Review of BREEDPLAN commercialisation model

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1 final report Project code: B.BFG.0064 Prepared by: Robert R. Woolaston Airlie Solutions Pty Ltd Date published: December 2014 ISBN: PUBLISHED BY Meat & Livestock Australia Limited Locked Bag 991 NORTH SYDNEY NSW 2059 Review of BREEDPLAN commercialisation model Meat & Livestock Australia acknowledges the matching funds provided by the Australian Government to support the research and development detailed in this publication. This publication is published by Meat & Livestock Australia Limited ABN (MLA). Care is taken to ensure the accuracy of the information contained in this publication. However MLA cannot accept responsibility for the accuracy or completeness of the information or opinions contained in the publication. You should make your own enquiries before making decisions concerning your interests. Reproduction in whole or in part of this publication is prohibited without prior written consent of MLA.

2 Abstract BREEDPLAN software is used for genetic evaluation of beef cattle in Australia as well as many overseas countries. The current licensing arrangements have been in place since 2001 and are reviewed in this report in the context of the software s application in Australian and overseas herds. BREEDPLAN is generally well-regarded and it has a competitive edge over alternative products and rates of genetic improvement have increased since its introduction. During consultations held over a number of years, the main concerns expressed by stakeholders have been related to: The overall rate of genetic progress in the industry, which is sub-optimal Cost associated with utilising BREEDPLAN Lack of clear priorities or processes for influencing R&D Time to get from research to implementation In addition there are two other factors that warrant consideration: Disruption due to genomics An increasing gap between lead users and the rest Most of these issues relate to the R,D&E pipeline and extend well beyond the form of the BREEDPLAN licensing agreement, which could nevertheless have some bearing on them. Some areas are identified where improvements could be sought around user costs, stakeholder engagement and catering for technical developments. Five alternative commercialisation models are described and each is assessed according to a number of criteria, including the above considerations. It is strongly recommended that wider industry consultation be conducted to help inform the debate over whether changes (if any) should be implemented. Page 2 of 93

3 Contents Abstract... 2 Contents... 3 Disclaimer... 6 Executive Summary... 7 Background Review framework BREEDPLAN delivery pipeline History of BREEDPLAN BREEDPLAN developments Companion BREEDPLAN products Ownership of Intellectual Property (data and infrastructure) Charging mechanisms Outcomes achieved Participation and adoption rates Genetic trends in breed groups Genetic trends in other countries Comparison with imported germplasm Variation between herds in rates of progress Cumulative gain by sector Value of cumulative gain Background and Outcomes - Key points Strategic Analysis Strengths Weaknesses Opportunities Threats Page 3 of 93

4 Industry perceptions Key issues R,D&E funding environment Across-breed evaluation BREEDPLAN international context Purported benefits of international activity Competitor analysis NBGEC Angus Genetics Inc Australian Dairy Herd Improvement Scheme (ADHIS) Sheep Improvement Ltd NZ ICAR Others Comparative analysis of Sheep Genetics Alternative commercialisation models Minimal change Free market Multiple licences Integrated chain Radical transformation Tentative conclusions Appendices Appendix 1. BREEDPLAN Commercialisation Arrangements Appendix 2a. Genetic trends in direct calving ease Appendix 2b. Genetic trends in birth weight Appendix 2c. Genetic trends in 400 day weight Appendix 2d. Genetic trends in intra-muscular fat % Page 4 of 93

5 Appendix 3. Summary slides from Pogson Review Appendix 4. Stakeholder perceptions Appendix 5. Beef Genetics & Genomics Coordination Forum Appendix 6. Beef genetics and genomics RD&E Round-table - observations Appendix 7. Sheep Improvement Ltd NZ Appendix 8. Recommendations of a 2006 Working Group Appendix 9. Better Coordination of Beef Genetic Technologies Appendix 10. Frequency of BREEDPLAN runs Australia and New Zealand Appendix 11. Frequency of BREEDPLAN runs Other countries Appendix 12. MLA program structure and governance Appendix 13. Radical Transformation People consulted for this review Acknowledgements Abbreviations and acronyms used in this report Page 5 of 93

6 Disclaimer Meat and Livestock Australia or any third party or person uses the information contained in this report entirely at its own risk. Airlie Solutions disclaims liability for all loss, damages and costs incurred by any person as a result of relying on information in the report. Airlie Solutions does not represent or warrant that the information in this report is accurate or complete. The report was prepared under restricted timelines for the use of MLA, to help it evaluate options for commercialisation of the BREEDPLAN software. Findings in this report are based on published scientific literature, from unpublished information supplied by MLA and from discussions held with the parties listed on page 92 of the report; and no attempt has been made to verify or validate all of the assertions made during those discussions, or interpretations thereof. Page 6 of 93

7 Executive summary BREEDPLAN is the analytical software used for genetic evaluation of beef cattle in Australia and in a number of overseas countries. It was developed by AGBU 1 and its owners (MLA, UNE and NSW DPI) have granted ABRI, a not for profit organisation, a world-wide exclusive licence for commercial use, from which the owners are paid a 7.5% royalty. The licence is granted for a five-year period, renewed annually. This commercialisation arrangement is reviewed in this report following a number of developments, including a certain level of dissatisfaction having been expressed by some users and an increase in the use of genomics to predict genetic merit. Relevant aspects of the genetic improvement pipeline are examined and the relative merits of several alternative commercialisation models are investigated. The licence agreement for BREEDPLAN states explicitly that its intended use is directed at maximising the rate of genetic progress in the Australian beef industry; and furthermore that the software s use in the beef industry outside of Australia is also to be maximised. This review focuses largely on the first of these dual goals. About 1500 Australian bull breeders are using BREEDPLAN, representing the majority of bull market in southern Australia and about half the market in northern Australia. Although the number of Australian bulls being evaluated has plateaued since about 2000, the accuracy of genetic evaluation appears to be slowly improving on a national basis; but not uniformly, nor as fast as it could. The main clientele for BREEDPLAN are breed societies, which levy their participating members in a variety of ways. A small number of clients are individual herd owners, who submit their data outside the breed society system and who cannot participate in GROUP BREEDPLAN (across-herd) comparisons, although there is nothing to stop them from pooling their data for evaluation. For some societies, all costs are covered by membership fees, while others charge an annual BREEDPLAN membership fee, plus per animal and per trait charges. 1 See page 85 for a list of abbreviations and acronyms used in this report Page 7 of 93

8 A total of 65 breed-country combinations are evaluated with BREEDPLAN, generally within-breed and frequently across-country. Although some across-breed comparisons are possible, management groups are such that these are limited. Genetic progress is most conveniently estimated by the annual improvement in an index (or indices) of important traits, appropriately weighted by their contribution to profit. Relevant data are available from bull breeding herds, which are the primary driver of genetic gain in the national herd. The annual increment in profitability of the Australian beef herd has been valued at approximately $25-$35m, a figure which has greatly increased since the initial release of BREEDPLAN in Recent analyses indicate that past investments in the development and application of BREEDPLAN show a very attractive rate of return. However, average rates of gain and BREEDPLAN adoption are far lower in northern herds than southern herds. Furthermore, great variation has been found in the effectiveness of breeding programs both withinand between breeds. Within each breed where relevant data are available, there has been a wide range in genetic trends for profitability, with leading herds exceeding average gains in their respective breeds by 3-7 fold. In a recent study, all breeds had herds with negative rates of gain and most breeds had average rates of gain that were a fraction of the theoretical potential; although some leading Angus breeders were near potential rates of gain. Angus breeders probably account for over 60% of the value of genetic improvement in Australian beef cattle, with three other breeds accounting for a further 25%. Genetic trends of individual breeds have been generally similar to the trends of the same breeds in other countries. Within Australia and when scaled according to feed consumption, genetic progress in sheep has exceeded that in the average beef breeding herd by 50%-650%, depending on segment. Progress in dairy cattle has exceeded that in beef by about 280%, although progress in leading Angus herds has been similar to dairy. It is reasonable to conclude that genetic improvement in the beef industry as a whole is lagging its potential. The main strengths of the current commercialisation model are that BREEDPLAN is a proven product developed over many years, widely regarded as world-class, and an exclusive world-wide licence allows economies of scale for its operation and simplifies development and maintenance. Having a Page 8 of 93

9 single system of genetic evaluation and a common descriptor for genetic merit are seen by industry as being highly desirable. Historically, levels of user satisfaction with BREEDPLAN have been high and the associated SBTS/TBTS extension model, also run out of ABRI, is generally regarded as very effective. However, exclusivity of the BREEDPLAN licence restricts competition and over recent times there has been dissatisfaction expressed by some leading user groups with the service s costeffectiveness. Several contentious issues have been identified, most notably the coupling of genetic evaluation with breed registry and database functions (for Australian but not overseas clients), imperfect communications (especially around changes that occur when the evaluation model is refined) and new innovations being implemented at a sub-optimal rate. Furthermore, despite it having been identified as a priority for a number of years, there is still very limited capacity to compare across breeds, in crossbreds and composites. This latter issue cannot be easily rectified by the commercialiser as it is a consequence of inadequate data with genetic linkages, a situation which is slowly improving. Comparisons with the Sheep Genetics service in Australia indicate that about 50% more billable animals are recorded in Sheep Genetics each year than are submitted to BREEDPLAN. Furthermore, ABRI is currently providing beef genetic evaluation services at an operational loss, partially (but not entirely) due to its contribution to extension and marketing through SBTS/TBTS. Costs and returns for overseas evaluation of beef are unlikely to generate a sufficient surplus to fully offset local losses. Database development costs for beef and sheep are similar on a billable-animal basis but revenue sources differ: for beef the costs are met by ABRI while for sheep they are largely from levy funds. Beef users pay a little over twice as much per billable animal as sheep users if their contributions to R&D and extension (through MDC projects and levies) are excluded. It was concluded that when compared with sheep breeders, the costs for beef breeders are not grossly disproportionate to the value of the animals being evaluated. Individual beef breeders have the option of using a number of alternative service providers, who use less sophisticated analyses than BREEDPLAN and who can only offer very limited across-herd comparisons, at least currently, because breed societies own most of the combined databases. Importantly though, breed societies could elect to use alternative systems for their members and this poses a serious risk to the BREEDPLAN model. Five alternative commercialisation models are described and contrasted with the current system. Page 9 of 93

10 1. Minimal change. Similar to existing but involving some highly desirable changes. These include better lines of communication and accountability and closer scrutiny of costs and services, with a preparedness to rationalise these as appropriate. Greater emphasis on delivering across-breed and multi-breed EBVs. 2. Free market. BREEDPLAN would exist solely for its core function of predicting EBVs, operated either by its owners or a licensee such as ABRI. Breeders would choose whether or not to participate with evaluation costs clearly distinguishable from other breed society costs. The BREEDPLAN operator would provide a data processing and reporting service only, and provide no direct advice to clients. This function would be undertaken by service providers. Poor quality data would simply be rejected from the analyses, where apparent. Marketing would not necessarily be done by the operator, but might be done as seen fit by MLA (or all three owners). 3. Multiple licences. Under this model, separate licenses would be granted to multiple providers or to larger breed societies. This may address some of the areas of dissatisfaction and allow breeders to continue using BREEDPLAN rather than migrating to other systems of evaluation; although it would risk fragmentation of the breeding sector and introduce other problems.. 4. Integrated chain. This involves separation of genetic delivery from herd-book functions, so that genetic innovations can be delivered to industry without the encumbrance of third parties. It features improved access to a centralised database which has improved functionality. Resource herds are maintained to underpin future R&D and industry accountability is ensured through representative committees to oversee key processes. There is an emphasis on transparency of operational delivery, accountability and costs. Routine BREEDPLAN evaluation analyses are semiautomated and run twice-monthly, consolidated into three separate runs one comprising all British breed data, another with European breeds and a third with tropical breeds. It could be operated by a separate business unit of an existing entity or a new agency with a simple management structure. GROUP BREEDPLAN (and reporting of across-herd, or across-breed EBVs) is available to any herds that meet specified technical criteria (related to data quality, linkage etc) rather than breed membership. 5. Radical transformation. As with the previous model, evaluation and registration are decoupled; and evaluation is performed in three main breed groups. However, there are some essential differences, including a focus on seven main breeds. All major evaluations would be Page 10 of 93

11 internationalised, if necessary at cost to Australia. Breeder contributions to industry gain are rewarded via premium services. Generic extension services are provided plus customised services for leading studs, mainstream studs and commercial producers. BIN populations are an integral part of the system, as well as co-investment in recording in leading studs from all seven breeds. Elite young sires (including overseas sires) are represented and breeds within the three main analysis groups are systematically linked. All BIN animals plus those in industry herds that meet data quality and quantity criteria are genotyped, with costs met by the wider industry. Assessment of models. A preliminary assessment of each alternative model is rated against 12 criteria, using the current system as a bench-mark. It is strongly recommended that wider industry consultation be held to determine whether any of the alternative models should be implemented. 1. Background BREEDPLAN is the national genetic evaluation system for beef cattle in Australia, also used for various breeds in other countries. Strictly speaking, BREEDPLAN refers to the analytical software developed to estimate the breeding value of beef animals, but the term is often used more broadly to refer to the genetic evaluation system which it underpins, or to label the estimated breeding values (EBVs) which it produces 2. BREEDPLAN software can accommodate up to 26 traits in an analysis and allows comparison of animals from different herds and times. Its inputs comprise pedigree information plus performance records and information on management groups; while its outputs are primarily EBVs, together with prediction accuracies and inbreeding levels. Trends in EBVs are used to gauge genetic progress. Apart from the main genetic evaluation software, various programs have been written to assist with input, interrogate and report outputs, and to provide diagnostics. These will be briefly discussed later in this report. The broad framework for commercialisation of the BREEDPLAN software has now been in place for almost thirty years. During that time, development of the analytical software has been carried out by scientists at the Animal Genetics and Breeding Unit (AGBU), based at the University of New 2 In this respect BREEDPLAN differs from the Australian sheep evaluation model, where there is a clear distinction between the core evaluation software, OVIS, and the banners under which the outputs are marketed i.e. MERINOSELECT and LAMBPLAN, through the Sheep Genetics information and evaluation service. Page 11 of 93

12 England, Armidale. A worldwide exclusive licence to use, commercialise, exploit and distribute the software (subject to specified conditions) has been granted to the Agricultural Business and Research Institute (ABRI), a not-for-profit company limited by guarantee. The current agreement, drafted in 2001, comprises some 22 pages of detail and it is beyond the scope of this review to provide a comprehensive legal interpretation. Suffice to say that in its current form, this agreement took effect from 1 July 2001 and continued until 30 June Each year from 2005, the licensee has had the right to apply for a one-year extension provided certain conditions are met, notably that the licensors accept an updated three-year operational plan submitted by the licensee. Parties to the agreement are the licensors (MLA, the University of New England and NSW Department of Agriculture) and the licensee (ABRI). During its 30 year evolution, BREEDPLAN has undergone continuous enhancements and arguably remains the most comprehensive genetic evaluation system available anywhere in the world for beef cattle. However, over the period that has elapsed since it was originally commissioned, there have been significant structural changes in beef breeding sector and in the RD&E landscape, accompanied by rapid advances in both information technology and genetic/genomic technologies. Consequently it is timely to assess whether the commercialisation arrangements for BREEDPLAN remain the most appropriate for delivering genetic improvements to the national herd. Review framework This review follows an analogous pathway to that adopted in the 2009 review of Sheep Genetics (conducted by SED Consulting for MLA and AWI), as depicted in the following figure: Page 12 of 93

13 Figure 1. Review logic BREEDPLAN delivery pipeline The actual process of computing EBVs is only part of the overall BREEDPLAN delivery pipeline and the various steps can be summarised as follows: Step Responsibility Comment On-farm pedigree & data collection Submission of pedigrees & data to breed society database Database management Prepare files for analysis Compute EBVs using BREEDPLAN software Prepare results files and deliver to breeders Stud breeders Stud breeders Breed society through ABRI ABRI ABRI ABRI Also some R&D data. Breeder investment in recording estimated 3 at $25 per animal but ranges up to $150 Entry cost typically included with BREEDPLAN cost ABRI builds and manages databases for most Aust breed societies and several overseas Some back-up from AGBU for special cases Delivery direct and via web 3 Dr R Banks, pers comm. Page 13 of 93

14 The most important parts of the genetic improvement process actually occur on-farm, when performance and pedigree records are collected and again after BREEDPLAN results are delivered to breeders, which is when breeders use the information to inform their selection decisions. The accuracy with which superior animals are identified, the emphasis placed on this information by breeders and the selection pressure that is available are the primary determinants of the amount of genetic improvement that can be made each generation. The improvement that is made per year is in turn determined by the average generation interval. Annual genetic gain is highest when realised selection differentials are high and generation intervals are short. History of BREEDPLAN The origins of BREEDPLAN can be traced back to 1972 when the National Beef Recording Scheme (NBRS 4 ) was established with the support of AMLC, with records maintained in a central data processing system by ABRI. Initially, the NBRS included only pedigree information and basic performance records incorporating phenotypic weight ratios with adjustments for age of dam and age at weighing. Breeder reports were simple and comprised a summary of current calves plus a dam summary and sire summary of progeny averages. Breed society participation has been crucial to the viability of NBRS, and it was reported in 1979 that 17 breed societies were using NBRS to process their pedigree records and to provide basic performance information for their members. During the early years of NBRS, researchers at AGBU were sponsored by AMLC to develop better methods for performance evaluation, as it was realised that genetic improvement was a primary profit driver for beef producers. In 1984, NBRS was reviewed by an external panel, which argued that it was not realistic to expect sufficient revenue from NBRS users to cover the cost of ongoing R&D for genetic evaluation, particularly as benefits flowed to the entire industry and ultimately to consumers 5. It recommended that provision be made for the continuity of a nucleus of highly competent applied researchers. It further supported investment in promotion and breeder education in genetic improvement using a national genetic evaluation scheme (BREEDPLAN) as a focal point. By March 1985, AGBU had developed genetic evaluation procedures to the extent that within-herd evaluation could be performed using state-of-the art methodology known as Best Linear Unbiased 4 NBRS has now effectively become the International Beef Recording Scheme (IBRS) and is managed at ABRI by Mr S Skinner. 5 R.M. Carraill (1985) Proceedings Aust. Assoc. Anim. Breed. Genetics 5: Page 14 of 93

15 Prediction (BLUP), which was made available to NBRS users under the BREEDPLAN banner. Within a year, breeder demand resulted in the capability for across-herd multi-trait evaluation using an animal model, made available as GROUP BREEDPLAN. It was agreed that ownership of the BREEDPLAN intellectual property should be apportioned at 51% AMLC (later MLA), 24.5% UNE and 24.5% NSW DPI. The BREEDPLAN technology and companion products was licenced for international commercialisation to the Agricultural Business Research Institute (ABRI) on a cost-recovery basis. The current license agreement includes the following objectives 6 : [The licensee will] ensure that the Analytical Software is commercialised, exploited and distributed to the Australian beef industry for the purpose of maximising the rate of genetic progress towards breeding objectives that are relevant to the needs of the industry; and maximise the commercialisation, exploitation and distribution of the Analytical Software in the beef industry outside Australia. EBVs were adopted by BREEDPLAN as the primary unit for describing genetic merit. However, it was soon recognised that the main thrust of promotion should be based on the profitability message rather than focusing on single traits. Consequently, AGBU s research effort was expanded to include the development of economically based breeding objectives, by deriving economic values for profit traits predicted by BREEDPLAN EBVs. The diversity of aims and risk profiles of beef breeders were accommodated by customisable indexes directed at comprehensive breeding objectives that apportion emphasis between the seedstock producer and the bull user. B-OBJECT was described in 1992 and later as BREEDObject. BREEDObject is now included as part of the analytical software licence. BREEDPLAN developments First generation BREEDPLAN introduced for within-herd evaluation, GROUP BREEDPLAN module added about a year later to accommodate across-herd evaluation. Approximately 500 users were enrolled. 6 It is worth noting that the software is not actually distributed to the industry, but rather the software s outputs are. Furthermore, the agreement gives no guidance to the licensee on how efforts should be apportioned between the dual aims of maximising genetic progress in Australia and maximising BREEDPLAN s application in other countries. 7 Details of releases prior to 2000 taken from conference proceedings. Details of recent releases kindly provided by Dr Brad Crook. He stressed that the availability of a new version did not mean that all features were necessarily operational / available to all breeds. E.g. NFI was only included for Angus in 2014, even though v6.2 could theoretically accommodate it. The parameter files required were not previously available. Page 15 of 93

16 1988 Second-generation of BREEDPLAN and GROUP BREEDPLAN released, which included direct and maternal effects for birth weight, repeated measures and MOET, calving ease (CE); calculation algorithms enhanced BREEDPLAN International launched. Estimated use of performance recording among Australian beef breeders had increased from 4% in 1978 to 58% in Third generation of BREEDPLAN implemented, with a completely new computing algorithm, increasing the range of traits and improving efficiency of use of information. Capability for plotting genetic trends made available by ABRI Version 4 introduced, which analysed all traits except CE in a single analysis, eliminating some anomalies which occurred when traits were analysed separately. Calving ease analyses were handled separately with CE score, birth weight and gestation length using a threshold model. Some new traits were introduced. 38 Australian and 9 New Zealand breed societies were using ABRI s pedigree performance registry. Users estimated at BREEDPLAN was dealing increasingly with breed societies rather than individual breeders; and involvement of larger herds was increasing Version 4.1 accounted for sire x herd interactions, heterogeneous variances, use of overseas information, included a new genetic grouping strategy and incorporated a carcase trait module and methods for including crossbred and across-breed EBVs. Some enhancements to BREEDObject were described, including refinements of breeding objectives to accommodate new EBVs, including marbling Version 4.2 included separate analyses for docility and net feed intake; revised handling of mature cow weight data; with some revision to trait ranges, parameters, etc Version 4.3: revised procedures for handling imported expected progeny differences (EPDs) from overseas. New solving algorithm introduced. Graser et al. (2005) 8 reported that 24 breed societies contributed data for BREEDPLAN analyses in H-U Graser, B. Tier and S.A. Barwick (2005) Aust J Exp Agric 45: Page 16 of 93

17 2011 (early) - Version 6.1: migrated to Linux platform, revised solving algorithm and capacity for post-blup blending of genomic prediction values into BLUP solutions. (Version 5 not commercialised) (late) - Version 6.2: revised methodology for genetic groupings; additional traits (flight time; shear force; net feed intake) added to the multi-trait BLUP Version 6.4 (docility analysis only): revised version of docility code. The current version of BREEDPLAN accommodates up to 26 traits in the analysis, depending on the breed, of which there are currently 34 listed for Australia 9. It allows direct comparisons of animals from different herds (within the same breed) and across time. Analyses are run monthly for most breeds. Companion BREEDPLAN products The following companion products are listed on the BREEDPLAN web site 10. Those largely developed by AGBU (and therefore largely with owner funds) are assigned an asterisk (*) 11. Internet Solutions Linked to the BREEDPLAN website, this online database allows members to search for a range of animal and EBV details, research pedigrees, view online sale and semen catalogues, search member details, download files, predict mating and inbreeding outcomes, and make online submissions of pedigree and performance information. BREEDObject* Calculates selection indexes which enable animals to be ranked on their overall genetic value for a particular breeding purpose. This overall objective is distilled into a series of weightings placed on individual EBVs relative to the contribution that each trait makes to the profitability of commercial enterprises targeting that particular production system and market endpoint. GeneProb 9 The BREEDPLAN web page currently lists 83 breed societies across 10 countries: Ownership of IP is discussed more fully in the next section. Page 17 of 93

18 A tool for managing genetic conditions which predicts the probability of untested animals being carriers for undesirable recessive conditions. MateSel Evaluates a list of available sires and dams and predicts which matings would result in the greatest genetic gain subject to certain constraints such as minimising inbreeding. TakeStock* Allows breeders to assess and improve their rates of genetic progress by benchmarking herd progress and identifying key performance indicators (KPIs). Completeness of Performance: Used to encourage complete performance recording, this tool summarises the quantity of information that each herd has recorded with BREEDPLAN through annual distribution of reports and the calculation of an overall star rating for each herd. In addition, several software products have been developed over the years by AGBU staff in association with BREEDPLAN and which have been made available to the scientific community. These include (but are not limited to) DFREML, WOMBAT, RRGIBBS, PDMATRIX, SECATEURS, Gene Detective and various FORTRAN routines. Furthermore, the core BREEDPLAN methodology has been adapted for use in other species including sheep (OVIS), trees (TREEPLAN), pigs (PIGBLUP). Ownership of Intellectual Property (data and infrastructure) The following table indicates the generally accepted view on ownership of IP used for genetic improvement of beef cattle. Note that this table was prepared without direct access to all relevant contracts or agreements, and some ownership arrangements may be open to legal challenge. Page 18 of 93

19 Item Owner Comments Phenotypes and pedigree information recorded by breeders Breeders own data collected and stored on-farm. Research phenotypes and genotypes (including Beef CRC and BINs) Genotypes paid for by breeder Genomic prediction equations Estimated Breeding Values and Selection Indexes Analysis parameters Breed societies own information contributed to their registry/ database. Legal precedent has shown that breeders can obtain electronic copies of pedigrees and raw performance data for their herd from their breed society R&D providers and/or owner of animals and/or breed society on a case by case basis. Contracts usually specify ownership. Genomics service providers (e.g. Zoetis) own SNP information but supply breeders with genetic predictions. SNP data for Angus cattle now supplied to Angus Australia. Some in private sector (e.g. Zoetis) retained as trade secret; those derived from CRC data in public domain Breeders own EBVs if data submitted through NBRS for within-herd analyses. Breed Societies own coefficients for standard indexes plus EBVs and index values computed from Breed Society databases and/or registries. Majority of genetic parameters used in BREEDPLAN are in (or have come from) public domain. Some adjustment factors used in BREEDPLAN (such as those for carcase traits) can be specific to breed societies; others can be drawn from larger datasets and be publically available; or computed from the data being analysed during run-time. Breeders can submit data directly to NBRS/IBRS for BREEDPLAN analysis. Not essential for data to go through breed societies but cannot participate in GROUP BREEDPLAN runs unless they do. Breeders can have joint analyses conducted outside of GROUP BREEDPLAN (may be restricted by contracts between ABRI and society). MLA is steward of CRC phenotypes and genotypes. The CRC policy was to make all IP public. Some lack of clarity about Angus breeders who arrange their own genotyping. Details of arrangements with Angus Aust not public. Details involving other testing services (Agrigenomics etc) and arrangements overseas unknown. Trend towards making genotypic data available for inclusion in onestep analyses, though more progress needed. Standard index coefficients not widely shared. Breeders can design and apply customised BREEDObject indexes to BREEDPLAN EBVs with web version. Genetic parameters come from a wide range of sources, generally estimated by R&D organisations including AGBU and published in scientific journals or conference proceedings. Actual values assumed in BREEDPLAN tend to be retained as trade secret. Software used for Defined in licence agreement. Analytical software comprises Page 19 of 93

20 Item Owner Comments BREEDPLAN operation Analytical software owned by licensors; Application software developed by licensee to service end-users owned by ABRI or their clients BREEDPLAN, GROUP BREEDPLAN, BREEDObject PC, BREEDObject web software and any upgrades. Application software includes data input routines, enquiry facilities, file structures, file maintenance routines, applications for recording pedigree and performance information and communications. Hardware Software used in BREEDPLAN R&D Hardware for BREEDPLAN-specific R&D owned by AGBU; Hardware for routine BREEDPLAN operation and for running application software owned by ABRI. Some breed societies maintain their own application hardware. Various Software developed to add value to BREEDPLAN MateSel Prof B.P. Kinghorn GeneProb TakeStock Data Audit Internet Solutions ILR2 Completeness of Performance Inbreeding calculator software New outlier strategy Diagnostics Charging mechanisms UNE AGBU AGBU ABRI ABRI ABRI Developed by AGBU Being developed by ABRI Some developed by AGBU, some provided as part of ABRI applications software Issues have occasionally arisen due to differences in hardware used for development (AGBU) versus application (ABRI); but thought to be less of a problem with modern computers and migration to Linux. Some developed at AGBU and made publically available such as WOMBAT, SECATEURS, PDMATRIX, Gene Detective etc. Other software also used under relevant commercial licence e.g. ASReml, compilers, MSOffice etc. ABRI has estimated that the seedstock sector supplies about 80% of the bulls used in the commercial beef industry; and over 95% of BREEDPLAN recording is undertaken in the registered sector. ABRI negotiates an annual charge for BREEDPLAN with each breed society based on the recommendations Page 20 of 93

21 Murray Grey Shorthorn Angus Hereford Simmental Charolais Limousin Brahman of IBRS (formerly NBRS). Breed societies in turn pass these charges on to their members with charging formulae that vary between societies. The way this is done is shown in the Table 2 for a selection of breed societies. Table 2. BREEDPLAN charging structures used by some breed societies Feature All BREEDPLAN charges covered by breed society membership and registration Discount for volume Charges the same irrespective of number of traits Annual BREEDPLAN membership fee Per-animal fee for BREEDPLAN use Per trait charges This shows that breed society members who do not use BREEDPLAN subsidise the users to varying degrees. At one end of the scale, Murray Grey and Shorthorn breeders have all BREEDPLAN costs incorporated into their membership and registration charges (which become lower per animal above certain thresholds); while at the other extreme, Brahman breeders access BREEDPLAN entirely on a user-pays basis by incurring an annual BREEDPLAN membership fee, a per-animal fee and per-trait charges. Further details on BREEDPLAN charging structures are provided in Appendix 1. It is important to note that Australian breed societies appear to be liable for three separate charges from ABRI one related to provision and maintenance of the herd-book function, another for routine evaluation using BREEDPLAN and a third transaction charge related to database access. The details around this are commercial-in-confidence and therefore not freely available. The fact that Australian breed societies are compelled to pay the transaction charge if they want to use BREEDPLAN is a source of contention, especially among the larger breed societies, who (it is understood) were also asked to make a financial contribution to establishing the database system (ILR2) in the first place. Most oversees breed societies maintain their own data and breed registry and it is felt by some societies at least, that this makes the charging system inequitable. Furthermore, it is not clear whether or not the evaluation charges and database charges accurately Page 21 of 93

22 reflect the respective costs of delivering these services, or whether one function might crosssubsidise the other. This is an area where much more clarification is necessary. 2. Outcomes achieved The principal outcome of BREEDPLAN is improvement in genetic merit of the Australian beef industry, contributing to greater producer profitability. Recently, Dr R. Banks (AGBU) identified the following beneficial outcomes: Genetic improvement the annual increment is valued at approximately $25-$35m, derived from positive genetic trends in growth, carcase merit, fertility etc. Number of users the actual clients of BREEDPLAN commercialisation are breed societies, but 1500 bull breeders are estimated to be using BREEDPLAN, which represent an 80-90% share of the bull market in southern Australia and about 50% in northern Australia 12. Societies in many overseas countries also access BREEDPLAN technology, but the major international impact is via Herefords in the US and South Africa. Costs associated with actual delivery (database, analysis and support) are covered by user charges. Royalties royalties due to BREEDPLAN owners are set at 7.5% on both Australian and overseas income, currently worth about $130k p.a. in total. Community outcomes from R&D BREEDPLAN commercialisation provides a direct and relatively rapid return on investment in R&D. The full value includes peer recognition for MLA, UNE and NSW DPI. There are also ancillary benefits from research and teaching through access to breed society and industry data. Additional benefits (which are difficult to quantify) were ascribed to enhanced user skills in breeding technologies and innovation, leading to greater adaptability and resilience. Participation and adoption rates BREEDPLAN usage can be measured by the number of breed societies that are participating, the number of breeders participating, the number of animals evaluated or some metric describing the 12 These figures were from briefing notes prepared for BREEDPLAN owners, but are higher than assumed in a recent AbacusBio study: in the base case was 70% in southern beef and in the north was 20% for Bos indicus and 50% for Bos taurus. The difference may be due to animals in the pedigree vs. animals with phenotypic records. Page 22 of 93

23 number of trait records submitted. Trends are not readily available for all of these, but information has been summarised recently on the numbers of bulls evaluated (Figure 2). Source: R. Banks, S. Skinner and D. Goosen (2013, unpublished) Figure 2. Numbers of bulls evaluated through BREEDPLAN by year of birth This indicates that the total number of bulls evaluated has plateaued since about From the numbers evaluated and the genetic trends, it is reasonable to infer that the quality and/or quantity of data has continue to improve slightly in the past decade, that breeders are placing more emphasis on EBVs in their selection decisions, or some combination. The net effect is that the standard of genetic evaluation appears to be slowly improving on a national basis; albeit in a very patchy fashion. Genetic trends in breed groups SBTS and TBTS have recently estimated genetic trends (in dollars per breeding cow) across the respective stakeholder breeds that publish their indexes (10/15 southern breeds in the case of SBTS and 9 northern breeds in the case of TBTS): The weighted average index for southern breeds increased from around $19 per cow mated in 1990 to $63 per cow mated in For northern breeds, the change was more modest, increasing from about $8 in the 1990 calving year to $21 in the 2013 calving year. Page 23 of 93

24 SBTS and TBTS attributed at least some of the upturn in recent years to their extension activities, which have genetic trends as one of their key performance indicators. The trends broken down by major breed group and adjusted for annual changes in breed contributions, are shown in Figure 3. Figure 3. Genetic trends of breed groups Source: R. Banks, S. Skinner and D. Goosen (2013, unpublished) Genetic trends in other countries Genetic changes in some of the traits that contribute to profit have been summarised for the major breeds and compared with changes in several other countries for the period (McDonald, see Appendix 2), where the co-operation of the relevant breed societies has allowed it. Genetic trends across countries and across breeds varied considerably, reflecting different breeding goals, different target markets (e.g. premiums for marbling in the USA and Japan) and different nutritional regimes. These analyses indicate that genetic trends of individual breeds in Australia have been generally similar to the trends of the same breed in other countries, although trait emphases can differ. For example, Angus breeders in Canada and the US have emphasized lower birth weights, whereas in Australia they have been allowed to increase slightly. In contrast, genetic trends for intra-muscular fat in Angus in Australia have exceeded those in Canada and the US. Unfortunately, no comparative trends are avaiable for net economic merit. Collectively, however, these graphs suggest that rates of genetic change in Australian beef cattle have, overall, not been particularly better or worse than Page 24 of 93

25 rates of change in the beef cattle of other countries. It is self-evident but none the less worth stressing, that these trends only refer to animals with records submitted for analysis and their known relatives. A reasonable expectation is that changes in profit traits are likely to be less in herds that do not record performance. Comparison with imported germplasm It is of some interest to examine the genetic merit of imported germplasm relative to what is available locally. In 2011 the Angus, Hereford and Brahman breed societies made their pedigree and performance databases available for detailed analysis by AbacusBio. Genetic trends were computed for home-bred bulls in beef breeding herds ( Homebred ) and compared with trends in bulls (or semen) purchased from other Australian breeders ( Outside ) and also in genetic material imported from other countries ( Foreign ) as shown in Figure 4. Page 25 of 93

26 Average genetic merit for index 1 Average genetic merit for index 1 Average genetic merit for index 1 Angus Hereford Foreign Outside Homebred Foreign Outside Homebred 0 0 Year of birth Year of birth Brahman Foreign Outside Homebred 5 0 Year of birth Figure 4. Genetic trends in the Angus, Hereford and Brahman breeds in sires bred from replacements (Homebred), purchased from other Australian herds (Outside) and purchased overseas (Foreign) (after Amer ). As expected, Angus and Hereford breeders were effective in identifying foreign semen with superior genetic merit relative to the average of their homebred bulls, but the gap for Angus has been rapidly narrowing. In the case of Brahman, imports in the early 1990s had superior profitability indexes to the average of locally-bred bulls; but by about 2000 the gap had closed completely so that in 2010, homebred bulls were markedly superior to foreign imports. 14 P.R. Amer (2011) Differences among some Australian beef breeds and implications for genomic selection. Presentation prepared for MLA Page 26 of 93

27 Variation between herds in rates of progress Johnston (2007) 15 examined trends in profit indexes in over 1100 BREEDPLAN-evaluated herds for the period (Table 1). With the caveat that herds were restricted to those that had been benchmarked, it was apparent that by far the greatest average progress in profitability was being made in Angus herds. However, the variability was such that there were individual herds in most other breeds that were making more progress than the average Angus herd. All breeds had some herds that had negative trends and no breed had average rates of gain anywhere near the theoretical potential of 0.30 genetic standard deviations per year. The study also found that the selection differential of sires was the key factor explaining the acrossherd differences in genetic progress for all breeds. This was determined by the extent to which breeders emphasized index values in their selection decisions. Depending on their level of performance, individual breeders could achieve greater progress through more intense performance recording, improving the quality of their records, more judicious choosing of imported bulls (locally or overseas) or in the case of top herds, making more use of embryo transfer. Table 1. Mean herd genetic progress per year (genetic standard deviations 16 ) for breed standard $Indexes for drop animals (from Johnston 2007) Trend Breed Index #herds Mean sd min. max. Angus Jap B Shorthorn Export B Brahman Jap Ox Santa Gertrudis Export Hereford Supermarket Charolais Export Murray Grey Long Fed Export Limousin Terminal domestic Simmental Supermarket Cumulative gain by sector McDonald (2007) 17 calculated industry-wide genetic trends in profit indexes for the three major markets for Australian beef cattle (excluding manufactured beef), by estimating the contribution of 15 D.J. Johnston (2007) Proc. Assoc. Advmt. Anim. Breed. Genet. 17: Genetic standard deviations are a suitable measure because they allow comparisons on an equal basis with respect to the amount of genetic change that is possible 17 A. McDonald (2007) Proc. Assoc. Advmt. Anim. Breed. Genet. 17: Page 27 of 93

28 the major breeds to each market segments either in purebred or crossbreeding herds (Figure 5). He noted that prior to 1985 there was no discernible change in profit indexes in any breed, but since then, the trend has been progressively increasing, with the greatest gains achieved in the Japanese and Korean B3 market; a market dominated by the Angus breed. It can be deduced from the total contributions assigned by McDonald that the Angus breed had about a 30% share of the three markets and Herefords about 16%. This contrasts with a) breed registrations tabled 15 years previously (Rickards 1992) 18 when Angus comprised less than 9% of the total registrations while Herefords comprised 44%; and b) figures from ABRI which indicate that about 50% of records now come from Angus breeders. Taken together with the results tabled by Johnston (op cit.), it might be surmised that Angus breeders account for over 60% of the value of genetic improvement in Australian beef cattle, with Herefords and Murray Grey breeders accounting for about 9% each, Charolais breeders about 6% and the remainder each accounting for 3% or less 19. Domestic Heavy steer Japanese and Korean B3 Major contributing breeds: 40% Angus & Hereford 40% Brahman, Charolais, Limousin & Murray Grey 20% Others 40% Angus & Hereford 40% Brahman, Charolais, Murray Grey & Santa Gertrudis 20% Others 70% Angus 30% Murray Grey, Shorthorn & Wagyu BREEDPLAN bulls 70% BREEDPLAN bulls 50% BREEDPLAN bulls 85% Figure 5. Changes in profit indexes weighted by contribution of each breed (Vertical scale ranges from $0-$40 per cow per year in each graph). From McDonald (2007). Value of cumulative gain A study recently commissioned by MLA and conducted by AbacusBio analysed return on investment in the beef genetics and genomics program by MLA and co-investors over the period from P.A. Rickards (1992) Proc. Assoc. Advmt. Anim. Breed. Genet. 10: Calculated from average genetic gains in benchmarked herds weighted by estimated market share of each breed. Page 28 of 93

29 to This was done by assessing the impact on discounted benefits through to 2040 that might have occurred had MLA withdrawn investment from the area in MLA invested 28% of the total $323m (2014 present value) over this period. Projected benefit streams from 2000 to 2040 (with the appropriate lags for commercialisation and adoption and a discount rate of 7%) equated to a benefit-cost ratio for MLA investment of 3.5 and an internal rate of return of 24%. Half of the net impact of the RD&E investment was estimated to accrue to beef producers, with the remainder distributed to beneficiaries beyond the farm gate, including consumers. Notably, the estimated benefit cost ratio was appreciably higher in southern beef (4.4) than northern beef (1.0) The commercialisation pathway for these investments has been (and was assumed to be) principally through BREEDPLAN, so their projections give some indication of BREEDPLAN s value. Historical genetic trends from were used to estimate benefits from , with the trends used to estimate benefits from The study concluded that the discounted (present) net value of the research was $487m, with the great majority of this coming from the southern sector. Lower rates of genetic improvement coupled with lower adoption rates and lower reproduction rates explained the much lower value in the northern sector. Page 29 of 93

30 Background and Outcomes - Key points Adoption of performance recording and the use of BREEDPLAN (and BreedObject) have allowed genetic gains in profitability to be assessed over time. Genetic gain is cumulative and permanent. The annual increment is valued at approximately $25- $35m, derived from continuous improvements in traits related to profit. Rates of genetic improvement in Australian beef breeds, assessed using profit indexes, have greatly increased since the initial release of BREEDPLAN EBVs in Detailed independent analyses indicate that past investments in the development and application of BREEDPLAN show a very attractive rate of return. There is evidence that rates of improvement made possible through BREEDPLAN have increased in recent years in both northern and southern herds, albeit slowly. However, average rates of gain and BREEDPLAN adoption are far lower in northern herds than southern herds. Furthermore, great variation has been found in the effectiveness of breeding programs both within- and between breeds. Within each breed where relevant data are available, there is a wide range in genetic trends for profitability, with leading herds exceeding average gains in their respective breeds by 3-7 fold. All breeds have herds with negative rates of gain and most breeds have average rates of gain that are a fraction of the theoretical potential; although some leading Angus breeders are near potential rates of gain. Angus breeders probably account for over 60% of the value of genetic improvement in Australian beef cattle, with three other breeds accounting for a further 25%. Benchmarking software developed in association with BREEDPLAN has allowed key performance indicators to be identified, allowing breeders to identify strategies to improve their herd s rate of progress. The greatest amount of variation between herds in rates of gain was attributable to the selection differential achieved for selected sires; and ways to rectify any shortcomings have been identified. Breed societies vary in the way they pass on BREEDPLAN charges to their members. For some, all costs are covered by their membership fees while others charge an annual BREEDPLAN membership fee, plus per animal and per trait charges. Page 30 of 93

31 3. Strategic Analysis The following observations apply to aspects of the BREEDPLAN software, its current commercialisation route and market penetration. Many of the strengths and weaknesses listed here were identified by stakeholders during consultations held in 2011 by MLA and the Beef CRC. Strengths BREEDPLAN is a proven product developed over many years, widely regarded as world-class Strong technology base and technical capability in Australia, with key researchers commanding much trust and respect from industry and peers Strong linkage to international R&D and implementation Granting an exclusive world-wide licence for BREEDPLAN allows economies of scale for its operation and simplifies maintenance Strong core of innovative technically-adept breeders committed to investment in performance recording and genetic improvement in both species High level of adoption in southern cattle breeds, underpinned by demand from producers for animals with breeding values Ample genetic diversity for long-term responses to selection Rates of gain and attribution of benefits are readily quantifiable at an industry level Although there is a wide diversity of opinions amongst breeders, industry consultations held in 2011 indicated that there is much goodwill towards BREEDPLAN Having a single system of genetic evaluation and description of genetic merit is seen by industry as having great benefits The genetic evaluation system can accommodate multiple genomics providers AGBU is seen as a major asset to the industry, and breeders voiced support for its capacity to undertake independent validation of genetic and genomic products Beef Information Nucleus herds have been established to support genomic selection and provide information on hard-to-measure traits The SBTS/TBTS extension model has been successful Weaknesses Weaknesses of the genetic improvement pipeline are mostly related to the commercialisation model at an industry level, and many are inter-related. Exclusivity of the BREEDPLAN licence restricts competition Page 31 of 93

32 Price signals for improvements in many traits do not flow back to the breeder, which reduces the incentive to invest Consequently the sector bearing the main cost of genetic gain gets only a small part of the total benefit Rates of adoption of best-practice technology are low, especially among tropical breeders Data quality is variable Ability to compare animals across breeds is currently limited Long lead-time between investment in genetic improvement and returns The majority of producers don t keep good enough records to detect marginal effects of all the traits evaluated (impact of genetics clearer for growth and marbling but less so for branding rate, feed efficiency, eating quality etc.). For individual breeders, performance recording is funded almost entirely by returns from bull sales Limited understanding in supply chains of benefits of genetic improvement Due to high recording costs and poor price signals, there are inadequate data to improve some important traits (e.g. traits related to welfare, methane emissions, disease) Very limited capacity to compare across breeds, in crossbreds and composites Extension is largely provided from the public sector and therefore requires injections of public funds (levy/taxpayer) to be financially viable Australia is a small player globally, with high exposure to export markets Opportunities The following indicate potential areas for improvement, without necessarily specifying the means by which improvement might occur: Increase in rate of genetic gain in all sectors so that potential is approached Improved data quality through better data auditing and through incentives Access to international R&D, and continuing collaboration with R&D in other species Increased effectiveness of use of technologies in all sectors of the pipeline Capture more across-breed variation Supply chain consolidation and integration leading to greater direct investment in genetic improvement Genomic tools becoming cheap enough to be cost-effective for large operations. Promote stronger market signals New investors within existing supply chains or outside (e.g. retailers) Page 32 of 93

33 Improve accuracy of selection decisions with DNA tools, particularly for important traits that are hard to measure New pipelines for RD&E and delivery New technologies to support new traits and methods of genetic evaluation over 20 years out Threats Many of the following threats were identified in the MLA strategic plan for genetics and genomics: Disenchantment of breeders or breed societies with elements of BREEDPLAN delivery could undermine goodwill and motivate users to seek alternative providers Fragmentation of genetic service provision may lead to inefficiencies and inconsistent and/or conflicting EBVs for the same animals Limited flow of price signals reduces incentives for investment, particularly in hard-to-measure traits Collapse of genomic reference populations due to unsustainable funding model Fragmentation of extension services, potentially leading to conflicting or sub-optimal messages Marketing of uncalibrated genomic tools could undermine existing information systems Loss of human capability in RD&E, exacerbated by wind-up of CRC Reduced funds for RD&E Heavy dependence on imported (US) genetic material exposes Australia s genetic improvement to US breeding objectives Breeders may focus on wrong targets e.g. Lean meat yield without balance of focus on eating quality 4. Industry perceptions Issues related to the beef genetic improvement pipeline, which includes some aspects related to BREEDPLAN commercialisation, have been the subject of industry debate and widespread consultation for at least the past decade. Some outputs from this extensive consultation are included as appendices: Appendix 3 summarises issues, criticisms, concerns and challenges from a review conducted by P. Pogson (The Leading Partnership) in Appendix 4 is a distillation of relevant issues identified by stakeholders in beef genetic improvement and recorded by an impartial Listening Group. This process was commissioned Page 33 of 93

34 by MLA and the Beef CRC to identify industry perceptions of the beef genetics and genomics pipeline. These responses are largely relevant to this review. Appendix 5 summarises issues and potential solutions related to beef genetic improvement from follow-up stakeholder forum held in December Appendix 6 lists observations recorded at a beef genetics and genomics RD&E round-table sponsored by MLA in September 2012 and involving leading beef producers and researchers. More recent discussions indicate that some progressive breeders remain less than totally satisfied with certain aspects of BREEDPLAN delivery. Two leading breed societies (Angus and Hereford) are sufficiently concerned about the cost-effectiveness of services delivered by ABRI under the current commercialisation model that they are seriously looking at alternatives. Some have been less concerned about the cost, than delays in implementing improvements for individual breeds, a perceived lack of transparency about priorities for BREEDPLAN developments, inability to influence these, or unexpected changes in EBVs that occur when improvements to BREEDPLAN are implemented. These concerns need to be balanced against the significant positives of the current system: Thousands of new animals per year are evaluated through a world-best genetic evaluation system adapted well to the breeding goals of the Australian industry Genetic progress is being made at rates that are essentially as good as anywhere else, with the exception of one breed in the US, and at similar or lower total cost for the underpinning RD&E R&D is being converted into actions (tools, extension material) at a similar rate to anywhere else The cost of genetic evaluation is not prohibitive (if assessed in isolation) The needs of a diverse range of stakeholders are being met, on average, quite well. Key issues The main concerns with the beef genetic improvement pipeline referred to above can be distilled down to four main issues: The overall rate of genetic progress in the industry Cost associated with utilising BREEDPLAN Lack of clear priorities or processes for influencing R&D Time to get from research to implementation Page 34 of 93

35 In addition there are two other key challenges, which can also present opportunities: Disruption due to genomics An increasing gap between lead users and the rest Sub-optimal progress The consequences of sub-optimal genetic progress in the industry are not immediately obvious, even though the opportunity cost to the nation s beef producers is very large. Furthermore, it adversely impacts the industry s responsiveness to new markets or new challenges. Reasons for low rates of gain have little to do with BREEDPLAN s commercialisation model rather they are related to things like excessively long generation intervals and/or poor selection accuracies, particularly for traits which are hard or expensive to measure and which can be the result of limited market signals. New technologies such as genomics and mate selection tools can help in the south, but in the north there are additional challenges related to recording basic measurements under extensive grazing conditions. Resolving these problems with the aid of new technologies requires a coordinated approach across delivery, extension and support. BREEDPLAN costs Concerns about costs can be expressed at the level of breeders (who may complain about the costs of breed societies) or at the level of breed societies (who may complain about costs associated with accessing BREEDPLAN). Analysis of the actual costs of evaluation suggests that BREEDPLAN costs are not disproportionate to the potential benefits that can be realised, but nevertheless may discourage some breeders from enrolling in BREEDPLAN; or worse, induce some societies to look at alternative genetic evaluation providers. In the present study, only costs related to EBV prediction were examined and it may be (and indeed probably is the case) that other costs associated with breed registration and/or breed database management are significant contributing factors. There is an argument for completely separating the registration business from the BREEDPLAN business, with extension and support being an essential part of BREEDPLAN delivery. Separation would make it easier for non-society breeders to participate and make the costs of genetic evaluation, including holding the necessary data, more transparent. Angus Australia, for example, has indicated that its preferred outcome would be to continue using BREEDPLAN, but not be required to also use ABRI s database services, as it believes that it can offer its members a more cost-effective and superior service using in-house resources. Page 35 of 93

36 R&D priorities Frustrations with opaqueness of R&D priorities and an inability to have any influence have been felt by leading users (some Angus and other innovative breeders) as well as some small breeds. Apart from causing aggravation, this can lead to delays in innovation. Although in itself this may be seen as a second-order problem, if it slows the introduction of useful new traits it is a cost to industry and can undermine confidence. Over recent years there has been a rapid change in the nature and level of demand from lead users, without a concomitant evolution of the R&D and service model, exacerbated by the loss of the Beef CRC. A solution that has been advanced is to implement change process projects for seven major breeds, backed by AGBU co-investment in skilled people for highend support and R&D. However, there is some political risk around working more obviously with lead users and it would need to be done on an equitable basis, meaning that some co-investment is likely to be needed. Implementation lag This issue is of particular concern to lead users and contributes to sub-optimal rates of gain. Likely causes are inadequate investment in R&D resources and/or inadequate investment in commercialisation resources. However there have also been instances where breed societies have delayed innovations being implemented in BREEDPLAN. Co-investment of industry into critical R&D and commercialisation resources would alleviate the problem; and the current role of breed societies in determining which traits to include in BREEDPLAN could bear some scrutiny. Disruption caused by genomics Leading users have already shown a desire to move quickly and have expressed some dissatisfaction with the rate at which the new tools are being made available. Widespread adoption of genomic testing has the potential to destroy the current breed society model, where accurate pedigrees can be determined from DNA rather than from breed registers. Under such a situation, the current ABRI business model, which relies primarily on phenotyping, would need to change. If genomics becomes dominant in the longer term, the current commercialisation model and the current roles of breed societies will be inappropriate and the industry will need to move to ensure that a system is in place to provide adequate phenotypes for all traits contributing to whole-of-chain profit. The solution will require a complete reorganisation of the breeding sector and extends well beyond the commercialisation arrangements for BREEDPLAN software. Page 36 of 93

37 Widening user gap An increasing gap between lead users and the rest results in escalating complaints from leaders becoming increasingly frustrated with access to cutting edge technology and therefore. Potential consequences are individual breeders or entire breeds exiting from the national genetic evaluation system and some breeds essentially disappearing altogether, reducing genetic diversity. Unless addressed, this risk will continue to increase. The gap has multiple causes, arising from differences in skills, different levels of confidence in the technology coupled with (and leading to) differences in investment. There is an inherent risk that existing breed society models and the ABRI business model cannot or will not respond quickly enough to lead users for fear of upsetting the majority. One possible solution is to introduce a two-stream support and service model, with co-investment from users. Industry would also need to co-invest, as it is the larger beneficiary. Rules for such a system must be transparent and fair. It would necessitate working with breed societies to overhaul their membership systems to be more value-adding based, rather than simply per person. If this could be done efficiently and equitably, Australia would obtain the benefits of much faster rates of gain coupled with a strong, diverse base of skilled animal breeding practitioners (breeders), and a meaningful portfolio of breeds; all of which are valuable attributes. 5. RD&E funding environment MLA s investment in recent years has been a small but important proportion of overall national RD&E investment in beef (approximately 10%). However, the total national investment is declining, through wind-up of CRCs and reducing co-investment. Winding up of the Beef CRC has significantly reduced the amount of Commonwealth funds being directed towards beef R,D&E; particularly the funding available for genetics and genomics. This is happening at the same time as a long-term trend away from funding support from state government departments, the universities and CSIRO. Despite predictions of increasing global demand for food (particularly animal protein), over the long term prices received for all commodities tend to approach the costs of production. To remain viable and globally competitive, the livestock industries will need an ongoing program of R,D&E to underpin continuous improvement in productivity. Being cumulative and permanent, genetic improvement will remain an obvious R,D&E target. Page 37 of 93

38 As indicated in MLA s internal plans for beef genetics R,D&E 20 : MLA is committed to working collaboratively within the national RD&E framework, and is expected to play a leadership role in the beef and sheepmeat industries in developing and implementing national RD&E plans. This means working with RD&E partners, service providers and industry to ensure the best possible use of resources, maintenance of critical capability, and maximum return on investment. MLA will maintain a coordination role for the national investment program, in line with the national RD&E framework. Another consequence of the CRC finishing arises from the fact that it has been largely responsible for coordinating R,D&E across the main agencies for the past two decades. Its cessation means that new models of co-operation and co-ordination are needed. The following summary of investments in beef genetics and genomics was provided in 2011 when the CRC was still operational (Table 3). Anticipated investments post-crc are shown in the second table, as predicted in 2011 (Table 4). Table 3. Estimated investment in beef genetics and genomics according to funding source (2011) Investment Estimated pa ($m) Funding source (%) Funding source ($m pa) Cash In-kind Total Breeders Levies 21 Govts Breeders Levies Govts 22 Beef CRC $7.3 $11.4 $18.7 1% 3% 95% $0.27 $0.65 $17.80 AGBU $0.7 $0.7 50% 50% $0.35 $0.35 BINs $2.5 $2.5 50% 50% $1.25 $1.25 ABRI $0.6 $ % $0.60 SBTS/TBTS $0.5 $0.5 42% 58% $0.21 $0.29 Sundry MLA $0.3 $0.3 50% 50% $0.15 $0.15 Other Govt RDE 23 $ % $1.00 On-farm recording 24 $3.8 $ % $3.75 Totals $15.7 $11.4 $28.1 $6.08 $1.15 $ % 4% 74% 20 MLA Investment into Beef and Sheep Genetics and Genomics RD&E Business Plan, Transaction levy funds. Matching government funds included under Governments 22 Includes Federal, State governments and Universities 23 Possibly an under-estimate 24 Based on 150,000 cows at $25 pa Page 38 of 93

39 Table 4. Estimated investment in beef genetics and genomics according to funding source (post- CRC). Investment Estimated pa ($m) Funding source (%) Funding source ($m pa) Cash In-kind Total Breeders Levies Govts Breeders Levies Govts Ex-CRC partners $1.5 $6.8 $8.3 7% 93% $0.65 $7.69 AGBU $0.7 $0.7 50% 50% $0.35 $0.35 BINs $2.5 $2.5 50% 50% $1.25 $1.25 ABRI $0.6 $ % $0.60 SBTS/TBTS $0.5 $0.5 42% 58% $0.21 $0.29 Sundry MLA $0.3 $0.3 50% 50% $0.15 $0.15 Other Govt RDE $ % $1.00 On-farm recording $3.8 $ % $3.75 Totals $9.8 $6.8 $17.7 $5.81 $1.15 $ % 7% 61% No recent figures are available for former CRC partners, but given restructuring activities in State Departments, universities and CSIRO, it is likely that the above estimates for the post-crc scenario from ex-crc partners are overly-optimistic. Consequently the total R&D expenditure has probably declined by more than the $10.4m indicated, or about 40%. Breeders and other levy-payers are now paying a significantly greater share of the total genetic improvement spend than they were in 2011; although the actual quantums may be similar. Specific comments about R,D&E funding from a beef genetics and genomics Round-table held in September 2012, sponsored by MLA and involving leading beef producers and researchers, are included at Appendix Across-breed evaluation Although it is not a view shared by all stakeholders, the consensus industry preference is for increased effort to be put into across-breed evaluation (Appendix 4 item b2; Appendix 5 item 6). There is certainly an argument that combining data across breeds for genetic evaluation of sheep has proven to be highly beneficial, even though in the early stages of implementation, purists may have been troubled by the simplistic assumptions made during analysis. According to ABRI, it is currently liaising closely with MLA, AGBU and breed societies to encourage the development and adoption of across-breed analyses. AGBU have completed research into the feasibility of analyses on combined datasets for British and European breeds. Results are encouraging but the development in this area will depend upon society interest and support. The availability of good quality data sets to provide the necessary genetic linkages remains a limitation, Page 39 of 93

40 but inroads have been made in recent years, particularly through initiatives such as Beef Information Nucleus herds. Similarly, the ability to produce reliable predictions for cross-bred populations is contingent on well-informed assumptions. ABRI expects that breed societies will wish to progress across-breed evaluation and is consequently providing the necessary support and advice to clients. Modified delivery options that include multiple breed runs are outlined later in this report. 7. BREEDPLAN international context In a 2012 presentation to the MLA Board, P.A. Rickards posited that BREEDPLAN is the world s most widely used genetic evaluation system for beef cattle, at that stage being used by 44 breeds across 15 countries, and involving about 460,000 beef cattle registrations. Although the numbers may have changed somewhat since then, it remains true that BREEDPLAN is the most widely used genetic evaluation system for beef cattle. In the same year, Banks and Rickards (2012) 25 presented a summary of organisational models for beef recording and genetic evaluation in many countries outside of Europe (Table 5), which illustrates the penetration of BREEDPLAN. 25 Banks, R. and Rickards, P.A. (2012) Organisational models for beef recording and genetic evaluation in Australasia, the Americas and Southern Africa. Paper presented to ICAR 2012 conference. Page 40 of 93

41 Table 5. Organisational models for beef recording and genetic evaluation 25 Virtually all registration and genetic evaluation work in Australia and New Zealand is undertaken using the International Livestock Register (ILR) and BREEDPLAN. Performance data for the nine main beef breeds that are run in both countries are combined for genetic evaluation, covering some 20 traits. In South Africa, Namibia and Zimbabwe the market for recording, registration and genetic evaluation services is divided between the ABRI products (ILR and BREEDPLAN) and the Logix system provided through the SA Stud Book. In the USA, some breed associations (such as the American Angus Association, the International Brangus Breeders Association and the American Simmental Association) have written their own breed registry software while others license software from commercial agencies including the ILR system from ABRI. The main service providers include Angus Genetics Inc. (AGI), Genetic Performance Solutions, the American Simmental Association and the BREEDPLAN service of ABRI. Around 65% of beef registrations in Canada are processed via licensed ILR systems and much of the Canadian data is combined with that from the US for genetic evaluation. Some of these genetic evaluations are provided by US agencies; some breeds use BREEDPLAN which also combines US and Page 41 of 93

42 Canadian data; with a minority evaluated by Canadian agencies which have limited opportunities for accessing US data. Banks and Rickards (2012) 25 estimated that Latin American countries run around 400 million cattle of which 52% are in Brazil. There are a number of service providers for recording, registration and genetic evaluation services. Government agencies, universities, commercial agencies and BREEDPLAN all compete for a share of this market. Notable amongst these is the pan-american Hereford evaluation conducted by ABRI, which includes almost 6m animals across Canada, US, Uruguay and Argentina, run twice yearly. These analyses do not use standard BREEDPLAN software (and are not branded as BREEDPLAN) but they do involve analytical software supplied by AGBU and which incurs a royalty fee. In a similar vein, ABRI aimed to finalise the genetic evaluation on a combined Limousin database from Australia, New Zealand, South Africa and Namibia in 2014; and is also involved in an ongoing investigation into combined evaluation of Brahman herds across Australia, USA, South Africa and Namibia. Appendices 10 and 11 lists the regular BREEDPLAN runs classified by breed and country these all use standard BREEDPLAN versions. Purported benefits of international activity Approximately 30% of royalty revenue from BREEDPLAN is from overseas evaluations (Appendix 1). ABRI has an active policy of engaging with countries that trade germplasm with Australia in order to encourage the adoption of multi-country genetic evaluations. This not only increases their revenue base but is seen contribute to the rate of genetic progress of the beef herd in Australia by identifying the potential for imported germplasm to improve Australian herds. The usefulness of this depends on the extent of genotype-environment interactions between countries for the key profit traits; and in the context of genomic selection, the relationship between breed populations in different countries. Certainly there is evidence in the Angus and Hereford breeds that importations have made a substantial contribution to genetic progress (see Figure 4). 8. Competitor analysis Although BREEDPLAN is arguably the most widely used genetic evaluation system for beef cattle, there are potential competitors that could assume this mantle or at least erode its market share. Some of these are listed in Table 5. Page 42 of 93

43 NBGEC In the US, the National Beef Cattle Evaluation Consortium (NBCEC) 26 claims that NBCEC is the global leader in developing, licensing and facilitating world-class cattle evaluation technology ; and that Genetic evaluation software developed by NBCEC is used in national and international genetic evaluations. The genetic merit of more than 500,000 beef cattle is predicted annually using data collected and analyzed by NBCEC-developed software. 27 In fact, NBCEC does not itself provide a bureau service but researchers at any of its participating universities (Colorado State, Cornell, Georgia or Iowa State) are potentially capable of undertaking, under contract, genetic evaluation that is close to best-practice. As part of its mission statement, NBCEC has the aim To establish and coordinate priorities for genetic evaluation of U.S. beef cattle with the goal of positioning the U.S. as a leader in this area thereby increasing the global competitiveness of the U.S. beef industry. Although NBCEC has become less prominent in recent years, its R&D members continue to collaborate actively and offer genetic evaluation services, including expertise in molecular genetic prediction. So in that context, NBCEC partners could be regarded as capable of providing services that compete with BREEDPLAN, at least for individual breeders or breeder groups. Angus Genetics Inc. Also in the US, Angus Genetics Inc. (AGI) was established in 2007 as a subsidiary of the American Angus Association to provide services to the beef industry that would assist in the genetic evaluation of traits of economic importance 28. It develops and promotes technology for use by the beef industry, including DNA technology. AGI has developed genomic-enhanced EPDs for the Angus breed that are updated on a weekly basis. AGI also conducts research and develops and utilizes new science and technology to benefit all beef producers. AGI provides client-specific genetic evaluation services to various breed organizations in the U.S. and Canada. There is little reason why its clientele could not include Angus Australia members, if that breed society felt so inclined. In April 2014 AGI dismissed six regional managers and six staff members because of dissatisfaction with management. 29 This is likely to affect AGI s capabilities, in the short term at least Note that the number of EBVs or EPDs predicted is not the same as the number of contemporary animals in the analysis, because all animals in the pedigree are also assigned a breeding value. To put this into context, BREEDPLAN analyses currently predict EBVs for over 5 million cattle, even though they only claim to have about 460,000 current registrations See: j/36634/6gqwlutnnug5awggmzfj_a Page 43 of 93

44 Australian Dairy Herd Improvement Scheme (ADHIS) ADHIS is the Australian dairy industry's independent genetic evaluation service, having commenced operations in Dairy is the nation s third largest rural industry, ranking behind wheat and beef, with farm-gate value of $3.7b and a national dairy herd of 1.65m cows 30. This compares with a national beef herd of 13.6m cows and heifers. The dominant breed in Australia is the Holstein, accounting for some 65-70% of all dairy cattle and most breeding is by artificial insemination. Around half of all dairy farms regularly record herd performance. Although BREEDPLAN and ADHIS both deal with cattle, the structure of the genetic improvement pipeline in the dairy industry differs so much from the beef industry that comparisons of the commercialisation models are not particularly informative. As noted by Williams (2009) 31, herdtesting is managed by herd improvement organisations (HIOs) which were historically farmer cooperatives, but many are now owned by breeding companies. HIOs provided services to farmers for the collection and management of phenotypic data, which is in turn submitted to ADHIS. Many commercial farmers use herd testing for reasons other than genetic improvement (feeding decisions, culling, disease management) and regular data collection is far more common than it is in beef cattle. Williams (2009) 31 also noted that the dairy industry uses only about 150 bulls per year (plus back-ups); a mating ratio of less than 0.01%, compared with 2-4% in naturally-joined beef cattle. The only services that dairy bull breeders purchase directly from ADHIS are either for a genomic breeding value or registration of a bull on the National bull registry (NASIS). ADHIS previously sold detailed bull lists, but since 2010 it has adopted a policy of removing any barriers that would stop a farmer from using ABVs 32 to make better genetic choices. This includes the fee for service bull lists, which were never well-marketed and therefore didn't sell 33. Bull companies continue to provide some funding to ADHIS through fee for service activities such as daughter progress reports, PBVs (early ABVs), genotyping, NASIS registration, etc Australia/~/media/Documents/Stats%20and%20markets/In%20Focus/Australian%20Dairy%20Industry%20In%20Focus% pdf 31 S. Williams (2009) Review of Sheep Genetics. SED Consulting report for MLA 32 In dairy, EBVs are called ABVs 33 M. Axford, pers comm. Page 44 of 93

45 Most of the funding for ADHIS comes from Dairy Australia through dairy farmer service levies and government funding. Dairy Australia s budgeted allocation for ADHIS was $1.3m 34, out of total budgeted receipts of $33.7m from the Dairy Service Levy plus $19.0m matching government payments. Revenue for breeder services is approximately $400k. Together, the allocation from Dairy Australia and the service revenue cover direct costs of routine analysis and associated data handling, plus some method development that is close to application. DEPI contributes in-kind to the ADHIS project via on-cost support to DEPI technical staff, amounting to around $300k 35. The actual analytical software for ADHIS is operated by DEPI under contract and could not be readily adapted to beef cattle, or at least is not designed to handle large multivariate models like BREEDPLAN. Data are largely provided through herd recording schemes; and genomic testing is funded by bull breeders with support from the Dairy CRC or Dairy Australia for specific applications, such as developing predictions for feed intake and cow fertility. Starting from a zero base in 2011, the Dairy CRC has targeted reaching a point by June 2016 where 40% of all semen used by the dairy industry is from young bulls that have genomic breeding values (GBVs). This target rises to 70% by June Strategic R&D projects to support the ADHIS system are funded by Dairy Australia, the Dairy Futures CRC and/or ADHIS on a case by case basis, rather than part of larger long-term integrated contracts such as those supporting beef and sheep. Sheep Improvement Ltd NZ Sheep Improvement Limited (SIL) provides genetic evaluation services for sheep in New Zealand. In his review of Sheep Genetics, Williams (2009) 31 described the SIL model and rather than re-describe it here, the relevant section of Williams report is included as Appendix 7. The evaluation software used by SIL (ASReml) could not be readily adapted to provide the degree of specialised analyses equivalent to BREEDPLAN Australia/~/media/Documents/Industry%20overview/About%20Dairy%20Australia/Strategic%20plan/Strategic%20Plan% _web.pdf 35 D. Abernethy, pers. comm. Page 45 of 93

46 ICAR ICAR 36 is an international non-governmental non-profit organisation, whose members comprise representatives of organisations involved in animal recording and genetic improvement. There are currently 105 members from over 50 countries. ICAR plans to grow to 200 members by 2019 and cover all main animal production regions in the world. Its stated aim is to promote the development and improvement of the activities of performance recording and the evaluation of farm livestock, which includes beef cattle, inter alia. The bulk of its activities appear to be directed at recording standards, with an interest in shared tools for evaluation. In its current form it is not clear whether this poses a competitive risk (or an opportunity) for BREEDPLAN in the longer term. However, with the ongoing need for phenotype information to underpin genomic selection and the need to share information (particularly for hard-to-measure traits), ICAR s role could potentially become increasingly important. Others Other alternatives to BREEDPLAN locally include organisations such as Zoetis (Formerly Pfizer Animal Genetics) which has produced EBVs for several individual clients, with and without genomic information. It is not currently staffed to do this but could easily be with additional investment. Similarly, individual consultants with appropriate skills and publically-available software could predict breeding values that on a within-herd basis at least, would potentially be highly correlated with BREEDPLAN EBVs. However, the analytical models used by these alternative service providers are generally far less sophisticated than offered by BREEDPLAN and would not be capable of large across-herd analyses analogous to GROUP BREEDPLAN. There are various off-the-shelf packages that could be substituted for BREEDPLAN for within-herd or even across-herd analyses, such as PEST, BLUPF90 and ASReml. Being designed for general use however, these packages lack some specific features that are incorporated into BREEDPLAN to cater for the typical structure and genetic grouping of beef herds. A competitive advantage that the BREEDPLAN system appears to have but is difficult to quantify, is its systems for ensuring data quality. Anecdotal evidence and personal experiences of the author lend some support to this Page 46 of 93

47 Finally, it is worth recognising that beef breeders in Australia who do not use BREEDPLAN or the simpler alternatives described above, rely largely on subjective evaluation, which is actually a competing methodology. By its very nature it is not objective and so comparisons of rates of gain with that achievable using BREEDPLAN cannot be quantified. Comparative analysis of Sheep Genetics The commercialisation model for beef genetics has more similarities with sheep than with dairy, but there are still a number of differences between the beef and sheep models. In the case of beef, the analytical software is exclusively licenced to a single provider (ABRI) which operates as a not-forprofit entity. In addition to routine computation of EBVs, ABRI provides fee-based data handling and reporting services and also undertakes several other activities apart from genetic evaluation. In the case of sheep, analysis and reporting is carried out by Sheep Genetics, which operates as a business unit of MLA (AWI also makes a contribution through MLA towards the Merino component). Information flows to and from the BREEDPLAN analytical engine are shown in Figure 6, with the comparable data flow in Sheep Genetics, as depicted by Williams (2009) 31 in Figure 7. For beef, BREEDPLAN analyses are conducted by ABRI, whereas in sheep, AGBU is contracted by Sheep Genetics to perform routine OVIS analyses. AGBU conducts R&D for both BREEDPLAN and OVIS, and is also responsible for incorporating relevant research from other organisations, including CRCs. Page 47 of 93

48 Figure 6. Information and product flows to and from BREEDPLAN (S. Skinner, pers. comm). Figure 7. Information and product flows to and from Sheep Genetics (Williams 2009) 31 Another important difference is that in beef, the functions of the Sheep Genetics database and data manager are replaced by four different types of databases, only two of which are actually Page 48 of 93

49 $ per billable Aust animal maintained at ABRI (IBRS and some breed societies). Irrespective of their physical location, breed society databases have the same ownership structure (i.e. data are owned by the relevant breed societies). Notably, the BREEDPLAN licensing arrangement only covers the transaction between the top two boxes in Figure 6. However, the rest of the chart is relevant as it affects whether or not the ABRI operational plan is working effectively (a pre-requisite to the licence agreement being renewed). The total costs of each component of providing genetic analysis for sheep and cattle on a per head basis are shown in Figure 8. Total costs per billable animal for cattle are $17.60 and $8.23 for sheep Beef Sheep Figure 8. Components of costs related to genetic improvement in beef and sheep due to BREEDPLAN and Sheep Genetics respectively (left side). Direct user contributions (right side) exclude R,D&E. This shows that of the costs associated with providing EBVs (excluding R&D and overheads), relatively more is being invested in extension for beef than sheep. About 40% of the investment in beef extension is from beef breed societies, which have made a voluntary commitment to extension through SBTS or TBTS, with no equivalent structures in sheep. It should be stressed that this is only a partial picture, as there are other extension services provided outside of ABRI (for beef) and Sheep Genetics (for sheep). Development costs for beef are sheep are similar on a billable animal basis but revenue sources differ: for beef the costs are met by ABRI while for sheep they are largely from levy funds. Page 49 of 93

50 Rate of progress ($ per breeding female per year) Beef users pay a little over twice as much per billable animal as sheep users if their contributions to R&D and extension (through MDC projects and levies) are excluded 39. Whether or not there are potential savings to be made for delivery of beef EBVs would require access to more details of ABRI s costs and related services than were readily available for this study. However, the evidence presented here does not indicate that the costs to breeders are grossly disproportionate to the value of the animals being evaluated. Against the comparative costs, it is instructional to compare rates of genetic progress in beef, sheep and dairy. Banks (2005) 40 showed that rates of genetic improvement in the beef and sheep has varied considerably, depending on the segment (Figure 9) Figure 9. Rates of gain in Australian beef cattle, dairy cattle and sheep , expressed on a breeding female basis (top) and a DSE basis (bottom) Beef cattle, Leading Terminal weighted Angus herds sheepmeat average Sires (av) Leading terminal sire flocks Merino average Leading Merino flocks Dairy cattle When scaled according to feed consumption, historical progress in the average beef breeding herd has been lower than the average Merino breeding flock; but in leading Angus herds is similar to that achieved in dairy cattle. Depending on segment, genetic progress in sheep exceeded that in the 39 Calculated as breeder revenue (less SBTS/TBTS contributions) divided by the number of billable animals 40 Banks, R.B. (2005) Aust. J Exp. Agric. 45: Page 50 of 93

51 average beef breeding herd by 50%-650%. Taken together with information presented earlier in this report, these figures provide a strong indication that genetic improvement in the beef industry is lagging its potential, but that costs associated with delivery of EBVs should not be a serious impediment, given the magnitude of potential gains. 9. Alternative commercialisation models Several alternative commercialisation models are outlined for initial consideration. Each was given a preliminary assessment by a small panel comprising the author and MLA officers, against the following criteria: Criterion Industry accountability Technical rigour and independence Business scale Capacity to deliver new products Capacity to provide R&D services Resilience of revenue base Equitable charging for services Flexibility in decision making Safe distance from industry politics Likelihood of increasing genetic gain Future proofed Interpretation Whether a mechanism exists for industry to hold service providers to account for their actions Technical quality of genetic evaluation and whether provider(s) are likely to act as (and be seen to act as) as an honest broker Whether scale of operations are likely to be sufficient to ensure long-term viability and provide efficiencies of scale Ease, effectiveness and speed at which new products related to genetic improvement can be implemented Degree to which the system can accommodate and support underpinning genetic/genomic R&D Long-term financial sustainability of the system and its ability to weather financial shocks Degree to which users of the system receive equal value for money and whether additional efforts are rewarded Ease with which decisions about changes to key elements in the system can be made and actioned Degree to which the system is resilient to the influences of industry politics A function of factors such as participation rate, evaluation accuracy, effectiveness of use and strength of market signals Whether the system is designed to accommodate technical developments and the advent of new technologies; and is financially robust Page 51 of 93

52 Cost to MLA Level of financial commitment needed by MLA (or MDC) to implement and sustain any desirable changes Scores were assigned relative to the current system, where 1=much worse; 2=slightly worse; 3=same; 4=slightly better; 5=much better 1. Minimal change Despite a number of concerns having been expressed about the current BREEDPLAN model, it actually works remarkably well. To make it sustainable and more universally acceptable, however, some actions are highly desirable. The first of these is a concerted effort to improve the coordination of all beef genetic technologies and to improve lines of communication and accountability. This has already been the subject of considerable discussion and the deliberations of a working group established to address this are outlined in Appendices 8 and 9. The second is a frank and adequately-informed discussion between ABRI and its clients about the real costs of delivering BREEDPLAN EBVs, a willingness to decouple components of the service when it is in the mutual interests of the parties (and the industry as whole) to do so, and a preparedness to address costs where (or if) they can be shown to be excessive. MLA management needs a process for dealing with stakeholder complaints around BREEDPLAN delivery. Some complaints may be genuine but readily soluble through a proper process and others may be intractable under current resourcing levels. If industry can take responsibility for implementing a process with proper lines of communication and accountability (as referred to above) with the guidance of MLA, the demand for fire-fighting responses should greatly diminish. In addition, some consideration should be given to a more pro-active move towards delivering across-breed and multi-breed EBVs, which are already being delivered for some sub-sets of the national breeding herd. Page 52 of 93

53 Preliminary assessment Criterion Score Assessment Industry accountability 3.5 Shared understanding of costs, but no redress for poor performance Technical rigour and independence 3 No changes to technical element Business scale 3 Could be a lot less if major breeds withdraw Capacity to deliver new products Capacity to provide R&D services Resilience of revenue base Equitable charging for services Flexibility in decision making Safe distance from industry politics Likelihood of increasing genetic gain 3 No structural changes to delivery pipeline 3.5 Only through better communications. Without that, no change 3.5 This is under threat from major breed societies but as comparison is with existing, would be unchanged at worst, and slightly better if improved 3.5 Unchanged but potential for improvement on existing 3 No relevant changes 3 No relevant changes 3.5 Could be improvement compared with existing if charges are uncoupled and breeders more satisfied with communications/governance Future proofed 3 No worse than existing Cost to MLA Slightly more MLA may need to invest more on communications and accountability e.g. by sponsoring annual meetings 2. Free market This variant was described as Black box by Williams (2009) 31 in his review of the Sheep Genetics business model. It is included here in an analogous form for comparative purposes. Its name derives from a model whereby BREEDPLAN (in this case) would exist solely for its core function of predicting EBVs. It could be operated either by its owners or a licensee such as ABRI. Whether or not a breeder chooses to participate or not would be an individual business decision, similar to the status quo except that financial transactions would be outside the breed society structure and evaluation costs would therefore be clearly distinguishable from other breed society costs. The BREEDPLAN operator would provide a data processing and reporting service only, and provide no direct advice to clients. This function would be undertaken by service providers. Poor quality data Page 53 of 93

54 would simply be rejected from the analyses, where apparent. Marketing would not necessarily be done by the operator, but might be done as seen fit by MLA (or all three owners). Advantages of such a system would be that costs would be transparent and it would operate entirely on a user-pays basis. For experienced breeders who need no assistance, it may provide a cheaper service that the current system. It would also provide clear opportunities for service providers. However, there are a number of disadvantages: The performance and pedigree databases would need to be re-created as the great majority of combined datasets which enable across-herd analyses are currently owned by breed societies. Because of the previous point and the lack of any assistance to breeders (including help with data quality), the participation rate would probably decline substantially. Service providers may not fill the gap, so that BREEDPLAN outputs may be under-utilised or misused. Potential criticism of MLA for being seen to abandon BREEDPLAN clients. Page 54 of 93

55 Preliminary assessment Criterion Score Assessment Industry accountability 2 Bureau service would come under scrutiny but service sector essentially laissez-faire Technical rigour and independence 2 Same rigour on analytical software, no rigour on service sector; limited rigour on data quality. Could be open to snake-oil merchants Business scale 3 Analytical service would be based on cost recovery Capacity to deliver new products Capacity to provide R&D services Resilience of revenue base Equitable charging for services Flexibility in decision making Safe distance from industry politics Likelihood of increasing genetic gain 2 Fragmentation of pipeline - less integration means harder to coordinate delivery 2 Fragmentation of pipeline - less integration means harder to deliver R&D effectively 1 Likely to be market failure in service sector. Might work for sheep in NZ but greater reluctance to use consultants here 4 Flat rate for EBVs. Breeders can choose their own service providers 4 Breeders would have a lot of choice, though it may cost more than currently 3 No relevant changes 1 Likely market failure would lead to reduced participation rates and (even-more) sub-optimal practices Future proofed 1 Based on experiences with Rampower etc, is likely to fail Cost to MLA Less Withdrawal from extension and hand-holding activities 3. Multiple licences Granting separate licences to multiple providers or to larger breed societies may ostensibly address some of the areas of dissatisfaction and allow breeders to continue using BREEDPLAN rather than migrating to other systems of evaluation. However, it would have several undesirable consequences: First, it is unlikely that the domestic market could support a second BREEDPLAN provider. Any economies of scale inherent in the current model would be compromised, threatening ABRI s business model and potentially leading to loss of services for smaller breeds. The databases would be fragmented leading to loss of statistical power and other inefficiencies. Animals could (and probably would) appear in more than one set of results with inconsistent and less accurate EBVs, leading to confusion and loss of confidence in the technology. Page 55 of 93

56 Software development, maintenance and support would become more difficult and most likely require additional resources. Preliminary assessment Criterion Score Assessment Industry accountability 2 More difficult to ensure responsible use with multiple users. Technical rigour and independence 2 Same rigour for BREEDPLAN software but not for the way it is used Business scale 1 Lose any economies of scale in centralised model. Might work for Angus, for example, but others would lose out Capacity to deliver new products Capacity to provide R&D services Resilience of revenue base Equitable charging for services Flexibility in decision making Safe distance from industry politics Likelihood of increasing genetic gain 2-4 Allows better tailoring for Angus (for example) but smaller breeder groups would likely lose out, so really a range of outcomes (2-4) 2-4 Similar to above 2 Market couldn't realistically support any more than one or two providers at best. Already unprofitable, would probably make it worse 4 Competition between licensees could perhaps lead to improvements 2-4 Similar to Capacity to deliver new products 2 Would probably lead to a reasonable level of dissatisfaction and BREEDPLAN owners would feel the consequences 1 Likely market failure would lead to reduced participation rates and (even-more) sub-optimal practices Future proofed 2 Harder to make changes to multiple copies of the software Cost to MLA Less Initially at least, would probably be some divestment of costs to service providers; but not in longer run 4. Integrated chain This model is intended to deliver desirable elements of the beef genetic improvement pipeline (as already identified by key stakeholder groups) in a more holistic fashion. Its name is not meant to imply that the current model is devoid of integration, but that it is given more emphasis here. Desired outcomes: Increased genetic gain and adoption by industry (primary goal) Separation of genetic delivery from herd book functions Genetic innovations delivered to industry without the encumbrance of third parties Improve access to centralised database with improved function Page 56 of 93

57 Greater engagement in data acquisition and utilising relevant commercial information Development of resource herds to underpin future R&D Industry accountability through project funding and representative committees Transparency of operational delivery, accountability and costs Key elements Four separate but inter-related segments of the pipeline are described, each with its own characteristics, but incorporating a mechanism for accountability and whole-of-chain corporate, operational and technical governance. 1. R&D is coordinated through a centre of excellence (COE) for beef genetics R&D. Project funding is competitive, with grants assessed according to their contribution to the primary goal of increased genetic gain in the national herd. Core funding is allocated for delivery of R&D into BREEDPLAN. 2. Genetic evaluation and delivery. This comprises routine BREEDPLAN evaluation analyses, semiautomated and run twice-monthly. Analyses are consolidated into three separate runs one comprising all British breed data, another with European breeds and a third with tropical breeds. It could be operated by a separate business unit of an existing entity or a new agency with a simple management structure. There is a single pricing model for breeders, designed to operate on a costrecovery basis, and open to individual breeders and breed societies. The aim is to reduce BREEDPLAN delivery costs by 50%, allowing funds to be invested into reference herds, extension (following the SBTS/TBTS model) and development of associated software. International evaluations are encouraged in order to provide a level of subsidy for Australian clients and to provide a larger reference population for smaller breeds. GROUP BREEDPLAN (and reporting of across-herd, or across-breed EBVs) is available to any herds that meet specified technical criteria (related to data quality, linkage etc) rather than breed membership. 3. Data collation and management. All data (genotypes and phenotypes) are held in a single database that is available for research, development and delivery, with a unique BREEDPLAN identification system. Delivery of information to and from the central database is undertaken by multiple service providers, with data ownership unencumbered by third parties. Service providers might include ABRI, breed societies and other commercial operators. Data from commercial herds can be included for traits such as cow fertility, condition score or MSA/retail yield, provided pedigree or genotypic data are available, as well as management group information. Ideally the central Page 57 of 93

58 database would interact with other industry databases (MSA, LDL), as well as genotyping services, on-farm software-providers and international databases. 4. Industry (on-farm) data. Data are owned by breeders and access is not restricted by breed society requirements. Communications and coordination Pipeline developments and prospective changes are communicated at an annual BREEDPLAN/beef genetics conference where any issues identified by stakeholders (mainly users) are resolved. Improvements and quality control measures are implemented as soon as possible, at the least disruptive time for each breed. Resource herds There would be an active program to coordinate research herds for the recording of hard to measure traits (e.g. disease resistance, eating quality, methane output, feed intake) and to generate linkages between herds, between breeds and if necessary, international linkages. Industry herds can also be used for research provided they meet criteria for data quality, linkage and relevant traits. In return, owners of such herds would get access to additional services such as genotyping, specialised breeding tools and direct engagement with researchers. Oversight and governance A BREEDPLAN advisory committee, comprising breeders, would be established to have input into beef genetic R&D priorities and would oversee BREEDPLAN implementation schedules, BREEDPLAN technical service development work-plan and the technical services work-plan. A beef genetics technical committee would include independent genetic and genomic experts and would be tasked with reviewing current and proposed beef genetic R&D. (This might also be combined with the Sheep Genetics technical committee). A program steering committee would be responsible for resource allocation and co-investment, drawing on elements described in Appendices 8, 11 and 12. It would include representatives from MLA, CCA, SCA and investors (leading breeders and RD&E providers). Page 58 of 93

59 Preliminary assessment Criterion Score Assessment Industry accountability 5 Governance structures put in place to specifically address this Technical rigour and independence 5 Includes technical oversight of the science and governance for other parts of the pipeline. R&D more inclusive of other providers Business scale 4 Less dissatisfaction could lead to greater participation Capacity to deliver new products Capacity to provide R&D services Resilience of revenue base Equitable charging for services Flexibility in decision making Safe distance from industry politics Likelihood of increasing genetic gain 4 Better coordination at all levels 4 Similar to above 3 Would need greater industry co-investment initially, but once working properly should be at least as good as currently 5 Processes put in place to address this 4 Similar to lines 5&6 2 MLA would need to take a more prominent leadership role. Would need to negotiate with breed societies regarding data ownership 4 Addresses many of the current blockages identified by breeders Future proofed 4 More inclusive decision making should enhance adaptability of the system Cost to MLA High Requires initial investment in development and establishment / funding of governance structures 5. Radical transformation A similar system to that described under the Integrated Chain (IC) model is included in Appendix 13. As with the IC model, evaluation and registration are decoupled; and evaluation is performed in three main breed groups. However, there are some essential differences, including: A focus on seven major breeds (Angus, Hereford, Charolais, Limousin, Brahman, Wagyu, Tropical Composites), recognising that it is not possible to develop sufficiently accurate genomic predictions for the numerous smaller breeds, at least not for the foreseeable future. All major evaluations would be internationalised, if necessary at cost to Australia. Contributions to industry gain are rewarded via premium services (contributions being measured by genetic merit and rate of genetic progress, as well as recording of information-rich data such as hard- or expensive-to-measure traits). Page 59 of 93

60 Generic extension services are provided, as well as customised services for leading studs, mainstream studs and commercial producers (not very different from the TBTS/SBTS model). BIN populations are an integral part of the system, as well as co-investment in recording in leading studs from all seven breeds. Elite young sires (including overseas sires) are represented and breeds within the three main analysis groups are systematically linked. All BIN animals plus those in industry herds that meet data quality and quantity criteria are genotyped, with costs met by the wider industry. Preliminary assessment Criterion Score Assessment Industry accountability 4 Less emphasis on governance than BGS model, but better than currently Technical rigour and independence 4 Less emphasis on this than the BGS model but no reason why it couldn't be equally rigorous and independent Business scale 4 Less dissatisfaction could lead to greater participation Capacity to deliver new products Capacity to provide R&D services Resilience of revenue base Equitable charging for services Flexibility in decision making Safe distance from industry politics Likelihood of increasing genetic gain 5 Flexibility and innovation designed into the system 4 Similar to above. Smaller breeds might be disadvantaged 2 Relies more on high levels of investment in HTM traits and genotyping; but if carefully managed and executed properly, could be financially sustainable 4 Processes put in place to address this 4 Flexibility and innovation designed into the system 2 MLA would need to take a more prominent leadership role. Would require negotiation with breed societies regarding data ownership 4 Potentially highest gain of all the options but discounted to allow for risk Future proofed 5 Designed specifically with future needs in mind Cost to MLA Higher Requires initial investment in planning and managing change. Preliminary costings on page 90 but requires detailed financial analysis for a proper assessment. Tentative conclusions Of the models described above, the Free Market and Multiple Licences options do not appear to be practicable. Minimal Change would be the least disruptive and potentially lead to several Page 60 of 93

61 improvements at relatively low additional cost. Integrated Chain is specifically designed to address the major issues identified during industry consultations, but would require careful change management and additional levels of investment. Radical Transformation is probably closest to ideal from a genetic (and also perhaps economic) perspective being designed to accommodate future technological changes, flexibility and an equitable funding model; but bring with it significant implementation risks and transition costs. It is important that industry stakeholders have an adequate opportunity to debate any potential changes before they are implemented. Page 61 of 93

62 10. Appendices Appendix 1. BREEDPLAN Commercialisation Arrangements (Adapted from information supplied to MLA by ABRI, September 2012). Following is a summary of pricing and delivery arrangements in the two territories, namely Australia and overseas. The level of service ABRI provides as a part of "The BREEDPLAN Package" differs markedly between the Australian clients and the overseas clients. This can be summarized as:- Australia ABRI handles all incoming performance data, and ensures its integrity and accuracy (often requiring breeder follow-up) and its addition to the database. Experience with numerous performance datasets from many countries and many database suppliers, indicates that the Australian BREEDPLAN dataset is far and away the highest quality dataset available. ABRI prides itself in maintaining this quality. ABRI handles all report generation and generation of worksheets (where required) for data collection purposes. All clients use ABRI systems for the collection & storage of their raw data. Where required ABRI handles all interim analyses and within-herd analyses, and all communication with individual breeders. ABRI provides technical support, extension and education (even outside of the role of SBTS/TBTS). ABRI runs across-herd analyses (Group BREEDPLAN) at contracted frequency (often requiring merging of data from other databases/countries). ABRI maintains specialized hardware (very fast processor, huge memory) for Group BREEDPLAN processing. Overseas The overseas client is responsible for: all data collection, all data processing, all printing and all contact with individual breeders regarding their data. - maintenance of the infrastructure (hardware, internet, communications etc.) to support their system. Some overseas clients do not use ABRI systems for the collection and storage of their raw data. ABRI provides limited technical support to the overseas client. The overseas client is responsible for any extension activities and education of their breeders. ABRI runs the across-herd analyses (Group BREEDPLAN). Pricing model(s) used in each territory There are three components to the pricing: i) data processing fee (Australia Only) ii) royalty (per animal performance-recorded) for access to the BREEDPLAN technology (Overseas Only) iii) Group BREEDPLAN fee Page 62 of 93

63 Data Processing Fee (Aust Only) There is a retail NBRS fee schedule set and reviewed annually by the NBRS sub-committee of the ABRI Board. Only for a small number of Australian clients, is this retail fee charged by ABRI direct to breeders. These fees are readily available from the BREEDPLAN web site for these clients (eg. Brahman). The vast majority of Australian clients do not use this. Instead they operate on contracted corporate rates. These corporate rates have been negotiated by the breed society client at a discounted rate from the retail fee. Per-Animal Royalty (Overseas Only) This is a contracted per animal fee, based usually on the number of weaning-weights added to file, and invoiced quarterly to the overseas breed society. Group BREEDPLAN Fee This fee covers the processing required for across-herd analysis. Many clients now do this monthly, but many overseas clients operate on from 1 to 4 Group BREEDPLAN runs per year basis. The increased use of across-country analyses has significantly increased the personnel resources required for this. Cost for breeders to participate In Australia, where clients are utilising a 'corporate' agreement, the client breed society is responsible for how they pass on or collect costs from their members. Some clients have explicit BREEDPLAN fees for their members whilst others have built them into their annual inventory and membership fees. There is a wide range of models used across the industry. ABRI does not prescribe to its clients which model(s) they should adopt, or what level of fees it should set for its members. Therefore, the fees seen by members are not always the true cost of the service. All overseas clients are responsible for passing on ABRI's costs to their members. Once again, there are a variety of models used by the overseas breed society clients to recoup costs from their members. BREEDPLAN costs are price sensitive. This is particularly so in overseas markets. An increase in overseas fees would result in a loss of some contracts. In Australia there is a little less price sensitivity, but even so, some groups have opted out of Group BREEDPLAN because of cost. Any lowering of price for particular clients would generally require a lowering of service levels for that client. Page 63 of 93

64 Appendix 2a. Genetic trends in direct calving ease Angus (courtesy of A McDonald) Hereford USA Aust NZ CAN UK USA Aust NZ CAN Shorthorn Limousin USA Aust UK CAN -1-2 Simmental Charolais Aust NZ US UK Red Angus USA Aust CAN Page 64 of 93

65 Appendix 2b. Genetic trends in birth weight Angus 2 2 (courtesy of A McDonald) Hereford USA Aust NZ CAN UK USA Aust NZ CAN Uru -0.5 Arg Shorthorn 2 Limousin USA Aust/NZ SA UK CAN FRA Simmental -1 2 Charolais Aust NZ CAN US UK Brahman Santa Gertrudis USA Aust 0.8 South Africa Red Angus USA Aust CAN Page 65 of 93

66 Appendix 2c. Genetic trends in 400 day weight Angus USA Aust NZ CAN UK (courtesy of A McDonald) Hereford USA Aust NZ CAN Uru Arg Shorthorn Limousin USA Aust SA UK CAN Simmental 19 Charolais Aust NZ CAN 7 US 5 UK Brahman USA Aust South Africa Santa Gertrudis Red Angus Page 66 of 93

67 USA Aust CAN Appendix 2d. Genetic trends in intra-muscular fat % Angus (courtesy of A McDonald) Hereford USA Aust NZ CAN UK USA Aust NZ CAN Shorthorn Limousin Simmental Charolais Page 67 of 93

68 Appendix 3. Summary slides from Pogson Review (The Leading Partnership, 2006) Page 68 of 93

69 Appendix 4. Stakeholder perceptions (Summarised by a Listening Group commissioned in April 2011 by MLA and the Beef CRC.) The following provides a distillation of feedback provided to the Listening Team tasked with observing and documenting opinions on the Australian Beef Genetics and Genomics R, D and E. It is an interpretation of what was heard, and items are presented in no particular order of priority. This summation does not necessarily reflect the views of individual listening team members, nor a consensus of views of the team. Numbered bullet point items are presented in response to the 6 questions circulated in advance to contributors. a. What is good about the current system? 1. There was much goodwill shown and a lot of positive feedback given from all participants but also there were many divergent opinions expressed on specific aspects of the pipeline. 2. Genetic improvement is providing substantial returns to the Australian beef industry. 3. Beef CRC has played a positive and important role in coordinating and resourcing the research effort 4. BREEDPLAN, as well as the pipeline in general, are supported by world-class researchers, who command much trust and respect. 5. There are benefits from having a centre of excellence in Armidale, with the co-location of CRC, ABRI, UNE, CSIRO, NSW DPI, Breed Societies and AGBU, and there is generally good collaboration in the pipeline. 6. BREEDPLAN is widely accepted as a world-class system and its integrity is not questioned. Having a single system of genetic evaluation and description of genetic merit was seen as having great benefits and a major positive. 7. The genetic evaluation system can accommodate multiple genomics providers 8. There was consistent support for SBTS/TBTS as a successful model for extension 9. AGBU is seen as a major asset to the industry, and there was strong and widespread support for independent validation of genetic/genomic products 10. The Beef Information Nucleus herds are a positive and important innovation b. What changes would you like to see? 1. Genomics needs to be delivered to the commercial as well as to the stud sector 2. There is a demand for across-breed EBVs, underpinned by adequate comparative information and a consistent and effective data quality assurance system. 3. At the strategic level, clearer rules of engagement are needed: i. Less complexity in negotiating contracts among players in the pipeline ii. Need a single, clearly identified decision-maker who is charged with removing blockages iii. Need a single research funding framework iv. Not all of the for-profit parties are at the table and should be 4. A mechanism should be set up whereby all participants are encouraged to submit raw genotypic data to BREEDPLAN databases rather than e.g. MVPs. Thus, there is a need to ensure that there is a way to extract data for the benefit of the industry without compromising for-profits investment and IP. 5. Industry benefits from for-profit investment and benefits from all IP need to be maximised. 6. There is a need for an industry-coordinated extension service with fresh approaches. 7. There needs to be a greater recognition amongst northern breeders of the importance of traits other than weight and size. 8. New service delivery models are needed so that leading progressive breeders can access innovative genetics expertise and services directly from researchers. 9. A consideration of completely new structures for commercial delivery of genetic improvement services is warranted. 10. Signals about value of genetic merit aren t being efficiently transmitted along the pipeline in either direction. Page 69 of 93

70 11. There is a need for better data auditing and clear points of responsibility for ensuring data quality. 12. Stock agents are an under-utilised resource for extension 13. Researchers should train and support extension teams and not hold single focus industry extension forums where recommendations are presented in isolation from a whole-ofenterprise or economic framework. What is essential about the present system? 1. Maintenance and development of key people and expertise 2. Independent oversight of R&D and of product claims 3. Retain collaborative relationships that have been established by the CRC 4. Single genetic evaluation system (BREEDPLAN) 5. Structures and processes that guarantee the integrity of current and new developments, products and processes. What incentives exist to encourage, promote and deliver genetic improvement? 1. For government funded organizations, it is in their charter 2. For-profit organizations (eg genomics companies, breeders) need return on investment. 3. For breed societies, it is to compete against other breeds and ensure the viability of their members 4. For ABRI, it is vital to their survival and for SBTS/TBTS, it is a contracted performance indicator. 5. For MLA, it is one of their reasons for existence 6. For individuals along the R,D&E pipeline, the satisfaction derived from making a difference. What disincentives or blockers are there for genetic improvement for you? Disincentives: 1. Registration-driven business models are not aligned with incentives associated with genetic improvement because of the need to balance a range of perspectives 2. Lack of investment from non-vertically-integrated meat processors in genetic pipeline driven by the problem of leakage to competitors. 3. Bull buyers lack an immediate and obvious profit signal 4. Best-practice recording is expensive Blockers: 1. Guarded ownership of the performance recording data by breed societies 2. Unsubstantiated product claims 3. Validation process too slow 4. Dysfunctionality due to vested interests 5. New innovations to BREEDPLAN and related products are not implemented quickly enough 6. Some breed societies are holding back innovation from innovative breeders 7. Limited use of artificial insemination to disseminate elite genotypes 8. Inadequate commitment for extension services Page 70 of 93

71 Appendix 5. Beef Genetics & Genomics Coordination Forum (Extract from report of forum convened by MLA and the Beef CRC, December 2011). Pipeline Consultation Discussion 7 main issues were identified during the past year as follows: 1) What AGBU does is a black box and priorities are not widely known 2) Access to Group BREEDPLAN is only possible through the breed societies 3) Too big a disconnect between R&D and commercialisation 4) Current system for data submission is anti-competitive, unnecessarily complicated and bureaucratic 5) Declining use of BREEDPLAN in Northern Australia (a bad situation becoming worse) 6) Across-breed, crossbred and composite EBVs generally unavailable 7) Too much effort ($$$) at R&D end and not enough at delivery end (extension) Attendees discussed changes that could be made to address these issues and came up with the following suggestions: Issue 1. What AGBU does is a black box and priorities are not widely known 2. Access to Group BREEDPLAN is only possible through the breed societies 3. Too big a disconnect between R&D and commercialisation Ideas for change Greater utilisation of the BTLG group to disseminate feedback/agbu issues to broader industry (to overcome AGBU priorities issues) Continue to have forums like this one Should AGBU become a research Hub rather than a research centre? The AGBU consultative committee should be expanded to be a Beef Genetics consultative committee Include ABRI, breed societies, service providers and leading breeders in AGBU priority-setting Clear path and timelines to adoption defined, with KPIs for each step, at beginning of R&D Would it be possible to undertake EBV production runs from the multibreed database (with composite data going straight into the multibreed database) and compare directly with the breed(s) production runs? (recognising you may need to pay a fee to the breed society to access their IP) Separate data flow from breed promotion within breed societies and work with breed societies to determine other revenue generation models (eg % of sale bulls) Clarify the rules for access for non-purebred animals R&D to explore capability of genomic relationship matrix to broaden connections to gene pools Incentive based system for genetic progress eg consider providing assistance for hard-to-measure traits for breeders that are the best recorders Proposal for broader involvement in priority setting Direct inputs from people with ideas for research Timelines on time to commercialise defined within the initial definition of R&D Build the commercialisation process into the R&D funding If service providers do not wish to commercialise, but there is industry support for product/service, clearly defined process for making R&D available to other deliverers Page 71 of 93

72 Issue 4. Current system for data submission is anti-competitive, unnecessarily complicated and bureaucratic 5. Declining use of BREEDPLAN in Northern Australia (a bad situation becoming worse) 6. Across-breed, crossbred and composite EBVs generally unavailable 7. Too much effort ($$$) at R&D end and not enough at delivery end (extension) Ideas for change Move to ILR2 system Single point of entry for pedigree and performance data would help overcome some frustrations Some thought not significant enough to comment. Feedback of slaughter data to genetic evaluation needs to be more straight forward. Commercial drivers are not there Multipliers don t have EBVs Use the northern fertility results from the CRC to gain traction Focus on the most influential breeders Increase extension FTEs with levy funds Role of genomics to start to gain traction Engagement of agents and AI companies New thinking needed re BREEDPLAN product, especially if there is a move to nucleus + multiplier and/or cheap genomic testing for herd bulls What about for fertile, tender and polled, then an EBV for weight? Should it be so breed-based (ie do Brahmans and composites get used in different areas or is there overlap?) Multibreed analysis needs more effort to improve systems for composite and crossbred and look at the options with the current system The idea would be to have a multi-breed, multi-country run but how do we link the current databases effectively to do this or do we need to create a data warehouse where the data is licensed from the current holders into one data warehouse for those runs. New research analyses should be continued Inclusion of non-pure bred animals is being opened up by several breeds No reason not to explore concept of 3 runs British, Euro and Tropical (maybe 2 within this for harsher and less harsh) Breeds and their members can still make decisions on what is reported This assumes that more extension will change either uptake or effectiveness of use of information What about just focusing on leading herds? Page 72 of 93

73 Appendix 6. Beef genetics and genomics RD&E Round-table - observations (Convened by MLA in September 2012 and involving leading beef producers and researchers) 1. Clearly, MLA does not have the capacity to fill the gap left by the long-term and continued withdrawal of public funds. New funding models will have to be explored and new sources of investment identified. R&D agencies must ensure that wastage and duplication of effort are avoided, while preserving a degree of competition that is necessary to promote innovation. This will require commitment to finalising and implementing the National RD&E plan, which will assume greater importance. Across-institution clusters of scientific expertise or centres of excellence are likely to emerge and in fact should be encouraged. 2. The group expressed a quite strong view that as funds for RD&E decline, emphasis will need to be retained on the R&D part. Despite this, there was a perceived need for extension efforts in the northern industry to be retained or expanded, provided that the effort is carefully targeted to where it can make the biggest difference. 3. There was a strong message that MLA should continue to invest in genomics R&D and that it should actively participate in exploring sustainable (and equitable) models for data collection. It should have oversight on the national genomics/genetics database that will be essential to underpin ongoing developments. MLA will also have a role in ensuring that cross-species synergies are exploited, particularly those involving sheep and dairy cattle. 4. The general feeling was that as funds get tighter, MLA should focus on R&D at the expense of E. This is ostensibly at odds with one of the outcomes of the 2011 beef industry consultations, which will be discussed briefly later in this report. Pipeline participants should explore more innovative approaches to R&D (&E) funding and think beyond levy funds. There was a sense that opportunities through the MLA Donor Company mechanism tend to be overlooked, as well as funding from other sources and more innovative solutions such as forming R&D consortia. MLA may have a role in helping industry participants think more widely and perhaps help facilitate alternative approaches. 5. The was a strong case put for MLA to base its funding decisions on return on investment for producers, as that is the source of its levy funds. However, it was noted that MLA already does that to a large extent. MLA should also have a role in stimulating competition amongst pipeline participants to encourage innovation and greater efficiencies. 6. With respect to beef genetic improvement in northern Australia where the uptake of technology has been poor the focus should be on ensuring that the right genetics are in place, with consideration given to collecting more local data and possibly more genetics trials in the north. However there is a big question on how much more should be invested. Certainly, any expenditure should be focused on leading edge practitioners and not try to cover everyone. Page 73 of 93

74 Appendix 7. Sheep Improvement Ltd NZ (Description reproduced from pp of Williams 2009) Sheep Improvement Limited (SIL) is a wholly-owned subsidiary of Meat & Wool New Zealand (MWNZ), the innovation and marketing body for sheep, beef cattle and goat industries in NZ. SIL operates as a wholesaler to eight accredited bureaus. Each of the bureaus is an independent business with its own database and acts as a retailer of performance recording and genetic evaluation services to breeders. SIL does not deal directly with breeders 41. Any breeder wishing to use its services is encouraged to shop around among bureaus to find the service best suited to their needs. In this respect there are similarities between SIL and ADHIS. Some bureaus allow their clients to enter data directly into their database. In such cases the quality of the data becomes the responsibility of the client. Groups that run across-flock analyses, such as the Coopworth Society, select a bureau to provide this service and that bureau is granted read-only access to the data of flocks from that group held by other bureaus. SIL also has a product called SIL-ACE (Advanced Central Evaluation) in which acrossflock and across- and between-breed genetic evaluations are made on a range of production traits. SIL-ACE is conducted on an opt-in basis with the top sires being published every two months in pdf format. A greater frequency of SIL-ACE runs and more flexible reporting formats are being considered. According to interviewees for this report, the purpose of the SIL design is to encourage innovation in service delivery through competition between the bureaus. In practice, however, it seems that bureaus compete almost solely on price and margins are too low to allow product innovation. The essential issue is that clients are price conscious rather than value aware in respect to data management. SIL employs two fulltime staff and a further four part-time advisers (one day per week) around the country. These advisers combine their SIL role with a range of other occupations farmer, exbreeder, beef geneticist and farm consultant. The advisers have a general extension role but can also deal one-on-one with breeders. MWNZ are generally steering away from initiating and running workshops because of the poor attendance and low cost-effectiveness. The SIL model has some advantages but also some clear disadvantages in comparison with SG. The licensed bureau model provides an organised, competitive service provider sector and appears to simplify client relationships for SIL. On the other hand, there is a dispersion of databases making centralised evaluations more complex (logistically if not technically). MWNZ also still see the need to deal directly with breeders which presumably means the bureaus are not playing an adequate marketing role. Just prior to the preparation of this report, MWNZ announced that New Zealand wool (and goat) producers voted not to continue the levy paid to MWNZ 42. Sheep meat producers opted to renew their levy by a narrow margin. The ramifications for SIL are not yet fully clear but there will presumably be a shortfall in funding and pressure for woolgrowers to receive services only a fully user-pays basis. How this will be managed given the overlap between wool and sheep meat production will be interesting to observe. 41 Anecdotally, SIL does sometimes deal directly with breeders, but this was not confirmed accessed 2 September Page 74 of 93

75 Appendix 8. Recommendations of a 2006 Working Group (on Better Coordination of Beef Genetic Technologies and Improved Lines of Communication and Accountability ) Initial Discussion Group: Arthur Rickards, Graeme Mitchell, Graham Truscott, Steve Millard, Mike Stephens, Jason Strong, Greg Harper, Duncan Ferguson Extended list: Jack Allen, Carel Teseling, Jay Hetzel, Alex McDonald, David Falepau, Steve Barwick Activities/projects and priority 1 highest 5 lowest Activity Establish a high level group that will have oversight of all beef genetic-related activities (Beef Breeding Aust Inc). Refer to the unedited document from Arthur Rickards, attached as Appendix 9. Priority 1 Consensus points about the group : - active in shaping long-term strategy for beef genetics; - active in creating and overseeing implementation of national beef genetics strategic plan; - debates issues and recommends policy; - requires resources and clear terms of reference; (MLA a likely source); - informs industry about decisions on a regular basis, perhaps through an annual forum; - requires an independent chairperson with appropriate skills; - requires members with appropriate expertise and industry recognition; - sets quality standards, and assessed products against these standards. Points about the group around which consensus was not reached: - the group be constituted as a Board of an incorporated entity; - the group be constituted of Directors chosen for their skills; - the group be constituted of senior representatives of the major entities involved in beef genetics; - active in setting long-term strategy for beef genetics; - responsible for creating and overseeing implementation of national beef - genetics strategic plan; - debates issues and is entrusted to make policy decisions that are binding through yet to be defined mechanisms; - requires a professional chairman with appropriate skills who is appropriately remunerated; - sets quality standards, and formally accredits products in relation to these standards. Who needs to be consulted/involved to develop these ideas further: MLA, DAFF, State Departments of Agriculture, CRCs at the strategy level, CSIRO, Private entities involved in provision of beef genetic services Page 75 of 93

76 Appendix 9. Better Coordination of Beef Genetic Technologies and Improved Lines of Communication and Accountability PA. Rickards OAM Managing Director, Agricultural Business Research Institute October 13, Background The group focussed on the infrastructure for achieving the goals encompassed in the heading. Use of the word better begs the question better than what. Figure 1 was constructed. The lower part of the diagram describes the current infrastructure. The upper part of the diagram outlines the additions that would achieve improvement. Figure 2 can be considered as an additional module that runs in parallel to the current infrastructure block. The current infrastructure block has been developed by the beef industry over a period of time and has been effective in achieving a national roll out of genetic technology to the beef industry. It is important that the components of this infrastructure be understood so that these components can be used to best effect in any future plan. 2. Current Infrastructure The Australian beef industry is fortunate in having two major research groups that are focussed on developing and validating better genetic technology to assist the beef industry improve productivity. The Beef CRC is in its third 7-year phase. It is funded by the Commonwealth, MLA, participating research organisations and industry. Its focus in the current phase is Gene Discovery and Gene Expression. The CRC will be unravelling the science behind improvements in feed efficiency, maternal productivity and meat quality. AGBU is a collaborator in the CRC research program. In addition, AGBU is responsible for writing the Analytical Software which takes performance, pedigree and (in future) gene marker information and produces the Estimate Breeding Values (EBVs) and Accuracies that are released to industry under the BREEDPLAN label. That is, BREEDPLAN EBVs have their foundation in a professionally-run research program. The Analytical Software is owned 51% by MLA, 24.5% by the University of New England (UNE) and 24.5% by NSW Department of Primary Industries. These three organisations provide the funding for the development of the Analytical Software in AGBU. The Analytical Software is licensed exclusively by the Owners to the Agricultural Business Research Institute as the commercialiser. The ABRI was incorporated specifically to undertake this commercialisation role. ABRI s Board is dominated by cattle industry representatives including those from the seedstock sector (Australian Registered Cattle Breeders Association and Performance Beef Breeders Association) and from the commercial sector (Beef Improvement Association and Cattle Council of Australia). In order to commercialise BREEDPLAN, the ABRI integrates the Analytical Software with the Applications Software. This is software that ABRI writes to capture and validate input records, build pedigree databases, provide BREEDPLAN reports, undertake accounting and a wide range of web services. The ABRI s integrated software is very flexible and is offered to different groups of beef cattle breeders to ensure that the whole market for genetic evaluation services in Australia is covered: Page 76 of 93

77 Breed societies (over 90% of performance recording in Australia is conducted by the members of breed societies), Agricultural corporates (like the Australian Agricultural Company which run their own breeding programs ), and Individual herds which may wish to use BREEDPLAN on a within-herd basis without going through a breed society. The ABRI pays a royalty to the Owners based on the revenue it earns from commercialisation of the Analytical Software. Departments of Agriculture/Primary Industry have traditionally played a major role in the extension services on BREEDPLAN to producers. Some of the larger breed societies (e.g. Angus, Herford and Poll Hereford) have appointed technical/extension officers. However, budget restrictions have caused the DPI to reduce their beef extension work. ABRI, MLA and breed societies have worked together to fund beef breeding extension. This stated in 1988 with the Tropical Beef Technology Services (TBTS) project in Northern Australia followed in 2005 by the Southern Beef Technology Services (SBTS) project. Commercialisers of other genetic technologies may deal directly with beef cattle breeders but in many cases their services are integrated with the BREEDPLAN service. Three of the leading service providers in this category are Genetic Solutions (providing gene marker services), X Prime (providing TGRM) and PrimeGro Ltd (undertaking IGF-1 tests). Figure 1: Proposed Future Model for Commercialisation of Beef Breeding Technologies. 2.1 DNA Laboratories The way in which these groups fit into the commercialisation model is shown below: Page 77 of 93

78 Figure 2: Data/Information flow for Gene Markers DNA Laboratories such as Genetic Solutions may deal directly with seedstock procedures to collect their DNA samples and return genotype results. However, in many cases there is close interaction between the producer, the breed society, the laboratory and ABRI. For example, DNA samples may go to the breed society so that the animal identifications can be verified before samples go to the laboratory which can then transfer the genotype results electronically to the breed society database at ABRI. Using new software being developed by AGBU under the SmartGene for Beef Project, the gene marker information will in future be used to produce marker-assisted EBVs. 2.2 Total Genetic Resource Management (TGRM) X Prime Pty Ltd is the commercialiser of the TGRM Technology. With the authority of breed societies and/or agricultural corporates, ABRI permits X Prime to undertake an extract of pedigree and performance information from particular herds that seek a TGRM analysis. The data is used by the TGRM software to produce a report for breeders and then the data is automatically deleted from the X Prime server. This is shown in Figure 3. Figure 3: Information Flow for TGRM Page 78 of 93

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80 2.3 IGF-1 Tests PrimeGro Ltd holds the patent for the use of Insulin Growth Factor tests in the production of estimated breeding values of livestock. Blood samples of animals are sent from the breeder to the PrimeGro laboratory from which the animal identification and IGF-1 test result are sent electronically to ABRI for loading onto the respective breed society database. The information is used by the BREEDPLAN software to produce Estimated Breeding Values as shown in Figure 4. Figure 4: Flow of Information in IGF-1 Test 3. Tapping into Global Research The working group acknowledged that with the mapping of the bovine genome in particular there will be an explosion of beef genetics research on a global basis that needs to be effectively accessed by the Australian beef industry. This will involve other specialised service providers e.g. gene marker companies such as Genetic Solutions. Figure 5 shows a model of how Australia should be tapping into global beef genetics research. Page 80 of 93

81 Figure 5: Proposed Model for Tapping into Global Beef Genetics Research Figure 5 can be considered as complementary to the Current Infrastructure section of Figure 1. Figure 5 proposes that Australia have a mechanism by which it can tap into global research into beef genetics. This research will need to be validated for the Australian beef industry prior to being passed on to relevant service providers in Australia. From there the technologies go to the seedstock industry and hence to commercial breeders as in the Current Infrastructure model. 4. Making the Current System Better The working group observed that there is not a proper connection between the Current Infrastructure and the MLA s National Beef Genetic Strategic Plan for The top part of Figure 1 aims to address this for the future. The group proposes that a new company be set up called, for example, Beef Breeding Australia Inc. which is given the resources to complete the National Beef Genetic Strategic Plan (NBGSP ) and implement it. The company should have an Independent Chairperson and be made up of the CEO s responsible for implementing components of the National Plan (e.g. AGBU, ABRI, Beef CRC, Genetic Solutions, a representative from Department of Primary Industries), MLA plus Seedstock and Commercial industry representatives. The rationale for constructing the Board in this way is that the CEO s will need to commit resources to ensure that the National Plan is implemented. The first two workshops will provide useful input for the NBGSP and as a first stage it was hoped that MLA would commission Dr Rob Woolaston to integrate the various working group outcomes into a preliminary plan in sufficient detail for there to be some follow-up action. However, the full NBGSP will require a Professional Facilitator (or access to even more of Dr Woolaston s time) plus the formation of Beef Breeding Australia Inc (BBA) and very active working sessions by the Directors to achieve an outcome. It will require considerable resources to put the initial NBGSP in place and a considerable annual cost to monitor the delivery of the plan. The MLA, if willing, seems to be the only source of these funds. It is likely that a period of up to July 2007 may be required to see the NBGSP emerge. At that stage the group would be in favour of MLA convening a Forum to discuss the NBGSP with industry. Page 81 of 93

82 Basically the group believed that BBA would be responsible for beef improvement in Australia. This means that the relationship between BBA and program managers in the MLA needs to be sensitively developed so that the national strategy will work efficiently. While the approach to extension was the responsibility of one of the other working groups, it would be consistent with this group s vision to see TBTS, SBTS and the extension activities of the Angus Society merged into a National Beef Technology Services project with a specialised division for Northern Australia and another for Southern Australia. 5. Check List The group believes that its plan, while considered radical in some quarters, does address the brief giving: Better Co-ordination Beef Breeding Australia Inc. will have a co-ordination role that is currently lacking. Improved Communications there would be direct Communication between BBA and the research agencies, extension agencies and service providers to ensure that the industry stays focussed on the NBGSP. By upgrading to a National Beef Technology Services project, communication to producers would be co-ordinated and delivered nationally instead of in a piece meal fashion. Accountability Beef Breeding Australia Inc. would be accountable for ensuring that outcomes of the NBGSP are achieved. Page 82 of 93

83 Appendix 10. Frequency of BREEDPLAN runs Australia and New Zealand Society ILR* (Courtesy of Dr B. Crook) BREEDPLAN Version Monthly Country Combined Angus yes AU yes Belmont Red no AU yes Blonde Dáquitane no AU no Braford no AU no Brahman yes AU no Brangus yes AU no Charolais yes AU yes Devon no AU yes Droughtmaster yes AU no Gelbvieh no AU yes Hereford yes AU yes Limousin yes AU yes Lowline no AU no Murray Grey yes AU yes Performance Herds yes AU no Red Angus yes AU no Red Poll no AU no Salers no AU no Santa Gertrudis yes AU no Shorthorn yes AU yes Simmental yes AU yes South Devon yes AU yes Speckle Park no AU no Wagyu yes AU no NZ Angus yes NZ yes NZ Charolais yes NZ yes NZ Devon yes NZ yes NZ Gelvieh yes NZ yes NZ Hereford yes NZ yes NZ Murray Grey yes NZ yes NZ Shorthorn yes NZ yes NZ Simmental yes NZ yes NZ South Devon yes NZ Yes * ILR version. Some clients remain on ILR1 because either a) their volume of throughput does not warrant the cost of transitioning to ILR2 or b) they are not yet scheduled to move to ILR2. Combined = AU + NZ Page 83 of 93

84 Appendix 11. Frequency of BREEDPLAN runs Other countries (Courtesy of Dr B. Crook) Society ILR BREEDPLAN Version Monthly Country Combined Beefmaster no US No Braford no US No Brahman no US No * Red Brangus no US No Red Poll no US No Salers no US No South Devon no US No Angus yes UK No Belgian Blue yes UK No Charolais yes UK No Hereford yes UK No Shorthorn yes UK No Simmental yes UK No South Devon yes UK No Welsh Black yes UK No Braford yes SA No Brahman yes SA Yes * Brangus yes SA Yes Limousin yes SA Yes * Santa Gertrudis yes SA No Simbra yes SA No Simmentaler yes SA No * Afrikaner no NA No Brahman no NA Yes * Brangus no NA Yes Braunvieh no NA No Charolais no NA No Hereford no NA No Limousin no NA Yes * Nguni no NA No Santa Gertrudis no NA No Charolais n/a 4.3 no HU No * = developments in joint evaluation with AUS SA South Africa NA Namibia HU - Hungary Page 84 of 93

85 Appendix 12. MLA program structure and governance IN CONFIDENCE (Extract from MLA s business plan for Investment into Beef and Sheep Genetics and Genomics RD&E, to ) Program Structure and Governance The current approach to governance of the Program and its links with other MLA RDE projects focussed on genetics and genomics includes: - A Program Manager responsible for the projects - The MLA-AGBU Beef Genetics Consultative Committee, which includes technical experts and leading breeders, and is responsible for oversight of the main MLA beef genetics R&D project with AGBU. This Committee is chaired by an MLA Director. - The Northern Beef Industry Committee provides advice on investments in this area for the northern industry. - Sheep Genetics has 3 avenues of governance and oversight: o Executive Committee, comprising Senior Managers from MLA and AWI, responsible for oversight of the Sheep Genetics Business Plan and Budget o Technical Committee, comprising technical experts, responsible for advising on and oversighting the main MLA sheep genetics R&D contract with AGBU. This committee is currently chaired by the MLA Program Manager responsible for o Advisory Committee, comprising breeders broadly representing the main breeds and production regions, responsible for oversight of and advice on Sheep Genetics operational performance - Investments in the Sheep CRC are monitored through an MLA representative on the Sheep CRC Executive, as well as through normal MLA project evaluation and approval processes - All MDC projects are assessed and monitored by the MDC Board. - Projects using ALFA funds are assessed by the ALFA R&D Sub-committee. There are 2 options for governance of and related genetics and genomics RDE investments into the future. The first is to continue the present approach, with a Project Manager to be appointed in early 2013 taking over day-to-day responsibility for the portfolio. Within this approach, there would be an advantage in expanding the scope and role of the Beef Genetics Consultative Committee to: - Oversight all MLA beef genetics and genomics RDE projects - Ensure inclusion of a northern and a southern breeder or producer from SAMRC and NABIC respectively - MLA project assessment procedures to continue as currently - The roles of the Beef Genetics Consultative Committee and the Sheep Genetics Advisory Committee in advising MLA on project selection annually to be defined. The second option is to move to a more formal national RDE framework approach. This is outlined as follows: The program of RD&E work in animal genetics and genomics can be mapped via two dimensions: a. strategic-applied- extension- implementation (SAEI) b. by focus species and region (S&R) Page 85 of 93

86 Within the SAEI mapping, research is more generic (can be applied to sheep and beef, north and south) at the strategic end of the portfolio. At the same time, at the extension and implementation end, the focus and skills of available personnel are much more regional and species-based. This mapping suggests that a blend of the two approaches is sensible, with 4 sub-programs. These map directly to the Key Initiatives outlined in section 7. Strategic research Core applied R&D: Core infrastructure: Implementation capability building and implementation in 3 main areas southern beef, northern beef, and sheep (3-sub programs with some common elements) Overall coordination across these sub-programs is proposed to involve: a. an overall Steering Committee, which should involve MLA, CCA, SCA, leading breeders, and those RD&E providers who commit resources to a specified level to the program ie genuine co-investors. The Chair of this committee should either be an MLA Board member, or someone independent selected by MLA and the co-investors b. A Technical Committee, ideally covering both sheep and cattle issues, to provide advice on project proposals. This should include 3 independent experts (currently scoping 1 European, 1 US-based and 1 Australian). c. Advisory Committees for each species-region program, to ensure strong engagement of leading breeders in the capability-building, extension and implementation. d. (The Terms of Reference for the MLA-AGBU Consultative Committee, the Sheep Genetics Technical Committee and the Sheep Genetics Advisory Committee provide a basis for defining TOR for the Technical and Implementation Committees). e. Program coordination provided by either: i. A single overall coordinator/project manager, or ii. 2 part-time program coordinators/project managers, one for beef and the other for sheep. This is in the short-term the preferred option. The overall structure can be summarised graphically (over page): Page 86 of 93

87 Program Governance/Steering Committee Program Coordinator/s Program Technical Committee Strategic R Core underpinning applied R&D (including genotype-phenotype databases and Information Applied R&D and Implementation Northern Beef Advisory Committee Nucleus/Resource Flocks projects) Applied R&D and Applied R&D and Implementation Southern Implementation Sheep Beef Advisory Advisory Committee Committee This structure may seem excessive for a program investment of c. $4.5m On-farm and $3.0m MDC funds per year, but the 2 key points are that: 1. coordination through the RD&E pipeline and from breeder-consumer is the biggest challenge facing this area of RD&E, 2. MLA investments are at least matched by those made by breeders and potential co-investments from state DPIs, key university groups and CSIRO. Total meat industry investment in RD&E and implementation in animal genetics and genomics will be c. $23m pa without the CRCs (and has been c. $63m pa including the CRCs). Internal coordination: MLA investment in animal genetics and genomics derives from a number of AOP nodes, including 2.1 (Eating Quality), 3.1.1, 3.1.2, 3.4 (Animal Health), 3.5 (Capability Building), 4.1 (Climate Change) and ICE. Funds are also contributed through the MDC program, from ALFA and from AMPC. In addition, MLA is the assignee of genetics and genomics IP developed through Beef CRCs I, II and III, and holds or shares several licenses in this area Regular internal coordination meetings with standing items to review budgets, milestones and IP matters will be initiated. During the life of the current Sheep Genetics Management Agreement with AWI, and the current Sheep CRC, such meetings will need to include items for coordination with, and reporting to and from, AWI and Sheep CRC. Process for establishing new projects: New projects will be sourced via a call conducted in September-October each year, to coincide with an Annual Coordination Forum. That forum will review all RD&E projects, assess progress against KPIs including rates of genetic progress, and include presentation of potential new projects. Project prioritisation should then be via a working party comprising industry and independent experts. This Page 87 of 93

88 working party should include members of the northern beef, southern beef and sheep program advisory committees (see section 10). Projects prioritised by the working party should then be considered within the normal LPI planning process, in conjunction with Peak Councils. Page 88 of 93

89 Appendix 13. Radical Transformation (Described by Dr R Banks, AGBU) Page 89 of 93

90 Radical Transformation (cont) Page 90 of 93

91 Radical Transformation (cont) Page 91 of 93