Managing Director's report

MLA's focus and outlook

Richard Norton

MLA’s purpose is to foster prosperity in the Australian red meat and livestock industry and in 2017–18 the company’s core values have again been intrinsic in every investment we have made on behalf of our stakeholders. This annual report records these, but I want to highlight some of the most timely demonstrations in my report to you.

Customer centricity

The customer is king and must come first in all that we do.

Today, increasing numbers of consumers in our domestic and high-value markets expect that the beef they buy is produced in a way that aligns with their values. They want to feel good about eating Australian red meat.

Our major customers are responding to these consumer drivers and increasingly requesting evidence from our industry on its environmental, animal welfare and social performance. Likewise, banks and the investment community are beginning to consider sustainability in their assessments of agricultural businesses.

The fact is, the Australian red meat and livestock industry has a good story and, in the past year, MLA has invested in a range of initiatives to share it.

Beef Industry Sustainability Framework

MLA has continued to provide professional and technical support for this critical industry initiative to improve transparency, align our practices with community expectations and build community trust in the red meat industry. The Framework’s inaugural report was launched at Beef Australia in May and is real proof that our industry can meet our customers’ needs in a responsible and ethical way – and without the heavy hand of more regulation.

Consumer and customer engagement

In August at Queensland’s famous EKKA, MLA launched the Australian Beef Paddock to Plate Story – a virtual reality tour of the supply chain which we’ve been taking to communities all over Australia ever since. Complementing that initiative, MLA launched a new suite of primary school education teaching resources which we’re now taking to more classrooms than ever before.

MLA has worked hard with Australia’s $45 billion foodservice sector to put more red meat on more menus. This includes a new partnership with The Coffee Club café chain and the launch of new resources within our dedicated foodservice program Rare Medium which is engaging more chefs and foodservice professionals as advocates for our product in the kitchen, where it counts.

In the latter part of 2017–18 we finalised the development of Good Meat, a new website targeted at the ‘curious consumer’ who wants to know more about the production of Australian red meat. Good Meat provides authentic information on topics such as animal health and welfare, environmental sustainability and nutrition, assuring consumers and countering the misinformation and claims of our industry’s opponents.

Stakeholder events

2017–18 was a year of events for the industry. In November, MLA hosted the inaugural Red Meat 2017 event in Alice Springs, bringing an engaging two-day format to the Annual General Meeting. The expanded program was extremely well-received by industry stakeholders, with attendance double previous years and national media coverage.

MLA also delivered a jam-packed program at Beef Australia 2018 in May, where we focused on the theme of ‘fostering beef’s prosperity’. MLA provided critical support to the event and leveraged our investment nationally, bringing internationally renowned chef Curtis Stone back to Australia and introducing National Steak Sandwich Day, both of which helped drive wide media coverage, industry promotion and product sales.

It was not just about the big events. MLA staff met with producers at literally hundreds of events and I personally engaged with thousands of producers at events in every state and territory. Events big and small are intrinsic to engaging with our stakeholders and ensuring we remain in touch with stakeholder needs.

Accountability through transparency

MLA is committed to being open and honest with our stakeholders. Below is a summary of pillar and priority performance against our Strategic Plan 2016–2020 and Annual Investment Plan 2017–18, as well as our financial performance.

Pillar and priority performance

Across MLA’s six pillars in 2017–18 were 211 key performance indicators, 187 from MLA’s Annual Investment Plan 2017–18 and 24 from MLA’s Strategic Plan 2016–2020. Of these, 64% were achieved, 10.4% were partially achieved, 16.1% were not achieved, 1% were not available and 9.5% were on track to be achieved by 2020 (see pages 101–114). Compared to 2016–17, the rate of achieving KPIs fell (from 68.3% to 63%), coinciding with MLA’s increased scope of work (number of research contracts increased from 458 in 2016–17 to 604 in 2017–18). MLA will continue to enhance the way KPIs are defined and measured.

Financial performance

In 2017–18, MLA’s revenue was $272.5 million, 35.9% higher year-on-year. The increase was primarily due to partner contributions and Government matching funding for investments made via MLA Donor Company.

Levy income increased $5.2 million (5.1%) to $106.4 million in 2017–18, with sheepmeat and cattle levies both higher than 2016–17. Poor weather conditions in key production regions resulted in increased slaughter rates and forced record numbers of cattle into feedlots, resulting in an uplift in levy income.

MLA’s total investment increased 35.8% in 2017–18 to $262.2 million. This included $171.8 million in research and development and $90.4 million in marketing, market access and insights activities. The uplift in investment is primarily attributable to MLA Donor Company, which increased investment by $59.3 million (158.1%) to $96.8 million and resulted in the MLA Group using almost 99% of the Government matching funds available in 2017–18.

MLA’s surplus for the year was $10.3 million, taking the retained surplus at 30 June 2018 to $118.5 million. Retained earnings increased primarily because of lower than planned levy investment, with the increased levy income also contributing to this result.

Outcomes that make a difference

MLA is dedicated to delivering value to our levy payers. In 2017–18, we’ve continued to invest in initiatives that make a difference to our industry.

Domestic and international competitiveness

Our producers are some of the most efficient in the world, but our processing sector operates in one of the highest‑cost manufacturing environments. New technology and the ability to share real-time, objective information across the supply chain is as critical to our future competitiveness as the quality and integrity of our product. Most of Australia’s processing capacity has now been costed for the new DEXA objective carcase measurement tool, already in use in three of the biggest plants and enabling big productivity gains from processing automation and real transparency in sharing carcase yield information with producers.

In the markets, MLA has provided expert advice and support to industry and Federal Government trade negotiators via a number of free trade agreements (FTAs) – the Comprehensive and Progressive Agreement for the Trans‑Pacific Partnership (CPTPP), the Peru–Australia FTA, the Indonesia– Australia Comprehensive Economic Partnership and the Australia–European Union FTA. Each trade agreement (pending implementation/successful conclusion) is expected to provide substantial benefit to the Australian red meat and livestock industry.

At home, MLA’s new ‘Australian Beef: the Greatest’ campaign has continued to reinforce beef’s versatility and place as an everyday meal, while MLA’s summer lamb campaign drove a 9.59% increase in domestic lamb sales.

Carbon neutrality

At Red Meat 2017, I reported MLA’s view that the Australian red meat and livestock industry could become carbon neutral by 2030. Managing climate change risk is one of the six priority areas identified in the Australian Beef Sustainability Framework and we’ve learned from speaking with key export customers and through our global consumer research that they are concerned by red meat’s greenhouse gas emissions. Addressing this priority is a must.

Again, our industry has a good story to tell, having already reduced its share from 20% of Australia’s 600 million tonnes total emissions in 2005 to just 13% in 2015. More innovations in this area are happening right now and, since my report last year, MLA has been developing an implementation plan that will assist our industry in not only reducing emissions, but also lifting productivity and boosting farm profits. In doing so, we’re supporting the peak councils’ efforts to secure the policy settings from government that are needed to facilitate the industry’s continued growth and development.

Research collaboration

In 2017–18, MLA Donor Company (MDC) collaborated with industry to implement two major research partnerships – the Strategic Partnership for Animal Welfare Research, Development and Adoption (RD&A), and the Livestock Productivity Partnership.

There are currently five projects underway through the Strategic Partnership for Animal Welfare RD&A. The partnership is built on a 50:50 funding agreement between MDC and collaborating research bodies, and will see up to $35 million invested in animal welfare over five years.

The Livestock Productivity Partnership is another collaborative research and development partnership which uses a 50:50 MDC co-investment model. There are now 11 projects underway as part of the partnership, valued at $35 million over five years.

Looking ahead

Every day, MLA is investing levy, tax payer and partner dollars to improve productivity, profitability and sustainability in our sector, and to lay down the foundations for red meat’s continued success. In 2018–19, MLA will continue to invest in activities and research that grow demand for red meat and enhance the reputation of our superior beef, sheepmeat and goatmeat.

Michele Allan

Richard Norton
Managing Director