ALLIED Beef founder, James Maclean, will seek to explain the inefficiencies of a fragmented beef supply chain when he addresses the Rural Press Club AgShow breakfast on Thursday, September 5.
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A cattle supply chain management company, Allied Beef uses a network of property partners to background or finish cattle for other sectors of the beef supply chain, such as feedlots and processors.
Together with previous roles at Meat & Livestock Australia, Mort & Co and within rural banking, Mr Maclean's experiences in developing Allied Beef have given him a deep understanding of the difficulties facing various sectors of the beef supply chain.
Mr Maclean believes the fragmentation of the supply chain presents challenges for producers looking to work closely with lot feeders and processors to deliver a quality and consistent product.
"In Australia, the top 20 processors handle about 80pc of all cattle slaughtered in the country," he said.
"The top 20 feedlots account for 50pc of cattle that are lot fed in Australia and the top 20pc of cattle producers own about 8pc of all cattle production. From a Queensland perspective we have about 14,000 properties with an average turnoff of approximately 300 head per year.
"These figures highlight that from a supply chain point of view individual producers need to be working collectively to be relevant to their chosen consumer.
"If a producer who only turned off 300 head per year was part of a group that supplied 10,000 head of cattle a year directly to a processor it would give them the ability to become a highly valued supply chain partner which, over time, equates to improved market arrangements and reduced input costs such as freight."
The idea that producers should work together in order to reduce costs and maximise returns is not new.
Plenty of producer groups have sought to create alliances in order to improve their impact on higher levels of the supply chain.
But Mr Maclean believes the Allied Beef business model differs from other alliances because it offers its property partners greater flexibility.
"We don't expect our property partners to agree on something today and for that to apply for the next 12 months," he said.
"Our primary objective when working with our property partners is to understand what production system they believe best suits their own property.
"We want them to tell us what the best approach is to maximise beef production and then we work to overlay a cattle program that meets those targets without regard to cash flow or capital.
"Our large geographical spread across Queensland and NSW gives us the ability to turn cattle off on a regular basis and that means we can work closely with lot feeders or processors to supply them a consistent number and quality of cattle that have all been treated under a consistent protocol.
"This enables us to achieve a scale that improves efficiencies and gives us greater leverage in the marketplace."
Mr Maclean believes the beef industry should look to other sectors, such as retail, where participants seek to specialise within the supply chain.
"Thirty years ago the retail sector looked a lot like the beef industry does today where a family owned the building that their shop was located in and they all worked within the business," Mr Maclean said.
"But over the past few decades we have seen the structure of that industry change and the building was sold to someone who just wanted to own real-estate while the business was purchased by someone who wanted to own a retail business.
"That industry has evolved to allow individuals to specialise in the sectors that they want to.
"And I think the same thinking could be applied to the family farm."
