Initiatives launched by the Red Meat Industry Forum have the potential to produce savings for the sector of between 500m and 800m, according to an independent academic.
Andrew Fearne, head of the Centre for Supply Chain Research at Kent Business School, told delegates at RMIF’s conference last week that these real savings could be achieved with the support of a critical mass of one-in-five livestock farmers and the biggest abattoirs and processors.
It is the first independent audit of the potential value to the industry of RMIF’s four main business tools: Farm benchmarking clubs, PROBE (promoting business excellence) business analysis, its centre of excellence and masterclasses.
Dr Fearne said: “Our expectations were exceeded, with farms involved with RMIF posting 10-15% higher profits and better productivity, as well as cutting costs.”
He estimated that savings of up to 7% could be made on farm as a result of joining a business club, while the various business tools available to processors could cut costs by 15%, boosting profitability by as much as 5%.
He calculated that about four-fifths of the savings would come from reducing waste, with the balance from cutting operating costs across the supply chain.
“Cost reduction will buy us time and free up resources for research and development.
But in the longer term, we have to add the sort of value that is not available to Brazilian beef imports.”
And for meat businesses, the real opportunity offered by PROBE and the RMIF masterclasses is the ability to carry on reviewing efficiency long after the management teams have left.
“For our system to work, we need an environment conducive to continuous improvement for sustainable competitive advantage.
Stop now and the patient may not get any fitter.”
Bob Howe, a divisional director at pig slaughterer Geo Adams, told the conference that his company had set up a reporting system to monitor daily performance and ensure there was no backsliding on changes made by a recent value chain analysis.
Geo Adams had made savings worth 185,000 a year following the VCA, he added.
David Hughes, professor of agribusiness and food marketing at Imperial College, urged farmers and red meat businesses not to be embarrassed about revealing their costs to benchmarking clubs.
“KG Fruits initially resisted, but have now seen tremendous benefits,” he said.
The total number of on-farm clubs has now reached 41, but another 78 are in the process of sharing their figures and will soon be meeting regularly.
Chairman Peter Barr said: “The industry needs to take up the challenge further.
The time for talk is now gone.”