The ALMTech Project: Initial Economic Evaluation of the Potential Benefits

In this paper results are reported of an initial assessment of the prospective economic benefits of a project examining the technical and economic feasibility of the use of new carcase measurement technologies for the Australian beef, sheep meat, and pig meat industries (the ALMTech project). Information provided in a report to Meat and Livestock Australia on their Objective Measurement program (the Revised OM Report) is used as input into recently updated/developed partial equilibrium models of the Australian beef and sheep meat industries to replicate the six value proposition scenarios for the beef and sheep meat industries assessed within that report. The Revised OM Report provides the starting values, and then the formal economic models are used to estimate the magnitude and distribution of gross annual benefits after the market reacts to the new information. Benefits are also estimated for the pig meat industry using a similar modelling framework. Adoption profiles from the Revised OM Report are then used to predict benefits out to 2040, R&D and user costs are estimated, all values are discounted to a common 2020 time period, and NPVs and benefit cost ratios are calculated. The estimated NPV for net benefits was $243 million, while the discounted R&D cost was $127 million. The overall Meat and Livestock Australia OM program was estimated to generate a discounted net benefit of $116 million with an estimated BCR of 1.9:1; for the ALMTech project it was $30 million with the same BCR.