Summary
Two important, and interlinked, supply chain innovations have been underway in recent years in the meat and livestock industry.
Meat & Livestock Australia (MLA) has been developing the Livestock Data Link (LDL) system, which aims to provide uniform, online and interactive feedback to beef and lamb producers. It has achieved some level of uptake with nine processors and a small group of producers, and decisions are now being made about the next stages of its development.
JBS Southern, during much the same period has been pursuing a premium branded, grass-fed strategy with both domestic and export markets, and to support this have developed their Farm Assurance supply program.
The two initiatives are linked, because JBS Southern is using LDL to aggregate its feedback at head office and buyer level, and has also been introducing it to its Farm Assured producers to enable them to access and analyse feedback in a more systematic way.
MLA and JBS considered it appropriate, now that both Farm Assured and LDL have had a period of exposure to producers, to understand more about the suppling producers involved, and the impact of the two initiatives. They engaged Gattorna Alignment (GA) for this review. GA are a supply chain consulting firm, working across diverse industries but also with a long involvement with the meat and livestock industry. They have worked on various projects since 2009, including an early study for MLA on LDL. All GA projects are designed to contribute to the same overriding objective – to create value by improving the alignment between all parties in a supply chain.
The project involved workshops with MLA and JBS Southern staff involved in Farm Assured and LDL, and a significant research study with Producers. The research study was conducted during May and June of 2016. 351 beef and sheep producers from South East Australia were interviewed by telephone. Of these, 251 were JBS Farm Assured suppliers and 100 were not, coming from the MLA member database. Of the Farm Assured group, 46 were current users of LDL. The interview topics were wide ranging, aimed at understanding the key differences in how producers manage their business, their priorities, as well as their knowledge of, and experience with, Farm Assured and LDL.
These two initiatives (Farm Assured and LDL) point to potentially important developments on the road to more sophisticated red meat supply chains in Australia.
JBS have designed a specific offer (Great Southern) to suit a segment of the market, and have consciously aligned the supply strategy behind this offer with the Farm Assured program. The 'branded, quality assured, consistent supply' offer requires a level of certainty in the supply base which JBS have used price premiums, quality audits and promotional activity with producers to build and maintain. The results from this research indicate that most producers believe the program has been beneficial for them, and this suggests that a level of alignment has been created between target market, processor and producers. JBS is still striving to improve the program further, and the research results provides insight into how this could occur. It emphasises that producers value different things and by developing a range of strategies that respond to these differences there is more likelihood that secure supply and high compliance will become easier over time. Of value for both JBS and the industry is the recognition that many producers value the structure that a program such as Farm Assured can bring to their business.
LDL's role in the industry was supported by the research; many producers appear to have both the capacity and interest in receiving information on their performance through this type of vehicle. There are improvements needed to make LDL easier to use, especially for those using it infrequently, but the fundamental functionality is considered of value. The segmentation results and the information on how producers prefer to learn new systems remind us that communication, engagement and even the interface with producers regarding LDL needs to be multi-faceted. A single approach will not reach the broad producer base, and value needs to be communicated and delivered in different ways to respond to a range of needs and to varying levels of capability.
