Review of Marketing Alliances, Abbreviated Report Prepared for the 1999 BeefNet Annual Conference

Summary

Meat and Livestock Australia ("MLA") commissioned Gibson Associates to review the Marketing Alliances Program. We carried out an extensive consultative program within MLA, the existing alliances and red meat industry stakeholders. This summary of our findings is extracted from our report to MLA dated May 1999.

MLA has supported both horizontal (producer groups) and vertical (through chain) alliances, in order to demonstrate the benefits which may be generated for red meat producers by working in groups and for downstream value chain participants by working together with producers.

MLA's support of alliances over the last few years has encouraged the growth in alliance participation by producers and has resulted in demonstrable benefits to many members of alliances.

In horizontal alliances, these benefits include improved prices received by alliance members for product supplied through alliances. Other benefits identified by alliance members include access to skills, technical advice, group development initiatives, and interaction with other producers, improved relations with downstream participants and business support.

In vertical alliances, producers also indicate that benefits have been gained, again primarily through improved prices. Processor members indicate that some have received improved prices, but others indicate that they have not done so. It appears that other benefits are starting to be generated for processors in terms of more consistent product and in supply coordination.

The producer-processor interface is a key area where vertical alliance processes will continue to benefit from assistance. MLA's processes for assisting horizontal alliances will have application in this area of vertical alliance development.

Based on our research and analysis, we recommend that MLA should continue its support of alliances to the extent that funding is available, with the emphasis on funding for:

The start-up phase of new alliances through direct funding support

Alliances and their producer members overwhelmingly see MLA support as crucial to the establishment and development of alliances, particularly in the early stages.

Providing generic support materials via internet and other mechanisms

MLA should also coordinate development or collation of a suite of materials for alliances to use in their establishment and development processes, as well as providing an active management of the coordination of alliances and the delivery of assistance.

Supporting R&D demonstration projects through alliances

Vertical alliances have been valuable in the past in assisting development of through-chain concepts and in development of new objective measurement technologies. MLA can continue to benefit industry by using vertical alliances as vehicles for similar R&D projects in the foture, on a project by project basis.

Extension of the BeefNet concept to the lamb alliances

A single AllianceNet entity could have both beef and lamb sections and relevant producer representation within an umbrella managed by MLA. Alliances consider that BeefNet has a key role as a contact point between alliances and with MLA.

Involvement in communications technology development for alliances MLA is already involved at an industry level in these initiatives and should resume the development of a professional web site in order to assist alliances' access to generic support tools and cooperation with one another.

Assistance to further develop alliance marketing information systems

Alliances have indicated that they need generic education in the realities of the downstream marketplace and access to professional assistance in order to develop and implement practical market research and plans.