Accounting Dissertation - Future of Red Meat Industry

[123]

I am a student in my final year of studying and accounting and finance degree at the University of Strathclyde and as such I am currently undertaking research to complete my honours year dissertation (a 12000-20000 word research into an area of accounting). As a farmers son growing up on a Beef and Sheep farm in South West Scotland, I am passionate about the red meat industry and its future.

From an accounting perspective the focus of my study is the value chain of the industry - a study of all the value adding processes from producer to final customer. A particular area which interests me is the current grading system used for cattle and lamb carcasses. My aim is to identify why there is such a disparity between the price farmers receive for their produce and the price on the supermarket shelves, and this starts by looking at how red meat enters the value chain at the grading process. I intend to use a survey as a research method to find out what producers opinions are of the current EUROP system, as Brexit provides an opportunity to develop our own system which may better reward carcasses for their eating quality and meeting supermarket specifications. In the future I have identified the potential value of VIA as a grading tool, for example some advanced VIA can measure the size of each cut from the carcass and as such in the future it may be possible that producers could be paid based on the size and quality (marbling) of each cut as opposed to a blanket price per kilo.

I welcome any opinions on this subject and on the grading system in particular from those in the industry. Please be critical if you believe that the above is flawed or limited, I want this research to be useful for the industry. Also, if anyone could guide me toward any previous research which has been conducted in this area it would be much appreciated. Thanks!

 

[holwellcourtfarm]

I am a student in my final year of studying and accounting and finance degree at the University of Strathclyde and as such I am currently undertaking research to complete my honours year dissertation (a 12000-20000 word research into an area of accounting). As a farmers son growing up on a Beef and Sheep farm in South West Scotland, I am passionate about the red meat industry and its future.

From an accounting perspective the focus of my study is the value chain of the industry - a study of all the value adding processes from producer to final customer. A particular area which interests me is the current grading system used for cattle and lamb carcasses. My aim is to identify why there is such a disparity between the price farmers receive for their produce and the price on the supermarket shelves, and this starts by looking at how red meat enters the value chain at the grading process. I intend to use a survey as a research method to find out what producers opinions are of the current EUROP system, as Brexit provides an opportunity to develop our own system which may better reward carcasses for their eating quality and meeting supermarket specifications. In the future I have identified the potential value of VIA as a grading tool, for example some advanced VIA can measure the size of each cut from the carcass and as such in the future it may be possible that producers could be paid based on the size and quality (marbling) of each cut as opposed to a blanket price per kilo.

I welcome any opinions on this subject and on the grading system in particular from those in the industry. Please be critical if you believe that the above is flawed or limited, I want this research to be useful for the industry. Also, if anyone could guide me toward any previous research which has been conducted in this area it would be much appreciated. Thanks!

A good start would be to look at how Australia and New Zealand grade and price meats. They both operate systems based on variations of eating quality.

@Kiwi Pete might have useful insight having worked in cutting plants there.

 

[Woolless]

I would suggest taking a look at the recent increase in the percentage of retail price pocketed by the supermarkets.

I would say that the current grading system doesn't properly reflect the true value of the carcase. The loin area is where the highest value cuts are but is given equal value to the shoulder. The loin area is the most difficult to grade as well IMO. And failing to take account of eating quality is no help to our future prospects either.

 

[DrDunc]

I am a student in my final year of studying and accounting and finance degree at the University of Strathclyde and as such I am currently undertaking research to complete my honours year dissertation (a 12000-20000 word research into an area of accounting). As a farmers son growing up on a Beef and Sheep farm in South West Scotland, I am passionate about the red meat industry and its future.

From an accounting perspective the focus of my study is the value chain of the industry - a study of all the value adding processes from producer to final customer. A particular area which interests me is the current grading system used for cattle and lamb carcasses. My aim is to identify why there is such a disparity between the price farmers receive for their produce and the price on the supermarket shelves, and this starts by looking at how red meat enters the value chain at the grading process. I intend to use a survey as a research method to find out what producers opinions are of the current EUROP system, as Brexit provides an opportunity to develop our own system which may better reward carcasses for their eating quality and meeting supermarket specifications. In the future I have identified the potential value of VIA as a grading tool, for example some advanced VIA can measure the size of each cut from the carcass and as such in the future it may be possible that producers could be paid based on the size and quality (marbling) of each cut as opposed to a blanket price per kilo.

I welcome any opinions on this subject and on the grading system in particular from those in the industry. Please be critical if you believe that the above is flawed or limited, I want this research to be useful for the industry. Also, if anyone could guide me toward any previous research which has been conducted in this area it would be much appreciated. Thanks!

Please post a summary of your findings, because us farmers would like to know how they're justifying paying us so little while making so much on meat too ?

 

[Frank-the-Wool]

Another extremely interesting fact would be the meat to bone ratio. There is no doubt that some of the large carcasses have a very poor meat to bone ration, whereas some of the more compact (native) breeds have an excellent ratio and the plus of excellent eating quality.

 

[Kiwi Pete]

Eating Quality System - Silver Fern Farms » Silver Fern Farms

The Silver Fern Farms Eating Quality (EQ) System® is a science-backed grading process, which allows us to guarantee you a better beef eating experience.

www.silverfernfarms.com

This link gives a reasonable insight into how EQ testing may be performed in commercial-scale processing

FWIW EUROP grading is merely a job creation scheme, eg it makes the job of one person the job of 3.... it's great for the GDP of red meat production and ultimately the profit suffers as the "ideal" carcass is more expensive to produce because it generally doesn't fit with what the environment/climate will provide.
It's also possibly at odds with grass-finishing?

By contrast, much of our beef kill is dairy-derived rather than purebred beef beef - our friesian bulls are destined for manufacturing (patties and burgers) whilst there are also schemes for pure hfd/angus beef as well, which are subject to the EQ testing and premiums.
In terms of "value chain" most beef will only get one or two rides down the road, we don't have many "finishers" because virtually nothing can beat grass as a feed.

In terms of why commodity producers don't get much of the end-value of what their raw product is turned into, that's an interesting topic all on it's own.

The people who make bolts and nuts maybe feel the same way when they see their nuts and bolts in the latest Mercedes, look at the price on the windscreen and wonder why they don't get a payback from the value others have added.

Their options are similar:- either "get over it" or sell top-end cars instead of nuts & bolts?
Unless the whole system from raw product to sales, design, marketing is integrated then getting paybacks from further up the value chain is only ever going to be a goodwill gesture, IMO

We always seek value over volume, this in itself is often completely at odds with the "feed the world"ers mantra of growing more and more and more.

 

[Global ovine]

@123
I sincerely suggest you search out the debate that circulated prior to the instigation of the EUROP grid for both cattle and sheep carcasses. There was much support from the science sector for cattle, but they were advising it was not suitable for sheep for a range of reasons that I suggest you should explore. However when in the EU one has to conform, as a third of the UK sheep meat has been exported across the English Chanel, despite several non EU countries also exporting into the EU using grading systems suited to their sheep industries.

No country in the world can match the genetic diversity of sheep breeds that is found in the UK, much of which has been relegated to rare breed preservation because these do not fit the EUROP grid payment system which finds a smaller number of vastly altered breeds, both maternal and terminal, but especially terminal, to be farmed for a similar outcome even if it requires a high cost growing and finishing management system irrespective of the farm environment.
My concern is the unforeseen consequences of skeletal shape change that has increased labour requirements and animal health costs as they work against the shape that nature worked out to be the most successful for the species.

I suggest that a result of Brexit, we may see the environmental assistance to UK farmers being of more importance to individual farms than previous forms of financial encouragement. This may see a resurgence of rare native breeds to utilise the local grazing that currently has been to a degree replaced by concentrate feeds. However the retention of the EUROP grid for sheep would work against any such land use changes.

 

[123]

Thanks to all for the replies! There are many avenues which my research could go down with regards to all of the replies above, however the issue in most cases is gathering data on the subject, for example to extra cost associated with producing a 'superior' graded carcass. I Intend to post my research survey to the forum to gather some data and opinions on a more specific area to use for my analysis in the next few weeks!

 

[JD-Kid]

to be fair I think it's a stick and carrot system
alot of the meat. co's need to fill orders so will still buy lower. grading animals to fill orders
it would be a meat co with balls the size of your head to pay a high discounted price for animals with lower. grading. they would lose too many animals and/or suppliers
meat to bone same. deal in alot of cases unless aiming for. higher % of boned cuts it will not have a big effect
realy unless there is a flow down from the top that the end product will sell for a higher price the cutting rooms will have higher output and lower. there costs per kg packed also lower cost with getting rid of bone etc
and if that can happen then there should be a flow down effect. to the grower to improve returns

then another. can of worms. gets opened depending on how the animals feed ie. grasses vs rapes vs grains how handled in yards. trucking etc shelf life of product fat etc etc and. even how cooked has a effect on the eating enjoyment

I do kinda agree with. what kiwipetes. saying with the nuts and bolts to a point but you do pay more for a higher spec bolt

2005-20-niche-agribusiness-supply-chains.pdf
thats a paper wife's son done on supply chain management

Niche agribusiness supply chains and the channel coordinator’s role in their creation and management

researcharchive.lincoln.ac.nz

thats the bigger one that has all the nuts and bolts in it