Marbled Beef

Value Based Marketing

Value Based Marketing (VBM) is a concept that has been around for decades, but only now just starting to materialise. The basic premise of VBM is that animals that are of higher value are worth more to all participants in the supply chain (aka ‘value’ chain), and so all participants are appropriately rewarded. That includes the producer who bred and/or finished them. In VBM, the value of an animal is simply the product of yield and eating quality.

The value to the wider industry of VBM is the transparent price signals that incentivise breeders to pursue the objectives that drive profit for all participants in the value chain. VBM also allow for far greater consumer focus as the consumer at the end of the chain can more clearly indicate their preferences with their product choices.

After decades of little progress, the advent of brands in the marketing of beef has finally got the industry making meaningful steps towards to VBM. Brands have allowed the processing sector to capitalise on the better eating carcasses that they find on their hooks. For a couple of years now they’ve enjoyed this windfall without passing on the spoils to their producers. To their credit, processors have talked about implementing VBM to their suppliers for some time, however, their appears to have been some reluctance to take the big step. This changed significantly on the 19th November with JBS announcing a $0.20/kg premium for carcasses that graded 4+ for Ausmeat marbling.

As Australia’s biggest processor, I’m sure JBS will not be alone in taking this step. Hopefully with some healthy competition we’ll see better than $0.20/kg (only $0.10 in live weight terms). I’ve previously written about the IMF premium available at certain feedlots that pay more for cattle with a track record for better than average marbling. The premium was $0.34 LWT this year. And that’s paid for every animal on the truck – not just the good marblers!

If you haven’t already, now is the time to include IMF genetics in your breeding objective.

The best time to implement your breeding strategy was 20 years ago. The second best time is now. If you haven’t already, now is the time to include IMF genetics in your breeding objective.

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