Tough beef with Coles

As is well known, Coles strongly promotes the fact that none of the beef it sells comes from cattle that have received hormone growth promotants (HGPs).

What most people don't know is that, as a result, you are more likely to buy tough steak at Coles than from retailers and butchers that continue to sell beef from HGP treated cattle.

Allow me to explain.

The most tender steak in the world, Japan's famous Kobe and Wagyu beef, comes from cattle that are kept in pens their entire lives and pampered with a highly nutritious diet and, in some cases, a daily massage. The aim is to encourage fast growth and for their muscles to become well developed but not well used.

Australian producers, who do not benefit from the subsidies and protection provided to Japanese producers, grow their best steak in feedlots where cattle are held in pens for about three months and similarly fed a nutritious diet, albeit less exotic and more affordable.

Before entering the feedlot the cattle are treated for parasites, vaccinated, and trained to eat from a trough. Once in the feedlot all they have to do is eat and put on weight, with little need to exert themselves. Provided transport and slaughtering procedures are up to standard, feedlot beef is pretty much guaranteed to be tender.

Steak from cattle raised on pasture is highly variable. When the cattle are surrounded by knee-high pasture, especially something like lucerne, the end result is not much different from a feedlot. Gaining weight under such conditions requires very little effort.

But if the cattle need to walk long distances to obtain water or grass, or are chased by dogs, motorbikes or similar, their muscles become more "athletic". Moreover, most pastures are nowhere near as nutritious as the diet provided in a feedlot, so their growth is slower. This further reduces tenderness.

The association with HGPs comes from the fact that virtually all feedlots use them to increase productivity. At normal prices, it is simply not economic for a feedlot to purchase and feed cattle without them. The boost to feed conversion efficiency and weight gain caused by HGPs, around 15%, represents the difference between break even and profitability.

Coles' ban on buying HGP-treated cattle means it can only buy animals from feedlots if it pays a price premium. Since the company is locked in a deadly struggle with Woolworths and other meat retailers, it would be uncompetitive to pay 15% more for the cattle it buys, and without such a premium no feedlots will forego HGPs to supply Coles because it would mean they made no profit.

As a consequence, Coles is mainly buying cattle from pasture-based sources. At the moment, with conditions pretty good since the end of the drought, most of the cattle it buys have led a placid, well-fed life.

But not all of them. Some have had to work harder to get enough to eat or drink, while others will have had to deal with various kinds of harassment. And as conditions return to something like normality, there will be many more that do not enjoy the inactivity and fast growth rates of feedlots.

One of the ironies about this is that Coles' ban on HGPs is driven by a desire to play on consumer fears, based on the experience of two of its senior executives from the UK. Cattle producers in the UK, and the EU in general, are not permitted to use HGPs due to those fears.

The thing is, there is not a shred of evidence that HGPs pose the slightest risk to consumers. Indeed, the World Trade Organisation disputes panel has found the EU's ban to be contrary to international trade rules because it lacks a scientific basis.

There is also little evidence that Australian consumers share the bias against modern agricultural productivity tools that is so widespread in Europe, especially since so many European countries (including the UK) are verging on bankruptcy because they have failed to maintain a competitive economy.

On the other hand, it is well known that consumers are reluctant to buy steak if they suspect it may be tough. Before feedlots became popular it used to be a lottery. Now, steak competes on similar terms to lamb, pork and chicken.

Coles' suggestion that cattle treated with HGPs might be fractionally tougher is absurd. Even if that were true, and the evidence is equivocal, any difference would be long gone by the time the cattle have done all that walking.

Given the lush conditions in much of the country, consumers buying beef from Coles may not experience any nasty surprises for a while. But in due course more and more of them will find they have purchased tough steak. And when that happens, it will be the beef industry rather than Coles that pays the price.

David Leyonhjelm works in the agribusiness and veterinary markets as principal of Baron Strategic Services. He is also Registered Officer of the Liberal Democratic Party.