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Benefit cost analysis of non-compliance within a Victorian pasture-fed beef supply chain

Project start date: 23 October 2013
Project end date: 18 March 2015
Publication date: 01 July 2014
Livestock species: Grassfed cattle
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Demand for pasture fed beef is increasing globally. However, due to the very nature of pasture growth and finishing pasture-fed beef,  value chains are challenged to maintain continuity of supply and consistent quality of product year round.  Pasture based systems are influenced extensively by weather conditions, pasture species, grazing management, genetics and livestock production systems. These issues along with  market forces all impact on long term viability and profitability of producers in the supply chain.  Few specific pasture based value chains have been analysed to determine the level of non-compliance, particularly within the more intensive grazing regions of southern Australia.
This project aimed to assess the level of non-compliance in a southern pasture-fed value chain, with the intention of using the results to focus further work on areas of production and supply most critical to sustaining the market.  Nineteen months of carcase grading data over 2012 and 2013 were evaluated to determine what carcase characteristics resulted in the highest levels of non-compliance to the relevant company specifications. Hot standard carcase weight (HSCW), fat depth (P8 mm) and sex were the carcase attributes that were compared and analysed.
The 2012 data set comprised 3,905 heifers and 9,922 steers. Sixty six percent of the heifers and 62% of the steers did not meet the company specifications for carcase weight or fat depth. For heifers the cost of non-compliance was estimated to be $63 per carcase and for steers it was $47 per carcase. The 2013 data set comprised 19,099 heifers and 30,014 steers. Only 22% of the heifers met the highest value specification on the 2013 grid, with more than 50% of heifer carcases being too light. Approximately 40% of steer carcases met the 2013 weight and fat specifications while 39% of all the steers were overweight. The foregone value in non-compliance for heifers was estimated to be $84 per carcase and for steers, $87 per carcase.

More information

Project manager: Alex Ball
Primary researcher: Department of Primary Industries