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Impact Assessment of the Red Meat Product Integrity Program
Australia enjoys unparalleled access to the world's markets for red meat because of the livestock industry's advantageous disease status and reputation as a supplier of safe and wholesome red meat. This reputation is underpinned by world-class food safety and integrity systems, developed as a result of significant investment from the Australian red meat industry over many years. This investment can be classified into three core components:
- livestock traceability, which operates as the National Livestock Identification System (NLIS);
- on-farm food safety systems, which operates as the Livestock Product Assurance (LPA); and
- scientific research, which involves a range of projects related to researching and communicating food safety risks and management approaches for incorporation into risk management programs.
To measure the impact of this investment, Meat and Livestock Australia (MLA) has commissioned an economic impact assessment to measure the net benefits of product integrity programs to the red meat industry and broader community over a 30 year time horizon. This includes investments by all sectors of the red meat industry (through levies) in research, development and operating costs, plus the contribution made by State and Commonwealth Governments to matching eligible research and providing operational support to integrity systems such as NLIS.
The impact assessment also needs to recognise that without the investment made by the industry, some other integrity system or process would exist in its place. This is the 'counterfactual', or what would have occurred without investment. The difference between 'with' and 'without' industry investment is then used to assess the net benefits for each program.
The total net benefits from the combined programs are estimated to range between $8.7 billion and $10.6 billion in 2014 dollars (Table 1), depending upon the counterfactuals for the on-farm food safety systems (LPA). The benefit cost ratio for the combined programs varies between 7.4 and 8.8.
Table 1: Product integrity programs: summary of net benefits
Investment in the NLIS delivers the majority of the net benefits. This mainly reflects the value of NLIS in improving traceabilty, which allows faster response times to a disease outbreak such as foot and mouth disease, limiting its spread and economic impact. The benefits of improved traceability in responding to slow moving disease like bovine spongiform encephalopathy (bse) were also measured and contributed to the net benefits. Other benefits of NLIS to market access or efficiency were noted in the analysis, but not assessed in the net benefits as they were considered minor in comparison to disease response.
The benefits attributed to LPA are based on the need for producers to participate in an equivalent program to meet food safety requirements for producing meat. The first counterfactual assumed that without LPA, each State would run an equivalent program, marginally increasing the operating cost. The second counterfactual assumes that without LPA, each property would require their own commercially delivered and audited assurance program at far higher cost.
The benefits of the food safety scientific research program is based on the key results of research projects in lowering or avoiding processing and inspection costs and lower health costs to the community due to fewer food safety incidents. The major benefits of this stemmed from research into the prevalence of E.coli, strategies to manage carcase contamination and improved testing for microbial contamination as well as more rapid testing for transmissible spongiform encephalopathy.
For all investments covered by this study the measurement of the benefits focused on the examples which deliver the majority of incremental benefits. Because smaller, marginal benefits were excluded, the total benefits to the red meat industry and the broader community from investments in product integrity programs are likely to be greater than reported.
The impact assessment has shown the benefits from investments in product integrity programs significantly outweigh the costs over the lifetime of those investments. The investments have delivered cost savings, efficiencies and have better positioned the industry to respond to food safety and biosecurity incidents.
By analysing the net benefits against counterfactual scenarios, the impact analysis has demonstrated that the red meat industry is better off than it would have been had it not made the investment in product integrity programs.
The distribution of benefits has shown that benefits accrue to all sectors of the red meat industry as well as consumers and the broader community, all of whom contribute to funding these investments through industry levies and matching commonwealth funding for eligible research.
This page was last updated on 25/07/2017
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