Horizons #65: Payment for quality

18 February, 2022

by Professor Ross Kingwell, AEGIC Chief Economist

Not just an issue in the grains industry.

An article in a recent National Poultry Newspaper1 caught my attention due to its similarity to an issue often raised in the grains industry: payment for quality.

Grain farmers sometimes complain that they are inadequately rewarded for their grain quality. They say: “The protein spread is too narrow.” On other occasions is heard: “The malting barley price is not much higher than the feed barley price!” As a result, many farmers say they just concentrate on yield. “Yield is king”, they comment. But as many farmers know, the chase for grain yield can cause protein dilution, with crop varieties then received into upcountry receival points at resultant lower grades.

Chicken meat production may be very different to grain production, but it is subject to a similar questioning: meat quality versus meat yield. Because breast meat is so popular, birds have long been selectively bred for bigger breast muscle (i.e. yield is king). Chickens are bred to grow quickly into larger, big-breasted birds. Broilers now reach their market weight in 60 per cent less time than occurred 50 years ago; and they are now able to be slaughtered after only 47 days of age.

But fast growth can lessen meat quality, potentially making the meat protein less digestible with occasional deficiencies in some essential amino acids; and fat calories in the meat can increase. Cooking quality also can be reduced as the meat’s ability to absorb a marinade can be lessened. So, the chase for meat yield eventually can come at expense to meat quality.

Let’s go back to the grains industry and the grain yield versus quality nexus. Population growth and increasing dietary preferences for grain-based foods continues to fuel the global demand for grain, yet the world’s arable area remains constrained. So grain yield improvement is likely to remain central to grain breeding and crop management. However, as population growth eventually slows and per capita incomes increase further, then more consumers will take an interest in grain quality, grain diversity and how the grains they consume are produced. In that situation grain quality characteristics will emerge to be more valued.

1 Cant, B. (2021) White striping a black mark on bulky broiler breeding, National Poultry Newspaper, Vol 4. No. 11 November 2021, page 4

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Horizons: the AEGIC Economics and Market Insights blog

Expert grains industry analysis and commentary from AEGIC’s Economics and Market Insight Team on a range of big-picture topics that affect Australia’s export grains sector.


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