Farm groups in New South Wales and Victoria have launched a call for a Senate inquiry into increasing market consolidation in the Australian red meat processing sector.

And beef and sheepmeat producers from NSW and Victoria are being encouraged to attend a meeting at the Barnawartha Hall on March 2 to discuss the meat processors’ boycott and the need for action from the Federal Government and the Australian Competition and Consumer Commission.

The Senate inquiry call followed crisis talks between the state farming bodies – the NSW Farmers Association and the Victorian Farmers Federation – which are concerned about the long term viability of the meat processing sector.

The bodies’ joint statement this morning said they believe a Senate inquiry would “give farmers on the east coast an opportunity to give evidence without fear of reprisal from processors”.

“Both organisations and their members are extremely concerned following actions taken by processors to boycott the Barnawartha saleyards last week, which highlighted the increasing market power of red meat processors.

“The saleyard boycott followed the recent decision by the Australian Competition and Consumer Commission to allow further concentration in the red meat processing sector with the acquisition of Australian Consolidated Food Investments Pty Ltd (Primo) by JBS USA Holdings Inc (JBS),” the statement said.

Late last week the VFF called on the ACCC to investigate the meat processors’ boycott of the Northern Victoria Livestock Exchange’s Barnawartha saleyards on February 17. Up to eight processors boycotted a sale, which wiped 20-30c/kg off the price of most cattle and led to a third of export-weight cattle being passed in. Processors took the action due to the pre-sale weighing of cattle at the yards.

JBS says it’s non-attendance at last week’s Barnawatha sale was in no way motivated by selling methods used at the yards, but specifically related to major technical disruptions at its Dinmore processing facility near Brisbane. As Beef Central flagged in earlier articles, Dinmore, the largest processing plant in Australia, lost two days’ kill the week before last due to major IT issues. That ‘loss’, totalling around 7000 head of cattle, inevitably put a big hole in the plant’s upcoming slaughter cattle requirements for last week.

Among the five large beef processors Beef Central spoke to last week over attendance at Barnawatha, JBS at no stage indicated that it would not operate at the Barnawatha sale in protest over selling methods. Two others were non-commital, saying only that they would ‘consider their position’, while only Teys Australia and one other indicated that they would not be attending the sale, on protest grounds.

Concern in Victoria over Barnawatha boycott

VFF Livestock President Ian Feldtmann said there had been enormous farmer concern over the processors’ boycott of the Barnawartha market, prompting the VFF to call on the ACCC to take action.

“The reality is the boycott is just a symptom of processors gaining too much market muscle and the issue of processors’ market power needs to be taken further.

“That’s why the VFF has joined NSW Farmers to call for a Senate inquiry,” Mr Feldtmann said.

“We need to explore why retail red meat prices have soared, but we’ve not seen a corresponding rise in saleyard prices.”

ABARES data revealed the retail price for beef has risen from $10 a kilogram in the year 2000 to $16 a kilogram in 2012 while saleyard prices had stagnated at around $3 a kilo over the same period.

All red meat producers welcome at Barnawatha

Mr Feldtmann said the Barnawatha meeting was initially called because of the Barnawatha boycott and consolidation in the beef processing sector.

“But certainly I would assume a Senate inquiry would be looking at all red meat processing.

“It’s an open meeting to producers to come along and express their concerns on in particular this Barnawatha market, but there is a whole raft of issues that has been raise, not only around the market, but about the power of the processors.

“As (sheepmeat) producers if they wish to come along I really encourage them to do that.”

NSW Farmers cattle committee chair Derek Schoen said the actions taken at the Barnawatha saleyards is the sort of behaviour that had renewed his organisation’s concern about the ACCC’s recent decision on JBS.

The ACCC recently concluded its investigation into JBS’s proposed takeover of Primo, concluding that there was no case to answer.

“It is also a demonstration that a reduction in competition means farmers lose – that is the bottom line.

“Our farmers’ ability to get a fair price for the produce is dependent upon competitive tension in the market place,” he said.

Mr Schoen said the best way to move forward is for the government to hold a Senate inquiry into the whole issue of consolidation in the red meat processing sector to enable the issue of competition in the market to be explored properly.

The Barnawatha meeting will be held in the town’s soldier’s memorial hall, on the corner of High and Havelock Streets from 12.30-2.30pm. Light lunch will be served.

Source: NSW Farmers, Victorian Farmers Federation