Independent review measures MLA’s value to industry
20 April 2016
An independent performance review has found that Meat & Livestock Australia (MLA) is delivering a return of $6.20 on every dollar invested by its levy payers, research partners and the Australian Government.
Despite the strong result, the review includes a series of recommendations for improvement that will assist MLA to further enhance the red meat industry’s profitability and sustainability by 2020.
The review comprised of two important reports - a Performance Review and an economic Impact Assessment.
The Performance Review, conducted by ACIL Allen, examined MLA’s performance over the five years to 2014-15 and confirmed that MLA has the necessary governance and organisational arrangements in place to deliver against its plans.
The economic Impact Assessment concluded that MLA’s $997 million expenditure on research, development and marketing programs from 2010-11 to 2014-15 provides current and future return of $6.20 for every dollar invested (a benefit cost ratio of 6.2:1).
MLA Managing Director Richard Norton said the review represented the most comprehensive examination of MLA’s performance ever – and that MLA was already acting on its findings.
“While MLA is performing at a high level and delivering good value for money to the industry and the community, we always need to look for improvement,” Mr Norton said.
“The review found that many of MLA’s programs are delivering exceptional results; such as Meat Standards Australia generating $679m in industry returns for a $54m dollar investment.
“MLA’s vital work in improving market access for red meat capturing a return of $24 for every dollar invested. Animal health and welfare programs, market information and the MLA Donor Company were also shown to be high performers.
“In other areas, we must continue to improve. For example, on-farm adoption of R&D in our industry is too slow, leading to a below par return on investment. This is a challenge for industry and one way MLA is working to address it is through a new regional consultation model that will ensure research is best targeted to producers and their business needs.
“In domestic marketing, our lamb marketing program performed well but our beef program lacked consistency and delivered a lesser result. We’re addressing this with our new Better on Beef campaign launched in 2015, which uses data and insights to better target consumers by reinforcing the nutritional credentials of beef.
“At MLA we have listened, worked hard and made fundamental changes, and the review acknowledges this. We don’t shy away from the need to keep improving.
“Evaluation is part of normal business for MLA and we’re using this review to guide our operation and the work we do for industry over the next five years.”
The review informs MLA’s next five year funding agreement with the Australian Government, and MLA’s Strategic Plan. Due for release in the coming weeks, the Plan is focused on commercial outcomes and is fully aligned with the Meat Industry Strategic Plan.
“I’m excited about the future of the red meat industry, and the contribution MLA will make to enhance producer profitability and sustainability in the coming years,” Mr Norton said.
Key findings of the Performance Review
- There is considerable benefit of having one service company which can span the entire value chain.
Recommendation: Maintain current company structures – to ensure MLA has the ‘breathing space’ necessary to operationalise the internal reforms that have been implemented over the past 2-3 years. This recommendation supports the continuation of the MDC (but with enhancements) as a fully-owned subsidiary of MLA.
- Meat Industry Strategic Plan (MISP) is an underutilised planning, investment, engagement and communication tool.
Recommendation: Use MISP 2020 as the access and exit point to MLA – to reinforce the role of MISP 2020 as a strategic planning and operational tool which drives internal and external company interactions.
- Listening is not enough, genuine partnerships are needed to drive future performance.
Recommendation: Improve MLA’s strategic partnership model – to ensure stakeholder engagement is meaningful, focused on building trust, oriented to evolve from transactional communication to seeking stakeholder involvement, and be calibrated to generate mutual benefits for stakeholders and MLA.
- Sourcing and procurement generates performance issues for MLA and MDC
Recommendation: Identify and then implement a leaner and more flexible procurement process – to achieve more from its investments and to accelerate realisation of MISP 2020 for the industry’s benefit.
Highlights of the Impact Assessment
- Each of MLA’s four main strategic areas of activity (Maintaining and improving market access; Growing demand; Increasing productivity; Industry integrity and sustainability) generated a positive return on investment ranging from $14.80 for every dollar invested to a low of $3.80 for every dollar.
- The majority of MLA programs generated healthy industry returns and all programs generated a positive return on investment.
- Four program areas within the strategic framework contributed 46 per cent of total industry returns from 20 per cent of expenditure.
- The best performing program areas were “Market access” (24.0:1); “Livestock exports” (14.5:1); “Eating quality” (12.5:1); “Product integrity” (8.3:1).
- Five programs returned below $3 for every dollar invested
- Two programs returned 7 per cent of total industry returns whilst using 23 per cent of expenditure; “Domestic beef marketing” (1.1:1) and “On-farm productivity” (2.7:1).