AnnuAl 4 OperAting plan A u s t r A l i A n M e A t p r O c e s s O r c O r p O r A t i O n

Transcription

1 Annual Operating Plan Australian Meat Processor Corporation

2 table of contents Introduction...3 Key challenges and drivers for research, development, extension and marketing investment... 4 The role of the Australian Meat Processor Corporation...5 The Annual Operating Plan...6 Consultation framework underpinning AMPC s RD&E and Marketing investments...7 Co-investment and collaboration...8 High level measures against AMPC Strategic Outcomes...9 Enhancing domestic and global competitiveness...10 Delivering to customers and consumers Product integrity, safety and wholesomeness Improving meat processing productivity, products and processes Improving sustainability Building capability and influencing practice change...22 Continual improvement in business practice...24 Total program investments...25 Australian Meat Processor Corporation 2 Annual operating report

3 Introduction The Australian Meat Processor Corporation Annual Operating Plan establishes the direction for Research Development & Extension (RD&E) and Marketing (M) activities and services that will be delivered on behalf of the red meat processing industry for This Annual Operating Plan (AOP) presents the financial year s specific programs, priorities and projects that underpin the new AMPC Strategic Plan This AOP is designed to communicate AMPC s programs and activities and their alignment with the red meat industry s Meat Industry Strategic Plan (MISP) , and the Federal Government s National and Rural RD&E priorities. New and emerging drivers, policies, market pressures and technologies that require underpinning by RD&E investment result in the need for continual review and evaluation of activities. It is clear to AMPC that RD&E priorities need to account for the changing customer, community and public expectations in order to maintain the strong position of the Australian red meat processing industry. A collaborative approach to strategic planning is needed to allow our industry to achieve competitive, sustainable operations in tomorrow s trading environment. To ensure that RD&E priorities are identified, relevant and result in outcomes for industry, AMPC has revised its consultation process and will continue to ensure the transparency of RD&E outcomes and accompanying evaluation activities. Several new focus areas and priorities will be introduced within the RD&E portfolio that will enhance AMPC s investment in RD&E on behalf of industry and Government and better account for the expectations of industry, Government, customers and the broader community. In addition to the above, there have been several process changes. The National RD&E Framework has influenced AMPC to provide greater consideration of collaboration and co-investment, therefore activities for continue to involve investment with other livestock industry sectors, and collaborations with other RD&E provider and investor organisations, CRCs, Centres of Excellence and RD&E Collaborative programs. Australian Meat Processor Corporation 3 Annual operating report

4 Key challenges and drivers for research, development, extension and marketing investment The Australian red meat processing industry remains well positioned to grow into the future, delivering strong economic growth to the Australian economy and significant benefits to the community. However the industry also faces significant challenges in relation to increasing competition, maintaining and improving market access, improving industry and human resource capability and adapting to environmental challenges. On this basis, efforts have been directed towards enhancing consultation and the identification of future RD&E priorities for the AMPC portfolio, as well as improving delivery and evaluation of impact from investment. These changes are reflected in the presentation of the new AMPC Strategic Plan and subsequently, this AOP that reflects intended investment for Australian Meat Processor Corporation 4 Annual operating report

5 The role of the Australian Meat Processor Corporation AMPC administers statutory levies for industry as detailed in the Statutory Funding Agreement between AMPC and the Commonwealth of Australia represented by the Department of Agriculture, Fisheries and Forestry (DAFF). The AMPC Annual Operating Plan (AOP) is submitted in accordance with clause 12 of the Funding Agreement. AMPC has 124 members operating in 157 meat processing establishments, representing over 96 per cent of Australia s red meat processing capacity. AMPC s mission is to maximize the long term efficiency, viability and sustainability of the red meat processing industry by supporting the development of sound, scientific solutions that will: Improve the long term efficiency and competitiveness of the industry; Enhance the sustainability of the industry; Assist to protect, secure and maintain market access; Enhance capability and innovation; Enhance the overall productivity and performance of the meat processing sector. The AMPC Joint program reflects the collaborative RD&E and Marketing investment that is established and delivered under the red meat industry Memorandum of Understanding. The Joint program is collaboratively funded between AMPC and Meat & Livestock Australia (MLA) using both producer and processor levies and matching Australian government RD&E funds. The Joint program is designed to deliver supply and value chain activities which support food safety, eating quality, increasing market access and growing demand for meat and meat products. In collaboration with Peak Councils and MLA, AMPC contributes to the development of strategic objectives and directions for the whole of the red meat processing and livestock industry and annual operational targets and KPI s for joint activities. The AMPC Core program represents industry-wide RD&E activities and are aimed at ensuring outcomes and benefits are available to all levy payers, as well as the broader supply chain and the Australian community. The AMPC Plant Initiated Project (PIP) program is a proven highly effective mechanism for leveraging significant private investment directly into industry RD&E programs. The AMPC PIP Program enables processors to identify and undertake RD&E projects aimed at delivering benefit to the whole of the red meat supply and value chain and the broader Australian Community. Figures from indicate that individual PIP projects will continue to be strongly subscribed to by a diversity of processing companies in both size and species, across a broad range of RD&E programs, particularly in relation to identified key industry priority areas of building innovation capability and in the facilitated adoption of emerging technologies. Australian Meat Processor Corporation 5 Annual operating report

6 The Annual Operating Plan AMPC s AOP is presented in 7 sections that align with AMPC s new ( ) strategic outcomes. Each strategic outcome comprises several specific focus areas, accompanied by RD&E and Marketing activities, and the proposed investment for This AOP attempts to more clearly define focus areas and accompanying key performance indicators (KPIs) to report on performance and evaluate AMPC investments and outcomes against the National and Rural Research Priorities. A collaborative approach to strategic planning is needed to allow our industry to achieve a competitive, sustainable operation in tomorrow s trading environment. This year, the AMPC AOP has been heavily impacted by the revision of the Company s Strategic Plan. The Strategic Plan was developed with wide industry (members), Government and partner inputs and was underpinned by several key reviews, the most critical of these being the AMPC Environmental Future Scan This Environmental Future Scan involved consultation and interviews with a large array of stakeholders, as well as review of previous investments, priorities and future RD&E needs. The AMPC Strategic Plan was developed in early 2013 and submitted to Government for approval during May This work follows a number of other changes to AMPC s consultation, including nation-wide surveys of processor priorities, direct engagement via industry network events and increased dialogue with members as a consequence of the implementation of AMPC s communication strategy. Current consultation arrangements now include the development of short, medium and long term strategies for each area of the RD&E portfolio and regular working groups and communication of RD&E outputs. Further, a new consultation process to engage a wider array of stakeholders, including those from science, policy, other primary industries and RD&E providers, has continued. In addition to the above, there have been several process changes. The National RD&E Framework has influenced AMPC to provide greater consideration of collaboration and co-investment, therefore activities for also include projects that involve investment with other livestock industry sectors, and collaborations with other RD&E provider and investor organisations. Extension activities will remain a key focus for AMPC, given the need to appropriately underpin the principles of the National RD&E Framework and align with the direction of other RDC, State and Commonwealth Government stakeholders. AMPC has sought to continue alignment with the key focus areas of its partner organisation, Meat and Livestock Australia. It is noted that MLA will in 2014 review their Strategic Plan and subsequently re-model their AOP, for which AMPC as a co-investor, will also make the necessary adjustments. The basis for this alignment is the arrangements between AMPC and MLA, where MLA deliver services to the meat processing sector, and the agreed Memorandum of Understanding between the red meat industry organisations. It is also noted that in the Meat Industry Strategic Plan will be revised, requiring AMPC to further revise its Strategies and AOP for alignment across the supply chain co-investment model. Delivering on this AOP, which integrates new priority areas is a challenge that requires careful balance of AMPC resources with those provided for the service delivery of AMPC s RD&E projects by MLA, as well as with consideration of market factors. AMPC undertakes to assess its performance through the annual review of this AOP and consequently report on its performance to shareholders & stakeholders and build on the results for purposes of continual improvement. Several new strategies were introduced in the AMPC Strategic Plan and as a result, this AOP now acknowledges these areas with underpinning projects and intended investments. Australian Meat Processor Corporation 6 Annual operating report

7 Consultation framework underpinning AMPC s RD&E and Marketing investments There are several activities that provide AMPC with input towards identifying RD&E and Marketing priorities and developing strategic research direction for each of the programs in the AMPC portfolio. First, to underpin all RD&E and Marketing programs, AMPC engages with its membership through an annual survey of RD&E priorities and needs, in order to capture processor input and to inform the development of targeted industry operational programs which are reflected in this AOP. Thirdly, AMPC engages with the Commonwealth to ensure effective alignment and delivery of industry and Government priorities and the integration of RD&E activities that address the needs of the wider industry, the Australian community and that deliver public good. Finally, AMPC engages with research provider organisations, to ensure that the latest science and scientific methodologies are considered when determining priorities and making investments. Second, AMPC facilitates several industry representative consultative committees which provide strategic and technical review of activities within key AMPC program areas of Environment, Technology, Livestock and Supply Chain, Climate Change and Capability. Representatives from AMIC, MLA and Mintrac participate in these consultation processes to ensure continued alignment with each organisation s Strategic Plans and respective service agreements. Australian Meat Processor Corporation 7 Annual operating report

8 Co-investment and collaboration AMPC is committed to working with its partners and stakeholders to achieve the efficient application of levy funds to required RD&E and Marketing activities. This is supported by focussing where possible on enhancing co-investment and collaboration. AMPC works closely with the Australian Government, the AMPC processor membership, MLA and other industry bodies participating in the red meat industry MOU. This collaboration ensures that processor levy funds are appropriately and effectively invested to deliver tangible results for processors, the red meat processing industry, rural Australia and for the Nation as a whole. MLA is the Commonwealth designated Service Provider to the red meat processing industry under the Red Meat Memorandum of Understanding (MOU), therefore a significant component of AMPC expenditure involves co-investment with MLA into core and joint industry activities. AMPC considers the partnership with MLA provides for enhanced services to the processing industry and the entire value chain for the red meat sector, without adding duplication of capability and resources. AMPC works closely with the Meat Industry Training and Advisory Council (MINTRAC) where MINTRAC provide for AMPC, the activities related to extension of research and development outputs to industry. The E of RD&E is critical to the effective uptake of RD&E investments and AMPC and MINTRAC have partnered to ensure that outcomes from the AMPC portfolio are delivered across the country to processors. AMPC will continue to use and develop strategic partnerships and alliances with other organisations that have complimentary capability and service delivery capacity as a key mechanism to amplify its impact. There are numerous existing collaborations at the project, program and organisational level that extend across state, national and international domains. Further partnerships between AMPC and key research organisations, including CSIRO, the Sheep CRC and several National RD&E Strategies, which are detailed on the AMPC website. AMPC works closely with the Australian Meat Industry Council (AMIC), the advisory council to the processing industry, to ensure that gaps, needs and issues identified by processor members are considered and supported through appropriate research, development and extension activities. Australian Meat Processor Corporation 8 Annual operating report

9 High level measures against AMPC Strategic Outcomes Recognising the Service Agreement between AMPC and MLA, there was a need to define a series of high level KPIs for each program as well as specific KPIs against each focus area to effectively benchmark and measure the company s performance comparatively to its core responsibilities on behalf of industry and Government. The measures below will be utilised in the reporting of RD&E outcomes against the AOP. Program (Strategy in alignment with the AMPC Strategic Plan) Enhancing domestic and global competitiveness Delivering to customers and consumers Product integrity, safety and wholesomeness Improving meat processing productivity, products and processes Improving sustainability Building capability and influencing practice change Continual improvement in business practices Expected outcome Ensuring that markets remain efficient, accessible and attractive for investment through RD&E Continue the development, delivery and reinforcement of key messages that encourage consumer and end user support for beef, lamb and goat products Establishing Australia as leader in the supply of safe and wholesome red meat products through systems and programs to manage food safety through innovative science. Disruption to trade from key animal disease threats, animal welfare issues and traceability is minimised due to improved practices and measures Increasing industry productivity and net value by developing technologies and new products, building the capability of processors to manage change and encouraging the adoption of new and improved technologies and practices Addressing sustainability issues including natural resource management and utilisation, climate change and overall business continuity Enhance industry and research capability and build critical mass to ensure industry remains sustainable, profitable and productive Demonstrate continual business improvement, improved corporate management and risk management Measure There is improvement in at least one market, validated by MLA market access reports Marketing campaigns are supported by industry to increase export and domestic products entering the marketplace (MLA/AMPC joint target), validated by MLA market access reports Maintain consumer satisfaction ratings on the quality of beef above 7.3 out of 10 (MLA/AMPC joint target) Industry maintains its microbiological benchmarks and major market closures are avoided due to the integrity of Australia s food safety systems (MLA/AMPC joint target), validated by MLA market access reports Eating quality of red meat improved by process control interventions in 80% of lamb and 80% of beef processed (MLA/AMPC joint target) Developed technologies or management practices which demonstrate rate of return, that enhance productivity and that reduce occupational health and safety risks, validated by industry evaluation reports Increased investment, delivery and implementation of best industry practice that addresses sustainability and climate change as well as regulatory and market requirements, validated by industry evaluation reports Processors are engaged in practice change and there are demonstrated capability building outcomes in the form of learning, education and training initiatives Demonstrate enhanced governance and compliance arrangements and improvements in member satisfaction results from outputs and engagement activities Other data to be utilised in order to measure success: Changes to practices developed through research and development Publications, including peer reviewed journals, technical articles and publications made available to industry and the community Number and summary description of innovations and forecast value from application in industry Number of industry and community publications Number of services designed, developed and delivered to processors and the community Number of services delivered in collaboration with industry Value of funding contribution to research projects that support productive and sustainable industry practices Australian Meat Processor Corporation 9 Annual operating report

10 Outcome 1 Enhancing domestic and global competitiveness Strategies for unlocking market potential and research to address current or emerging market access barriers is of major importance to the red meat processing industry s sustainability, profitability and future net value. The viability of industry is dependent on ensuring global markets remain accessible, efficient and attractive for investment by trading partners. Currently, industry s co-funded Market Access program provides market access resources to the wider industry, focussing on monitoring trade developments in overseas and domestic markets; undertaking market access research; developing industry-wide positions to support submissions to government on trade priorities; and lobbying for market access improvements. To date, significant effort has been directed towards maintaining the current status of meat markets and where possible, securing improvements to these conditions, as well as responding to unexpected issues as they arise. The World Trade Organization (WTO) Doha Round continues to offer some prospects for trade reform, despite ongoing delays. It is critical that real and significant improvements in market access are forthcoming from this Round. In partnership with government, industry needs to continue to pursue the broad range of initiatives to address the multidimensional measures now used to restrict trade. These include not only mounting arguments to lower economic barriers to trade, but also work on animal disease, animal welfare and food safety standards. To guarantee access it is important to ensure that current regulatory standards in these areas are met and exceeded, as well as anticipated developments in these standards internationally. There remains a need to support FTA negotiations in collaboration with Government to ensure that current favourable market access is maintained, that tariff barriers and other trade restrictions are reduced, that commitments on customs procedures and investment are managed and that the formation of formal consultation processes deliver opportunity for effective dialogue between industry, Government and trade officials. Coupled with the above activities will be further development and extension into communicating our system for Australian red meat processing to trading partners and customers. Whilst this may be considered a given, the importance of developing recognisable key performance indicators that represent the attributes of Australian product will become increasingly important not only for trade development, but in relation to addressing opportunities for branded products within developed markets. This program focusses on the following key strategies: Research, identify, prioritise and address trade and technical market access barriers to develop agreed strategy in industry and with Government Apply sound, scientific solutions to mitigate and remove trade barriers and enhance opportunities into existing markets Build capability in key technical and trade disciplines to support ongoing response to market access, trade negotiations, technical and regulatory issues as they arise Maximise the market access options for red meat processors through effective trade reform activities Respond to domestic and international market expectations by effectively demonstrating and describing the system under which red meat is processed (and produced) Details of AMPC investment in these areas for is provided below. Strategies Key activities underpinning AMPC s Strategic imperatives Budget allocation 1.1 Research, identify, prioritise and address trade and technical market access barriers to develop agreed strategy in industry and with Government Input into the identification of market access targets and strategies developed to resolve these in the short, medium and long term Project platforms to address key technical market access barriers that result in agreed protocols are developed Collaboration with other industry sectors, bodies, Governments and nations, assists to manage, communicate and prepare for current and potential trade barriers Representation on the IDC $3,580,000 $190,000 $87,032 Australian Meat Processor Corporation 10 Annual operating report

11 Outcome 1 Enhancing domestic and global competitiveness Strategies Key activities underpinning AMPC s Strategic imperatives Budget allocation 1.2 Apply sound, scientific solutions to mitigate and remove trade barriers and enhance opportunities into existing markets Research and development into key trade and technical issues Investment into response capability to address impediments when they arise National key performance data is developed and analysed to position and communicate the attributes of Australian red meat processing 1.3 Build capability in key technical and trade disciplines to support ongoing response to market access, trade negotiations, technical and regulatory issues as they arise 1.4 Maximise the market access options for red meat processors through effective trade reform activities 1.5 Respond to domestic and international market expectations by effectively demonstrating and describing the system under which red meat is processed (and produced) Professional development programs to coordinate and manage new and emerging issues for market access are developed PhD program is developed in agricultural trade, policy communications and/or economics in red meat processing Capability building initiatives directed at key disciplines including product development, branding, marketing, trade and technical market access are developed Evaluation of the current implementation of domestic and export inspection system reforms is undertaken Monitoring and responding to WTO developments and providing representation to government Monitoring developments in overseas markets; developing networks of industry and government contacts in Australia and overseas; and providing via MLA a response capability when impediments arise, (activities delivered by MLA on AMPC s behalf) Coalition building in key overseas markets and industry missions Preparing and lodging submissions on industry priorities for FTA negotiations via MLA (activities delivered by MLA on AMPC s behalf) Contribution to research to support trade reform advocacy in WTO and FTA negotiations including in market and supply chain research Communication tools to describe the system underpinning domestic and export products are further developed Inputs to key communication messaging for trading partners and customers is provided Implementation of industry s issues management strategy is continued Total AMPC Contribution $3,857,032 NB: Budget allocation reflects AMPC direct contribution Performance Measures to be reported against by MLA (reflected in MLA AOP): Major market closures for red meat products are avoided due to enhanced ability to demonstrate to international and domestic Governments and customers, the integrity of Australia s food safety systems for red meat Satisfaction rating of MLA market access activities by government and industry maintained above 85 per cent (survey conducted biennially) on the basis that MLA deliver the program on AMPC s behalf Improvement in access to at least one market (validated by market research data) Maintain the current industry microbiological performance benchmarks RD&E is commissioned to address market risks and concerns, such that Australian red meat is recognised to deliver on customer and market requirements Performance Measures to be reported against by AMPC: Effective consultation, under the auspices of the MOU, with partner organisations to develop strategic objectives and activities for Joint programs Australian Meat Processor Corporation 11 Annual operating report

12 Outcome 2 Delivering to customers and consumers In relation to increasing the demand for Australian meat products, global demand is estimated to increase by 150% by This will result in three markets: the first being low cost commodities for third world countries, the second premium differentiated brands for affluent customers in developing countries and the third adding value through the adoption of technologies that provide options for lower value cuts. The consumer and societal expectations regarding industry and corporate accountability are progressively increasing due to changed value systems. Furthermore, the demographics of the community both in Australia and international countries are changing. In addition, specific consumer and societal expectations regarding industry and corporate accountability are progressively rising, due to changed value systems. To maximise delivering to customers and consumers and to maintain and increase the demand for red meat and red meat products, Australian red meat processing will focus more on product development, differentiation and the substantiation of product quality parameters in the next 5 years. Australian meat processors will need to be heavily focussed on category development and management as the mechanism to produce enhanced business results by focusing on delivering consumer value. In anticipation of this activity, research will underpin objective measures for eating quality and consistency and the utilisation and promotion of meat quality attributes to differentiate our products in key markets, both domestically and overseas. Understanding the customer and consumer base and being able to address their needs with consideration of demographical differences and influences of choice will be paramount. In terms of meat quality, the integrity of the Meat Standards Australia grading provides a strong basis for brand development and underpins specific approaches to branding by individual meat processor companies. From a research perspective, the evaluation of the accuracy of eating quality measures will continue in order to enhance the demonstration of meat quality attributes, validate these and communicate to the end user. Building on the current platform of eating quality with further research into genetics, genomics and functional foods, as well as other attributes in areas of integrity (e.g. shelf life), branding (e.g. packaging/ cuts/cooking) and new product development will be a key focus. This program focusses on the following key strategies: Understand what consumers and customers want in relation to red meat products and how these expectations would be met Demonstrating the importance of red meat in the diet Delivering wholesome and consistent eating quality Enhancing and communicating the value proposition of the red Australian Meat Processor Corporation 12 Annual operating report

13 Outcome 2 Delivering to customers and consumers meat category to the customer, consumer and community Details of AMPC investment in these areas for is provided below. Strategies Key focus areas Budget allocation 2.1 Understand what consumers and customers want in relation to red meat products and how these expectations would be met In the domestic and export markets, examine the drivers of consumer demand Measure the effectiveness of marketing and promotional activities Identify and provide information to address customer and community information needs Work closely with peak councils and government and seek opportunities with like-minded organisations to identify priority industry issues and commission research to support these issues Support Industry s effective engagement with the community Continue the Intercollegiate Meat Judging Program and Competition $ 163, Demonstrating the importance of red meat in the diet 2.3 Delivering wholesome and consistent eating quality Review and enhance the methodology for capturing consumer and customer buying behaviours Develop targeted strategies by market, cut, product and supply chain that specifically address the drivers of demand Examine the effects of specific product attributes on consumer acceptability and product quality within market and by product Continue investment and communication of evidence on the benefit of healthy beef and lamb diets for meeting nutrient requirements and preventing obesity and chronic disease at key life stages Contribute to the red meat industry publications that provide information on role of red meat in the diet Deliver nutrition and health messages to the community and key stakeholders through advertising, direct mail, publications, conferences, seminars, on-line and events Develop and enhance the application of interventions for eating quality, nutrition, consistency and productivity Develop and improve meat measurement tools and on-line measures of quality Enhance understanding of the variables and influences contributing to eating quality Investigate issues including shelf life, microbiology, muscle attributes and cooking methods towards improving quality Investigate pre-slaughter practices that impact on eating quality while also achieving nutritional content and productivity objectives Develop new technologies including probes that contribute to optimal eating quality, nutrition and consistency of product Continually examine and establish sound, scientific solutions for product attributes that are determined to impact negatively on the customer and consumer Collaborate with industry organisations to maximise consistent eating quality standards that demonstrate and minimise risks to meeting customer expectations Integrate, in collaboration with MLA, meat quality measures into clear and transparent standards to underpin meat processing industry brand development and guarantees provided to the customer Encourage and support capability development in meat quality and meat science through relevant leadership, PhD, Masters and Honours programs $ 847,000 $ 852,116 Australian Meat Processor Corporation 13 Annual operating report

14 Outcome 2 Delivering to customers and consumers Strategies Key focus areas Budget allocation 2.4 Enhancing and communicating the value proposition of the red meat category to the customer, consumer and community NB: Budget allocation reflects AMPC direct contribution Strengthen Australian consumers emotional bond with beef, create desire and educate consumers to cook a range of seasonal beef meals/cuts Marketing to maintain lamb as a routine purchase by building national pride and encouraging consumers to purchase a wider range of cuts through promotional campaigns Contribute to whole-of-industry marketing campaigns that address the drivers of demand e.g. enjoyment, nutrition, convenience, integrity, ethical and social accountability and value for money Position Australia s red meat as safe, consistent, versatile, wholesome, and nutritious via trade and consumer educational activities Develop programs that facilitate individual processors in building their brand strategy through innovation and deliver products to the marketplace Focus on lamb promotional efforts for consumer-specific community occasions throughout the year Expand via investment with MLA, the red meat meal repertoire by building consumer confidence in preparation of a wider range of cuts and desire, using seasonal meal-based promotions Invest via MLA in work with retailers and foodservice operators to raise standards of red meat presentation, quality, merchandising and promotion Performance Measures to be reported against by MLA (reflected in MLA AOP) $1,275,750 Total ampc contribution $3,137,866 Increase consumer satisfaction by increasing MSA grading numbers to 1.7 million cattle and 1.7 million sheep carcases in 2011/12 Consumer research targets are demonstrated: 50% of the community strongly agree red meat is an essential part of a healthy diet and no more than 17% community avoid eating red meat Approximately 200 tonnes of 4-5 star beef identified and sold by brands Increase consumer quality rating above 7.3 out of 10 Improvement in beef and lamb attributes measured by consumer tracking ( beef is my favourite meat above 20%, makes the most satisfying meals above 59% and top of mind awareness of lamb above 19% and is loved by Australians above 76%) Strong retailer support for programs is evidenced by retail butchers continuing to rate the programs overall at 3.5 out of 5 Performance Measures to be reported against by AMPC: Effective consultation, under the auspices of the MOU, with partner organisations to develop strategic objectives and activities for Joint programs Australian Meat Processor Corporation 14 Annual operating report

15 Outcome 3 Product integrity, safety and wholesomeness As competition in meat markets increases and trade barriers around expectations for integrity and quality continue to proliferate, the demonstration and differentiation of meat products from Australia has become increasingly important. Whilst it is recognised that food safety is non negotiable, the importance of being able to validate, demonstrate, communicate and manage responses to food safety issues as they arise is part of daily business in the red meat processing industry. It is important that the food safety system is delivering the appropriate level of protection to the market and that level of protection is continually reviewed against public health data. Linked to food safety is the overall product integrity framework by which Australian meat processing products are produced, including traceability, freedom from biosecurity and disease threats, animal health and welfare measures and overall meat processing quality standards. Provision of a response capability to manage unforeseen food safety and integrity issues is also a necessity. Therefore the red meat processing industry will provide further consideration to investment into building capability and capacity in microbiology, epidemiology, veterinary and meat science disciplines within the future planned research programs. From a research perspective, there is an ongoing need for investment into the establishment of scientifically valid assessment tools for food safety, diagnostics and the establishment of verification systems that communicate the required measures and outcomes in a meaningful way to the customer, end user, regulators and community. Furthermore, the demonstration of equivalent analysis methodologies that underpin our standards and the rigour of scientific approaches remain important in order to reach agreement on the expectations of product integrity and quality with our end users. Consistent messaging relating to the science and the systems applied in industry towards assuring product integrity and quality outcomes is key to building sustainable relationships with trading partners and Governments. RD&E activities under this program will also include investment towards demonstrating high standards of animal welfare, livestock handling, stunning and slaughter practices, as well as supporting animal health, residue management and the protection of industry from biosecurity incursions. Other key strategies within which investment will contribute include emergency management, enhancing disease surveillance tools and improving traceability systems. This program focusses on the following key strategies: Research and development to ensure food safety systems and practices are the landmark of Australian product Maintain and enhance efficient product integrity standards and quality assurance systems Maintain and enhance world class communally based traceability systems Biosecurity, residue management and animal health standards are underpinned by sound science High standards of animal welfare are demonstrated Details of AMPC investment in these areas for is provided below. Objectives Specific Activities for Budget allocations 3.1 Research and development to ensure food safety systems and practices are the landmark of Australian product Ongoing research to underpin the systems supporting product integrity and food safety is undertaken Continue developing recognisable and scientifically valid performance indicators for integrity that are established, benchmarked and communicated Ongoing investment is contributed to whole of supply chain product integrity systems and processes Understand and enhance diagnostics for adulterants New and innovative technologies are developed that further improve current food safety and product integrity systems in Australia to maintain our international leading edge in knowledge and practice change $269,000 Australian Meat Processor Corporation 15 Annual operating report

16 Outcome 3 Product integrity, safety and wholesomeness Objectives Specific Activities for Budget allocations 3.2 Maintain and enhance efficient product integrity standards and quality assurance systems 3.3 Maintain and enhance world class traceability systems 3.4 Biosecurity, residue management and animal health standards are underpinned by sound science 3.5 High standards of animal welfare are demonstrated Contribute to the development of new food safety systems and processes Continue the support of AusMeat Standards Division Support the Secretariat services for SAFEMEAT and contribute to the development of effective industry integrity and food safety issues Information is developed to respond to customer and market expectations on the wholesomeness of red meat products Uptake of product integrity standards is continually supported through rigorous quality assurance practices, extension, training and capability development in industry Contribution to supply chain related projects that target and underpin the integrity of the Australian red meat and livestock industry quality assurance programs is maintained Continue to support training and extension systems covering livestock management and the supply chain Continued investment in the development, implementation and compliance for traceability systems for livestock and meat products Ensure that NLIS Ltd remains supported with capability and services in order to maintain compliance with national traceability standards Investigate the capacity to align objective carcase measurement with traceability and inventory data capture systems Investigate gaps in knowledge relating to biosecurity, animal disease and residue practices towards improved animal health outcomes at processing establishments and across the supply chain Enhance the efficiency of ante-mortem procedures on plant and along the supply chain Develop best practice standards, extension and training to address endemic and exotic disease, biosecurity and traceability risks Continue disease surveillance and monitoring programs to support industry and Government biosecurity Implement and support the industry s animal welfare standards Continue research investigations into refining animal welfare measures and practices in livestock handling, stunning and slaughter Investigate livestock (animal) measures that correlate to meat quality measures to enhance the integration of animal welfare as a quality characteristic Develop communication materials on animal welfare activities in meat processing for consumers, trading partners and Governments $2,585,000 $54,200 $354,362 $155,600 Total ampc contribution $3,418,162 NB: Budget allocation reflects AMPC direct contribution Performance Measures to be reported against by MLA (reflected in MLA AOP): Satisfaction rating of MLA s food safety activities by industry (processors and AMIC) rated more than 85% (question to be included in market access survey) on the basis MLA deliver and measure impact on AMPC s behalf Independent audit confirms the NLIS database delivers against national performance standards for livestock traceability Develop the capability for all jurisdictions to be able to execute traceability reports through the NLIS mirror database Overseas customers rank Australia s safety systems as equivalent to, or better than, alternate supplying countries Performance Measures to be reported against by AMPC: Effective consultation, under the auspices of the MOU, with partner organisations to develop strategic objectives and activities for Joint programs with MLA Study on community/consumer attitudes is conducted and reported Extension and training materials commence development for biosecurity, traceability, animal health, product integrity, food safety and animal welfare Australian Meat Processor Corporation 16 Annual operating report

17 Outcome 4 Improving meat processing productivity, products and processes There is an increasing need to focus research efforts in collaboration with other Rural Research and Development Corporations, Government, RD&E providers and meat processing companies towards new technological advancement, product development and product differentiation. Productivity growth and the ability to respond quickly to changing economic conditions are essential to maintaining industry competitiveness. Research and development, coupled with innovation and capability are recognised across industry as underpinning productivity gains. In particular, developing and implementing new products, processes and innovative technology solutions are critical to improving business productivity and sustainability. Processors operate complex businesses in an environment characterised by highly variable seasons and markets. It is essential that research and development delivers new tools, manufacturing practices and technologies that support producers to become more productive and efficient. New and emerging challenges include labour and skills shortage, competition brought by emerging international technologies, climate challenges including drought, increasing regulatory pressures, the decline in RD&E expenditure, slower technology outputs and slower rates of adoption all impact the rate of productivity growth in the industry. Consequently, new technologies, processes and practices that enhance efficiency and profitability are becoming increasingly important for all processing businesses. There are opportunities to address these issues through research and development applied at an industry-wide level. In terms of new product development, there will be increasing focus on the alignment of innovation with the need of customers and trading partners. Processing businesses are well placed to engage in new product development if they are supported by effective programs that expose them to technologies, new practices and capability. This program will focus on assisting industry to identify market opportunities for lower-value meat cuts and co-products, developing the capability to access novel markets and value chains and developing advanced technologies. This program focusses on the following key strategies: Increasing the productivity of red meat processors to compete on the global scene through new technologies and manufacturing practices Examining novel and efficient technologies and processes for whole carcase measurement and monitoring Developing new meat products Examine opportunities to value add from meat and meat products Enhance the adoption and commercialisation of new technologies and innovations in industry Details of AMPC investment in these areas for is provided below. Objectives Specific Activities for Budget allocations 4.1 Increasing the productivity of red meat processors to compete on the global scene through new technologies and manufacturing practices Continued investment into technology development including ovine shoulder break up, container load out, Y-cutter extension and picking and packing Continued investment into reviews that benchmark technological, data, processing practice and labour needs to drive strategy development Integration of issues such as work-related injuries and illnesses with technological developments Continued investment into addressing materials handling, slaughter, boning and cutting activities, as well as advancements in packaging Technologies are designed, tested, trialled and evaluated Cost effective automation and robotics solutions are developed Picking and packing technologies are investigated and trialled Alternative to bandsaw use and short, medium and long term bandsaw solutions are established Novel and efficient processing practices that deliver labour and/or worker safety outcomes are investigated $1,390,443 Australian Meat Processor Corporation 17 Annual operating report

18 Outcome 4 Improving meat processing productivity, products and processes Objectives Specific Activities for Budget allocations 4.2 Examining novel and efficient technologies and processes for whole carcase measurement and monitoring New technologies and systems that maximise utilisation of meat and meat products are researched, including meat specifications, sensing for automation and inventory and traceability integration Platform technologies including vision and sensing are investigated Benchmarking of key tasks and strategy development is conducted to maximise real time data collection and integration with technological advancements Enhancing the measurement and specifications for lean meat yield is explored $262, Developing new meat products 4.4 Examine opportunities to value add from meat and meat products 4.5 Enhance the adoption and commercialisation of new technologies and innovations in industry New technologies that enhance new product development are investigated Trends for new and emerging products are identified and evaluated New technologies that improve the range of applications of co-products are developed Industry capability programs are delivered that aid in the adoption and development of new products Technologies and processes are developed that expand consumer and food service demand for low-value cuts and by-products to better capture unrealised value from the carcase Develop products and protocols for high connective tissue cuts Value-adding technologies are investigated Processors are supported with advice and strategies to enhance the integration of value adding options and processes Assist industry to identify new domestic and international market opportunities for value-added products Purification and functional technologies for Australian bio-actives are explored and taken to market Resources are allocated to the commercial evaluation of new product and technology opportunities Develop the industry-wide technology strategy through reviews of manual assist, sensing and scanning and picking and packing RD&E options Address identified barriers to the adoption of both automated and manual assist technologies Collaborate with other sectors and international partners in new technology development Develop decision making and business planning tools and resources to support new innovations Develop and maintain IP protection to secure competitive advantage Cost-benefit analysis and evaluation is performed to aid in adoption Training and extension for adoption of new innovation and technological advances Extension activities improve industry awareness of trends, technological advancements, new products and value-adding opportunities $429,000 $134,250 $444,350 Total ampc contribution $2,660,747 NB: Budget allocation reflects AMPC direct contribution Australian Meat Processor Corporation 18 Annual operating report

19 Outcome 4 Improving meat processing productivity, products and processes Performance Measures to be reported against by MLA (reflected in MLA AOP) New technology developments are commenced that improve cost of production and yield (to effect of $1 per head) At least one new technology is developed to proof of concept stage ready for commercial trials At least one technology is commercialised Development of two new value added red meat products that are successfully launched in Australian domestic market, each adding at least $2 per head in net value (MLA measure) Two processors establish facilities for production of value added blood products that contribute $2 per head in net value (MLA measure) Commercial feasibility for production of value added product is conducted through experiment, trial or review Performance Measures to be reported against by AMPC: New product developments are communicated and disseminated to industry At least one review that validates options for new technologies and cost/benefit, and/or evaluates the need in industry for future technological solutions specific to a particular priority area Investigation of objective carcass measurement technology is commenced that focusses on improving visioning and sensing and the cost and benefits are quantified Technologies and tools developed for processing are able to demonstrate clear reductions in health and safety risks Australian Meat Processor Corporation 19 Annual operating report

20 Outcome 5 Improving sustainability Sustainability in the industry relates to a multitude of influences that may be social, economic, infrastructure and environmental in nature. The red meat processing industry is Australia s largest food manufacturer and Australia s largest food exporter. It generates annually $16.2 billion in GDP, $7.6 billion in household income, $5.8 billion in exports and 148,000 jobs when flow-on effects are included. Similar to most other agricultural industries, red meat processing businesses face considerable challenges, including international competition, volatile markets and trading conditions, declining resources and capability, labour shortages, changing customer and trading partner requirements, climate variability and other issues. These challenges continue to place increasing pressure on the ability for industry to remain productive and competitive in the world market. Research and development strategies need to consider these challenges through more targeted and triple bottom line investments that enable increased productivity in order to overcome current sustainability issues facing industry. Another key component of sustainability is managing the effects of climate change and maintaining the natural resource base. Activities relating to managing the impact of climate change will include benchmarking resource utilisation, developing tools, processes and technologies to improve resource use efficiency and manage waste and establishing alternatives to current waste management including recycling, value adding from waste products and producing and utilising waste products for alternative purposes. Investment in RD&E strategies to manage and mitigate climate change will enable red meat processing businesses to proactively participate in a low carbon economy into the future. This program focusses on the following key strategies: Investigating, understanding, communicating and responding to changes and influences in the red meat processing industry Technologies, practices and procedures that improve wastewater management, nutrient capture and value adding Improving industry knowledge and capability to achieve sustainable resource management and adapt to climate change Improving energy efficiency Efficient natural resource utilisation Business sustainability and continuity is enhanced Details of AMPC investment in these areas for is provided below. Objectives Specific Activities for Investigating, understanding, communicating and responding to changes and influences in the red meat processing industry Conduct research into new standards, policies and programs that may affect and/or aid meat processing Continue to identify and evaluate issues impacting the industry and liaise with Government Develop emergency and crisis response plans for meat processors Develop understanding of the common issues facing related primary (and non-primary) industries $1,056, Technologies, practices and procedures that improve wastewater management, nutrient capture and value adding Investigation and implementation of waste to nutrient recovery technologies and practices Development of technological approaches for future integrated wastewater treatment systems and processes Continuation of the experimental approach to developing optimal design and operational parameters for covered anaerobic lagoon and engineered organic waste digestion technologies Examining options for nutrient recovery, water efficiency and re-use $849,539 Australian Meat Processor Corporation 20 Annual operating report

21 Outcome 5 Improving sustainability Objectives Specific Activities for Improving industry knowledge and capability to achieve sustainable resource management and adapt to climate change Improving industry knowledge into technologies, practices and processes that minimise impacts and maximise value add opportunities of solid and liquid waste streams Determination, benchmarking, monitoring and reporting of key industry performance indicators for climate change $213, Improving energy efficiency 5.5 Efficient natural resource utilisation 5.6 Business sustainability and continuity is enhanced Development of environmental sustainability and best practice initiatives including biogas management and wastewater management options Examine technologies and alternatives for renewable energy on plant Examine peak and non-peak energy use, storage and efficiency Examine methods to measure and benchmark energy use Development of energy and water efficiency initiatives whilst maintaining food safety standards Develop an ongoing program for resource use efficiency (energy/water/ waste) that focusses on practice change in manufacturing Examine options for recycling solid and inorganic waste Examine options for water recycling and water re-use Examine options using economical and feasibility modelling to enhance processor businesses sustainability including renewable energy options, long term infrastructural options and programs that focus on practice change for a sustainable future Investigate facility design and establish a resource that consolidates best practice engineering information Develop an effective Whole of Enterprise decision making systems Examine options to mitigate labour shortages and challenges with retaining skilled workers Work with other RDCs to build attractive agricultural learning packages Adoption of RD&E outcomes is integrated with VET, universities and regional extension groups Develop innovative tools to identify, benchmark and respond to issues that impact the sustainability of industry $82,316 $88,792 $92,038 Total ampc contribution $2,383,120 NB: Budget allocation reflects AMPC direct contribution Performance Measures to be reported against by MLA (reflected in MLA AOP) Identify and/or start development of technologies and practices that have the potential to reduce by 2015 net energy consumption per thscw by 10% Investment in environment & sustainability programs and impacts/benefits for processors are evaluated Performance Measures to be reported against by AMPC: Establish a clear RD&E Strategy that encompasses energy efficiency research priorities in consultation with AMPC members Establish extension tools for processors to determine the most optimal way to reduce energy consumption Deliver investigations into new waste water technology, biogas technology, ammonia removal and other nutrient capture and value adding options for processing businesses Develop environment and sustainability related extension packages aimed at encouraging industry practice change Australian Meat Processor Corporation 21 Annual operating report

22 Outcome 6 Building capability and influencing practice change The value of research and development is only delivered when outcomes are taken up and successfully implemented by enterprises along the value chain. More attention is now being paid to improving the capacity of the primary industry representatives in both industry and Government to apply the products of science and research and to understand how boosting this capacity and improving their business models will better serve market and customer needs and secure productivity benefits for the red meat processing sector. Training programs and the ability to demonstrate the effectiveness of workers practices across a range of different topics will continue to be a key area of investment under the Meat Processing Diploma and related training units. Educational networks established in the industry to date have been particularly effective in this regard. Furthermore, AMPC recognises the significant benefits in improving coordination and collaboration across government, RDCs, industry and educators in delivering outcomes for the red meat processing sector. Strengthening partnerships between government, industry and educators will also help to reduce duplication and improve efficiencies. AMPC s RD&E programs will continue to include extension and education elements for transparent and effective communication and engagement of industry and other key stakeholders including research providers. This program focusses on the following key strategies: Engaging key stakeholders to create awareness and demonstrate value Increasing industry capability and capacity Increasing research capability and capacity Evaluation of RD&E outcomes Details of AMPC investment in these areas for is provided below. Objectives Specific Activities for Budget allocations 6.1 Engaging key stakeholders to create awareness and demonstrate value Develop new capability programs with focus on plants and providers skill discipline development Support the Australian Rural Leadership Program Support and delivery with MINTRAC, the Meat Industry Training Network Support and delivery with MINTRAC, the Environment Network Support and delivery with MINTRAC, the Meat Inspection and Quality Assurance Network Support and delivery with AMIC, the QCMPA Networks Support the Processor Innovation Awards Support industry extension programs and the AMPC communication strategy $372, Increasing industry capability and capacity Develop a benchmarking project on skill base to evaluate skill needs in industry and options for further professional development Meat science tutorials ($40,000) Continue investment in training and the upgrade of the Meat Processing training packages and programs Develop new training units for emerging needs, including the integration of RD&E outcomes into industry practice Continue the up-skilling, undergraduate and scholarship support Develop new and innovative extension programs including webinar series on key topics of interest Encourage and facilitate identification and development of RD&E for adoption through the PIP program $118,250 Australian Meat Processor Corporation 22 Annual operating report

23 Outcome 6 Building capability and influencing practice change Objectives Specific Activities for Budget allocations 6.3 Increasing research capability and capacity Develop a benchmarking project and strategy for developing industry researchers capability in key areas of industry RD&E need Participate in the Animal Welfare RD&E strategy Participate in the CCRSPI Contribute to collaborative RD&E projects within the Sheep CRC (Core Commitment) $229, Evaluation of RD&E outcomes Evaluation of GHG emissions and mitigation activities in meat processing Evaluation of the PIP program outputs Business evaluation Ongoing ex-ante and ex-post evaluations against key programs $75,000 Total ampc contribution $794,850 NB: Budget allocation reflects AMPC direct contribution Performance Measures to be reported against by AMPC: The delivery of two new capability building programs that lead to an increased innovation adoption rate The establishment of post-graduate research stipends (2) in areas of processor priority and capability needs The development of at least two new training units in key areas At least two evaluations are completed with one covering a key AMPC program area Australian Meat Processor Corporation 23 Annual operating report

24 Outcome 7 Continual improvement in business practice This program supports AMPC s focus on continual business improvement, corporate management and risk management. There is ongoing need to review business performance and the policies, plans and strategies underpinning AMPC delivery on behalf of red meat processors. Specifically, this program during will enhance focus on the delivery of the AMPC communication strategy to engage processor members and other key stakeholders, as well as enhancing collaboration and co-investment with other RDCs and research provider organisations. The program will also include ongoing review and development of policies consistent with the company s strategic plan and exercising direction and governance over resources and the way in which the strategies are implemented. Finally, evaluation and demonstration of investment rationale and outputs will remain a key component of AMPC core business, together with measuring, reporting and improving on the value gained from investments. Objectives Specific Activities for Budget allocations 7.1 Demonstrate AMPC s outputs to key stakeholders 7.2 Improving the efficiency of the organisation 7.3 Improve AMPC compliance with obligations 7.4 Enable AMPC to achieve its stated objectives Develop publications that communicate opportunities for members and that communicate and meet AMPC governance requirements Design and conduct targeted processor forums to identify RD&E priorities and strategies for industry Develop materials that communicate the partnership and co-investment arrangements, outcomes and results Deliver the AMPC communications plan Produce and publish reports, factsheets, circulars and other materials for stakeholders Maintain the AMPC website portal Maintain the AMPC project management databases The Board and Executive oversee and determine policies consistent with the company s strategic plan and exercise direction and governance over resources and the way in which the strategies are implemented The provision of accurate, timely and meaningful information to management and stakeholders, managing financial risks, providing support for the budget and planning process and ensuring internal controls are in place while effectively supporting operations Provide services to realise the potential of investments to deliver value to the industry. Ensure that the service agreement with MLA delivers the agreed collaborative portfolio $376,000 $248,400 $78,400 $400,000 Total ampc contribution $1,102,800 NB: Budget allocation reflects AMPC direct contribution Performance Measures to be reported against by AMPC: Demonstrated changes to portfolio balance and refined processes to guide investment decisions are detailed in the AMPC investment strategy and annual operating plans AMPC measures, reports and improves value from investments and ensure that its investment strategy is understood by Government, members and other stakeholder organisations Internal and external processes are enhanced for the integrated project management system, revised consultation arrangements and demonstrated transparency in research outputs Improve decision making by documenting how AMPC delivers its corporate objectives in a manner that is clearly consistent with its legal and policy obligations within an RDC governance framework Conduct further reviews of business performance by independent parties Australian Meat Processor Corporation 24 Annual operating report

25 Total program investments The below table provides the total program investment where AMPC co-invests with MLA as provided for in the MLA Annual Operating Plan for Joint programs, defined under the red meat industry s Memorandum of Understanding (MOU). The table below provides AMPC s total contribution to the overall programs administered by Meat and Livestock Australia. ENHANCING DOMESTIC AND GLOBAL COMPETITIVENESS AMPC Contributions 1.1 Research, identify, prioritise and address trade and technical market access barriers to develop agreed strategy in industry and with Government 1.2 Apply sound, scientific solutions to mitigate and remove trade barriers and enhance opportunities into existing markets 1.3 Build capability in key technical and trade disciplines to support ongoing response to market access, trade negotiations, technical and regulatory issues as they arise 1.4 Maximise the market access options for red meat processors through effective trade reform activities 1.5 Respond to domestic and international market expectations by effectively demonstrating and describing the system under which red meat is processed (and produced) $3,580,000 $190,000 $87,032 Total Program administered by MLA $7,301,000 $740,000 $348,129 Total $3,857,032 $8,389,129 DELIVERING TO CUSTOMERS AND CONSUMERS AMPC Contributions 2.1 Understand what consumers and customers want in relation to red meat products and how these expectations would be met $163,000 $2,614, Demonstrating the importance of red meat in the diet $847,000 $7,215, Delivering wholesome and consistent eating quality $852,116 $1,704, Enhancing and communicating the value proposition of the red meat category to the customer, consumer and community $1,275,750 $17,627,500 Total $3,137,866 $29,160,731 PRODUCT INTEGRITY, SAFETY AND WHOLESOMENESS AMPC Contributions 3.1 Research and development to ensure food safety systems and practices are the landmark of Australian product 3.2 Maintain and enhance efficient product integrity standards and quality assurance systems $269,000 $538,000 $2,585,000 $10,567, Maintain and enhance world class traceability systems $54,200 $108, Biosecurity, residue management and animal health standards are underpinned by sound science $354,362 $421, High standards of animal welfare are demonstrated $155,600 $246,200 Total $3,418,162 $11,881,462 Total Program administered by MLA Total Program administered by MLA Australian Meat Processor Corporation 25 Annual operating report