Value-based pricing will transform lamb industry says processor

Will Barton, chief executive officer of family-owned, NSW-based Gundagai Meat Processors (GMP), says the arrival of eating quality measurement technology will revolutionise the industry and open new opportunities for high growth.

He says the combination of objective measurement of carcase lean meat yield (through DEXA machines) and eating quality (based heavily on intramuscular fat) will provide identification of the best lamb genetics.

Together they will allow the introduction of a value-based payment system which will send clear price signals to producers about the most profitable sheepmeat genetics.

Consumers would receive an accurate guide to lamb quality rather than relying on marketing claims.

"You now can't get a graded or ranked lamb product that is going to give you a better eating quality outcome than another.

"It's all just lamb, we manage the whole category by age, nothing else. A little bit by weight maybe, but that's it."

Value-based marketing will change all that by rewarding producers who supply both yield and eating quality, he said.

"Some (lamb) genetics will be proven to eat well, other genetics will be proven to eat not as well."

Value-based marketing would prove the truth or otherwise of claims by breeders spruiking their genetics are superior in yield and eating quality.

Mr Barton, 38, said the lamb producers he met were telling him they were waiting for processors to tell them what to produce.

He said the introduction of value-based marketing would probably also mean sheep producers would either focus on wool or meat.

"I think people will focus on one or the other if they want to be at the top of their game but it's really about being better informed on what genetics best suit your (geographic) location," he said.

GMP is at the forefront of installing and trialling the technologies which Mr Barton says will usher in an exciting new era for prime lamb.

The state-of-the-art export plant on the outskirts of Gundagai in southern NSW kills around one million lambs and sheep a year on a fee-for-service basis for long-term clients including Coles supermarket and the Arcadian Organic Meat Company.

A "hot" DEXA (dual-energy X-ray absorptiometry) unit has already been installed on the slaughter floor as part of the nation-wide ALMTech (Advanced Livestock Measurement Technologies) project which is being overseen by Meat and Livestock Australia and led by Graham Gardner and his team from WA's Murdoch University.

Murdoch University researchers are finetuning the "hot" DEXA unit to ensure 100 per cent accuracy before it's commissioned.

DEXA units normally operate on chilled carcases so the scans can also be used to guide robotic carcase cutters in the boning room.

"Hot" systems don't allow robotic cutting up of carcases but that's not a major concern for Mr Barton.

"Firstly we don't have the scale to justify automated carcase cutting (and the $2 million investment) in our boning room," he said.

The main reason for the "hot" DEXA unit was to further lift the efficiency of the plant's fully-automated chiller facility where carcases for each client are now sorted and racked together by weight.

DEXA measurements on the lean meat, fat and bone content will enhance sorting and help clients better target individual cuts at markets, either domestic or export, which offer the maximum returns.

"The price of lamb really requires you balance that carcase by trading everything out to maximise value, for most clients of ours that's either a domestic or export focus for the prime cuts and a very different export market focus for the secondary cuts (like breast and flap prices)," Mr Barton said.

The other major attraction of a "hot" DEXA unit was its capacity to give faster feedback to producers on lean meat yield.

GMP was aiming to be the destination of choice for producers who were crying out for more feedback on the processing performance and health of their sheep.

"The DEXA unit tells you how much meat was in the carcase. That on its own is a really dangerous piece of information (for farmers)," Mr Barton said.

Sending farmers a signal about lean meat yield on its own risked them pursuing more muscle at the expense of eating quality which could quickly ruin the industry.

"As soon as you have got an eating quality measure you can chase as much lean meat yield as you like as long as you are taking eating quality with it genetically."

Mr Barton was hoping the bugs could be knocked out of the DEXA unit in the next few months and said trials of eating quality technology were planned for the GMP plant in 2020.

He said the MLA had portrayed DEXA as "plug in and play" solution but the units needed plenty of tweeking to get meaningful data from them.

"The journey is not for the faint-hearted," he said.

The Barton family's journey in the meat started in 1919 when Will's grandfather, Fred, started a butcher's apprenticeship in South Gundagai.

Bartons have been around Gundagai since the 1850s. Fred Barton ended up owning a butcher's shop in the main street of Gundagai.

Will's father, Bill, also became a butcher while his uncle, Tony, focused on farming and livestock procurement.

In 1974 they decided to build a small abattoir on land once owned by Fred Barton's grandfather, William, in South Gundagai which has now grown into a Tier 2 export-licensed work employing around 240 people.

The pair started processing pigs, cattle and sheep mainly for the family butcher shop but the business grew quickly and in the early 1980s started to process beef and lamb for the big supermarket chains, Coles and Woolworths.

The two supermarkets remained key fee-for-service customers throughout the 1980s and 1990s but by around 2000 the Bartons decided to close the beef chain and focus on sheep.

The Bartons could see the major investment being ploughed into beef processing by by the big meat companies and decided to stick to a processing area where they could continue to compete.

Woolworths was also putting pressure on them at the time to process more lambs.

Then Coles approached them seeking an exclusive processing contract which ran from 2001 to 2015.

"As a business we fell off the radar a bit in terms of visibility to the public," Mr Barton said.

"We still have a long term contract with Coles but we are non-exclusive."