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### Abstract

Variable eating quality was identified as a major contributor to declining Australian beef consumption in the early 1990s. The primary issue was the inability to predict the eating quality of cooked beef before consumption. A R&D program funded by industry and Meat and Livestock Australia investigated the relationships between critical control points along the supply chain, cooking methods and beef palatability. These relationships were underpinned by extensive consumer taste panels. Out of this R&D grew the Meat Standards Australia (MSA) voluntary meat grading system which aimed at predicting consumer palatability scores of cooked beef. Quality was defined on the basis of one of four grades. The grading model predicts consumer scores for 135 ‘cut by cooking method’ combinations for each graded carcass. The MSA system commenced in 1999/2000 and at present some 850,000 cattle are graded annually, about 25% of the total domestic kill. This paper first describes the evolution of the MSA grading scheme and its adoption by industry. Next, evidence is presented relating to consumers’ willingness to pay (WTP) for guaranteed eating quality, the premiums that Australian consumers have actually paid for MSA graded cuts, and the extent to which premiums paid by consumers are transmitted back along the value chain to cattle producers. WTP data collected during exit surveys from taste panels in Australia, the United States, Japan and Ireland showed that consumers were willing to pay more for premium quality. However, whilst MSA has the capacity for four quality grades, it is mostly used to simply discriminate between ungraded and graded product (ie 3 star or better). A survey of Australian beef retailers and wholesalers suggested that from 2004/05 to 2007/08, beef consumers were prepared to pay around $0.32/kg extra for MSA branded beef on a carcass weight equivalent basis. Retailers kept about$0.06/kg and wholesalers kept about $0.12/kg. The remaining$0.14/kg was passed back to cattle producers. Despite accelerated use of MSA in the wholesale trade, visibility at retail is generally low. It is being used predominantly to support private brand initiatives or to underpin existing channel partner offers. The paper concludes by discussing two case studies of business models that small niche beef retailers have developed to further capture the benefits from the MSA scheme through introduction of private brands. In summary, the MSA innovation has resulted in a higher degree of accuracy in the ability to predict beef eating quality for consumers. This has improved consumer choice, opportunities for value adding, and sufficient transmission of the premiums paid by consumers for graded cuts to provide real incentives for beef producers to supply MSAcompliant cattle.