The European Union had effectively ‘changed its view’ over the acceptability of Australia’s AEMIS export meat inspection system, the Senate Estimates hearing was told on Tuesday.
Queensland senator and estimates committee member Barry O’Sullivan questioned senior Department of Agriculture (formerly DAFF) personnel, secretary Dr Paul Grimes and deputy secretary Phillip Glyde, at length over the EU meat inspection issue.
Beef Central broke the news about sweeping changes necessary in the way many Australian meat plants will have to conduct meat inspection for the EU market in this story last week.
This followed an EU audit that found the Australian Export Meat Inspection System model did not meet the EU’s requirements. The result came as a complete surprise to industry, and contradicted earlier advice to industry from DAFF, as the department was then called, that AEMIS complied with EU standards.
Since its launch in 2011, the AEMIS company-employed inspection model has been widely adopted by export processors, including Teys Australia, JBS Australia and Nippon Meat Packers Australia, which collectively hold the majority of the nation’s EU grain and grassfed beef quota.
Senator O'Sullivan asked Paul Grimes whether he accepted that, if no changes were made, the development would affect Australia’s capacity to export meat products to the EU.
“I am confident that we are making good progress in working through these issues both with industry and the European Union,” Dr Grimes said, before referring further questions to Phillip Glyde.
“This is certainly an issue that has been raised at the level of the secretary for quite some time,” Mr Glyde responded.
“The EU audit first occurred in October 2012. There has been quite a lot of concern about this and we have been heavily involved in that process,” he said.
“To go to the specific answer: the way the system works is that, if the Australian exporters do not comply to the satisfaction of the importing country, then we do not export. So it is important that we get this right. It is important that we understand what is behind the changes that the EU is seeking, and that we work with industry to make sure that we can deliver a change in the system at minimum extra cost to the industry.”
Sen O'Sullivan asked whether the department accepted that, when the changes were made in 2011 to transfer from one system to another (federal meat inspection to AEMIS), they did not comply for the EU then and, therefore, did not comply now.
“I don’t think I can accept that,” Mr Glyde said. “What happened was that, after a lot of consultation with all of our markets—not just the EU but also the US, China, Korea and Japan – a change was made to the meat inspection service primarily to make sure that we could deliver the same surety to those exporting destinations with a more cost-effective inspection system.”
“At that stage the EU indicated it had no difficulties whatsoever with our move to the new system. As it has turned out, and as this audit has gone forward, the EU has in essence changed its view,” Mr Glyde said.
“Part of that is not so much that they are worried about the capacity of our new (AEMIS) system to deliver results – it is more a legal issue that they have raised, which is that some of their member countries require the use of an inspector who is independent of the processing company involved, in the certification process.”
“What has happened here is that we have gone forward in good faith, in full consultation with the EU, and it has realised that the change that had been made was not going to suit them—and that is what was picked up during that audit.”
Sen O'Sullivan asked Mr Glyde whether he was saying that, at the time the changes were made in 2011, the department was satisfied that the changes to the structure of the program, or the policy implemented, met with the approval of the EU, and whether the department had sufficient anecdotal evidence to support that.
Mr Glyde replied in the affirmative.
“Later on I am going to ask you to take it on notice to produce documents that would show us that we made those changes in the honest but now mistaken belief that the EU had agreed that that was an approved process that met their standards,” Sen O’Sullivan said.
Mr Glyde drew the committee’s attention to the EU audit report, which “did not question the ability of AEMIS to meet either the EU’s food safety outcomes or the product suitability requirements.”
“Nor did it question the competence of the people involved in doing the authorisation and assessments.”
“Often you can get a long way down the path on the basis of good understanding and good communication, but then finally someone has a closer look at the legal framework – and we are in the situation we are in now,” he said.
“Somewhere, somebody failed. It is as simple as that,” Sen O’Sullivan said.
“Our processors have had to incur great expense in establishing new processes in their operations which are now redundant, in so far as it applies to the export of meat products to the EU. My interest is to find out who made the mistake and then find out what it is that we are doing to rectify it, and in particular, to support our processors,” he said.
Se O’Sullivan indicated he would pursue the matter later in the inquiry.
“We are more than happy to talk those issues through,” Mr Glyde said.
“But it’s important to look at the meat inspection system in the context of the broader global markets and the savings that Australia had been able to make, in terms of both cost to government and cost to industry, in the broader system of trying to reduce the red tape, reduce the amount of staffing in these systems and still meet the health requirements of the importing countries.”
“So there is a bigger question there. I take your point that there has been a considerable change in the EU's position and that is unfortunate. We are certainly working closely with industry. I would add that the industry representatives have been beating a path to our door and we have been doing the same since the 2012 audit,” Mr Glyde said.
Sen O'Sullivan asked whether between 2011 and the audit in December, the EU had made changes to its standard. Mr Glyde’s response was no.
“My understanding is that for stakeholders, this is probably one of the most predictable governance issues that you could have. Is it your understanding that their underlying concern is the potential of a conflict where we have inspectors employed by the exporter, in this case, as opposed to an independent government agency, governed by regulation, to do the same job?” Sen O’Sullivan said.
“My understanding is that, when they had a closer look at the legislation that existed in a number of the member countries of the EU, it was quite clear that, at that level of inspection, legally the inspector had to be either a government employee or independent of the company,” Mr Glyde said.
“Our move to AEMIS was to have inspectors and auditors who were employed by the company accredited by the department, by the regulator. That has been accepted in other markets, and we went forward on that basis as a cost-saving measure to try and have that new system.”
“As it has turned out, on closer inspection the EU has found that that does not work for them. So we have been working collectively with the EU and with the industry to find a way forward on this matter,” he said.
Sen O'Sullivan declared he would ‘drill down further’ into the matter later.