News

300 at Barnawatha back Senate inquiry into processor consolidation

Terry Sim, 02/03/2015

A NSW-Victorian call for a Senate inquiry into processor consolidation in the red meat industry might already have had an impact on the government.

BarnawathaFarmers vote Mar2-15More than 300 NSW and Victorian farmers voted today to support a cross-border campaign for a Senate inquiry into market consolidation in Australia’s red meat processing sector.

In the northern Victorian town of Barnawatha today between 300-400 beef and sheepmeat producers strongly supported a call by NSW Farmers and Victorian Farmers Federation leaders for an inquiry, following a processor boycott of a pre-sale weigh cattle sale at the Barnawatha saleyards on February 17.

The meeting was also called in protest at the Australian Competition and Consumer Commission’s sign-off on JBS Australia purchasing smallgoods manufacturer Primo, but also to delay a decision by Treasurer Joe Hockey on the acquisition.

A spokesman for Mr Hockey said the treasurer is aware of the issue, “however no decision has yet been made.”

The meeting passed three resolutions:

  • Calling for a Senate Inquiry into the growing power and market consolidation of the red-meat processing sector.
  • Rejected post-sale weighing at sale yards
  • Petition the Federal Treasurer to hold off on approving the sale of Primo to Brazilian multi-national JBS.

NSW Farmers policy director John Dunn said farmers from NSW and Victoria sent a clear message to the treasurer today that he set aside his decision on the acquisition of Primo by JBS Australia until a full Senate inquiry can investigate market consolidation in the processing sector.

Producers in the meeting voted by a raise of hands to support the joint VFF-NSW Farmers move to seek a Senate inquiry.

“The single issue here is the power of the processors in this sector and that power has gone too far.”

Producers at the meeting were directed to email and tweet a list of MPs and senators about their concerns over the Barnawatha boycott and processors’ market power, the ACCC’s “lack of power”, the need for a Senate inquiry and for Mr Hockey to step in over JBS Australia’s Primo purchase.

John Dunn, NSW Farmers

John Dunn, NSW Farmers addressing the meeting

Mr Dunn said there had also been strong indications of broader national producer and National Farmers Federation support for the inquiry call.

VFF Livestock Group president Ian Feldtmann said the meeting gave a very strong clear message that producers have “had enough and they are not going to take anymore.”

“Today was really a result of the buyers withdrawing from the market at Barnawatha.

But what that did was bring to the surface the anger among producers on the whole processing and buying system throughout the eastern states which they have been forced to operate under – post sale weighing,” he said.

“With the consolidation of processing works in Australia that’s in their eyes a clear indication that competition is going to be reduced.

“The message from the floor is that they definitely wanted us to pursue a Senate inquiry and part of that is based on the purchase of Primo by JBS, which is demonstrating a reduction of players in the market and a lack of competition over time.”

Mr Feldtmann said the ACCC Competition Compliance Team is investigating the incident, “but this is not an isolated problem, it is a symptom of the structural inequity that exists in the cattle market.”

“Market consolidation in the meat processing sector is causing lower returns to farmers and it is time this trend is stopped,” Mr Feldtmann said.

“The treasurer must set aside the approval of the JBS acquisition until a full senate inquiry can investigate this issue.”

Chair of NSW Farmers’ Cattle Committee Derek Schoen made a direct plea to the treasurer: “Put this decision on hold until all the facts are tabled.

“If we get this decision wrong, farmers will lose.”

“What is the point of protecting our agricultural land from too much foreign acquisition when all of our produce will be processed and controlled by a select few?,” he asked.

“This is an issue which demands a serious examination of the national interest.

“Farmers just want a fair go; a fair price for their produce,” he said.

“If the treasurer approves this decision it will have long term ramifications for cattle farming in Australia.”

 

 

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Comments

  1. Peter DeGaris, 03/03/2015

    Meatworks agrigation is a commercial reality without protective legislation nothing will change. The last govt banning of the live trade then the growing drought on helped to glut the Abbs the processors only paid what the had to a commercial reality! The profits made excessive as they may have been!Now as the drought diminishes the live export trade flourishes the A$ falls let’s hope the processes can Pay!!

  2. Dennis Scanlon, 03/03/2015

    An interesting point, Stuart – Duopoly and competition.
    I have a good mate who has a mid to large sized petrol/diesel retail business.

    We all know which duopoly businesses might control fuel prices – my mate certainly does – and he reckons it’s great: just let the duopoly determine pricing, and the better run ‘smaller petrol retailers get the ‘crumbs’ that fall from the table.

    Maybe another duopoly might even constitute a big slice of the export suitable cattle processing capacity in Australia – an interesting possibility.

    And of course, we all have a good idea which duopoly businesses may already control domestic meat market – sharing the biggest % of the short grain fed markets. At least they still have a little more competition in the MSA market area – at least for the present. Food for thought.

  3. Loretta Carroll, 03/03/2015

    Annual Average Processor Margins between Medium Cow Index and 90 CL export price (source: MLA)
    2009: 70 cents, 2010: 81 cents; 2011: 86 cents; 2012: 128 cents;
    2013: 161 cents; 2013: 161 cent; 2014: 279 cent
    We have a huge issue here! Our prices have flat-lined over the past 7 years while processor margins have grown to a point in 2014 where their margin was greater than the price of the cow. Consider the impact of this on our drought affected farmers across Australia. We are calling for equity in the industry. The only way to do this is to call for a Senate inquiry!

  4. Stan Emmon, 03/03/2015

    Don’t you think the farmer has been hijacked enough the past 20 years? I was paid $2 per Kg TWENTY years ago, that has not changed. Why are all overseas people allowed to buy up prime land for food and yet Australia buys in sub standard food that is making us sick and even killing us. Don’t you think it is time to get our priorities in order. Time to pay the farmer at least $3.00 per kg for beef directly sent to the market. None of this rot about paying hot weight. Disappointed in our lax attitude towards people who provide our food in Australia. Yours, Stan.

  5. Stuart Castricum, 03/03/2015

    Im not sure the duopoly is quite worthy of the publicity, granted they are the biggest players . Its mentioned that 8 processors were involved . Don’t forget the duopoly of the supermarkets that people hate , they buy livestock as well , ignoring the emerging Aldi and IGA (which we shouldn’t ) and the live cattle trade .That leaves a rather competitive buying base in my view , surely ? We may not like them but that’s not the point . Taxpayers funding conspiracy theorists inquiries could be better served with supporting drought assistance / disasters . Priorities ? NQR .

  6. Edgar Burnett, 02/03/2015

    Due to the duopoly of JBS and Cargill , if the Processors have not made bulk money out of buying and processing cattle through the last two or three years of drought over a lot of Eastern Australia, they cannot be very good operators. There has been a record amount of meat leave Australia in recent times so where is the competition? It is not there due to the duopoly so Joe Hockey, DO NOT approve the sell of Primo to JBS.

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