remains the case.”

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