Value in value-chain knowledge

Summary

​The business environment for Australian livestock producers is rapidly changing with factors such as technological innovation,   industry consolidation, and changing consumer demands, driving businesses across the supply chain to develop new approaches to capturing value. There is particular interest in the development of shorter or more collaborative value chains. Many producers are investigating alternative business models that bring them closer to the customers (e.g. processors) or the end consumers of their product. The motivation for these producers varies greatly, however there is a common interest in adding value to their product and reducing the risks of commodity price cycles.

The purpose of this study is to help livestock producers, Meat and Livestock Australia (MLA) and others involved in the red meat industry gain a better understanding of the value that can be derived from direct participation in red-meat value chains, and the characteristics of value-chains that deliver greater benefits.

The study consisted of two key components: a desktop literature review, and case-study analysis. The desk-top review explored relevant recent research which has sought to identify how participants in value chains interact for optimum financial performance – with a specific focus on red meat chains. Research from the Australian, New Zealand and Canadian red meat industries was highlighted, and insight was also gained from the US and EU industries. The second component of the research involved in-depth interviews with the operators of five case study businesses which showcase a range of different business models involving value chain collaboration (1 pork, 4 red meat).

This study highlighted common themes that appear to facilitate closer collaboration in the value chain, including the importance of trust, clearly defined business objectives and a high level of information flow between suppliers and customers. The benefits of more direct participation by producers in value chains include improved business relationships, increased ability to innovate, greater control over the trading environment, and increased information flow that supports better business decision-making.

As new value chain models continue to emerge and evolve there are likely to be implications for the way MLA invests in its R&D, marketing and industry integrity programs. This study summarised key areas that are likely to influence the further development of collaborative value chains including: enhanced market information services, tailoring extension services to meet business needs, providing resources to help strengthen the marketing capabilities of producers, and investments that to improve on-farm decision-making (such as objective carcase measurement).