ABA forum highlights restructure challenges

James Nason, 12/07/2013

Differences of opinion over how directors should be elected to the board of a new national grassfed industry representative body, and whether it can take control of annual grassfed levy funds, remain two key sticking points in ongoing attempts to restructure Cattle Council of Australia.

The industry restructure issue was in the spotlight at an Australian Beef Association forum in Roma on Wednesday attended by around 80 people.

The forum was also attended and addressed by Cattle Council of Australia president Andrew Ogilvie and chief executive officer Jed Matz.

Both groups, long-time sparring partners, have put hostilities aside over the past 18 months to work together on the restructure process in an attempt to develop a single model that can provide effective representation and policy development for all grassfed cattle producers.

Despite the rare spirit of cooperation, the restructure process remains in limbo as both groups struggle to find common ground over key issues such as what constitutes a democratically-elected board, and whether the new body should gain access to, or control of, funds generated by grassfed levies.

Democratically-elected board

On the first point, ABA’s view is that the new board must be fully democratically-elected.

Its position is that every seat on the board should be decided by a vote of all producers.  

Voting would be based on a two-tiered register, where producers receive a single automatic vote as a grassfed cattle producer, and a weighted vote based on the number of cattle they sell.

However, in the model CCA has adopted as its preferred approach, the new board would contain a mix of State Farm Organisation-appointed and independently elected directors.

It allows for 11 SFO-appointed directors, 9 independent directors elected by direct members of CCA, with an allowance for a further six direct positions to be filled by corporate members.

ABA members at Roma argued that direct elections provided the only genuine way to deliver a truly democratic process.

They maintain that under a fully directly elected board model, SFO’s would be free to promote their own candidates in board elections, backed by the advantage of having significant resources and profile to back their campaigns.

On the other side CCA president Andrew Ogilvie said providing a mix of independently elected and SFO appointed directors maintained a democratically elected board, because SFO appointed directors were still chosen by producers through a democratic process within each SFO.

Levy access

This board election issue is also inextricably tied to the other key unresolved issue of funding.

CCA’s proposed model reflects its view that while access to grassfed levies would be desirable – and indeed would be about the only conceivable way it could receive a significant boost to resourcing – the changes to legislation required to deliver that funding could take years to achieve. As such, its view is that model based on revenue from membership fees is needed to deliver a restructure that could be put in place immediately.

Its model requires SFOs to pay membership fees of $25,000 per seat per year in return for the right to appoint their own directors to the board. (The fact that some financially-strapped SFOs are not paying membership fees to CCA at present, but still have a say, is another ongoing point of contention in the restructure debate). Producers not aligned to SFOs would also be required to pay a direct membership fee to the new organisation in return for the right to participate and vote in independent board elections, while corporate board seats would also provide a further source of revenue.

Under the ABA model the new organisation would be funded by taking full control of the $52-$56m that is generated in annual grassfed cattle transaction levies each year. If achieved, this would allow the national organisation to stand completely free from SFO involvement or revenue. SFOs would be allowed to appoint representatives to issue-specific sub-committees one step below the board, but not to appoint directors to the board.

A portion of the levy funding would go towards resourcing the new body, and it would then oversee the distribution of the levy funds to marketing and research, development and extension projects.

At present those funds go directly to Meat & Livestock Australia. ABA members expressed anger at Roma that the grassfed cattle industry currently had to go ‘cap in hand’ to MLA to secure a share of grassfed levies. They argue that the new grassfed producer representative body, not MLA, should be given full control over how and where those funds are spent.

A number of ABA representatives also expressed a desire to see the restructure process expanded beyond CCA alone to include MLA. This approach would see MLA and CCA combined into a single body to collect levy revenues and to oversee policy setting, representation and advocacy, and marketing & RDE, in a similar manner to how Australian Pork Limited operates.

Legislation roadblocks

Here things start to get more complex. Accessing levy funds requires Federal Government support and legislative changes, and differences of interpretation surround to what extent that is likely or even possible.

What is known is that the industry must be able to demonstrate “unity of purpose” behind a single restructure model before the Government will consider any plan.

CCA chief executive Jed Matz told the Roma forum that the organisation has spent a great deal of time talking to government about what is achievable in relation to accessing levy funds under current legislation.

He said CCA is currently viewed as an advocacy body, not a service provision body, and was therefore not able to receive compulsorily acquired levies.

Because transaction levies were collected under national taxation law, and as such were regarded as ‘Government’ money, not producer or industry money, strict laws controlled how they could be used or directed.

“Until we change that legislation so it can be directed to other purposes, the government will not allow it to go to another purpose,” Mr Matz told the forum.

“Even if we had a vote of industry tomorrow and everyone thought it was a good idea, we would still need to convince the government to change that legislation.

“That is a three year process.

“And I need to say this, you need to consider this – that requires a minister or a government of the day to take a tax law and extend that out to compulsory payment of an advocacy group.

“Now most ministers when we’ve talked to them about that process have said they don’t know a minister or government that would ever have enough appetite to ever extend a tax law to that point…it is a very significant shift in government policy in Australia.”

A significant level of debate surrounded the issue of why the grassfed cattle industry should not be able to take control its own levy funds in the same way the pork industry does through Australian Pork Limited, and the different interpretations that surround whether a government will or will not support levy funding for a policy development and advocacy organisation.

'Why won't CCA fight for funds?'

ABA chief executive officer David Byard said it seemed that Cattle Council was not prepared to fight for access to the $56m annual levy funds.

“Cattle Council don’t seem to want to push to get that money, and I’m at a loss to understand why you won’t take that money,” he said.

Mr Matz said former agriculture minister Joe Ludwig advised CCA in its last meeting with him that he would not extend a tax law to a body that represents a constituency, because that amounted to “compulsory unionism.”

Mr Byard and other ABA speakers said that, in contrast to Mr Matz’ statements, the ABA had been told by minister Ludwig that he supported the Australian Pork Limited model.

“I’m glad you raised it because that is a very important point,” Mr Matz responded. “He (Ludwig) said to us that if you merge CCA and MLA together, and have everything together in the same body, it could be done.

“But what he also said was that if you look at the constitution of MLA or APL, the minster has full control over that organisation and can take that money away at any time that he likes, and can tell that organisation to do whatever he likes.”

He said that under APL’s constitution, it was not allowed to engage in political activity, and said CCA had been told by the Government it “would never repeat (the APL model) again.”

While both groups have been engaged in a rare display of cooperation in recent times, Wednesday’s forum also highlighted the extent to which ABA members who have participated in the CCA reform process over the past 18 months also now believe their views were never taken seriously.

Process aimed at protecting SFO power

ABA director Linda Hewitt, who was a part of the industry restructure group appointed by CCA, said that after a long and time-consuming process, central components of the ABA’s preferred model – fully directly elected boards and full control of the grassfed levy – were rejected by CCA without consultation.

She emphasised that she was not opposed to SFOs and believed they played an important role in Australian agriculture, but added there was no need for SFO’s to be involved in national cattle industry representation.

After working hard on the restructure process to date, she said it seemed clear that the new CCA model was simply trying to preserve the power of SFOs.

“We tried to pull people together, and I didn’t agree with quite a lot that was said in the room and I didn’t agree with quite a lot of structure, but I tried my hardest to work with them,” Mrs Hewitt said.

“The amazing thing was that after these meetings that we’d have, CCA main board would then review what we’d written about how we proposed the new structure, and they would come back with a whole set of instructions for us to rearrange it

“(They would say) that is not going to suit us, we don’t want to do it that way, we want to you to do this, we want you to cut this out and add this in, and this is where I’m saying with all due respect to them, SFOs do not want to hand over that power, they want to keep that and they want to keep themselves on board.

“And as a consequence we end up with a board of 23 which is just unwieldy.”

Motions call for democratically elected board, full levy control

In a press release issued after the meeting outgoing ABA chair Brad Bellinger said the Roma forum had achieved a very positive outcome. 

"Motions to deliver a democratically elected board and to give that board control of the grass-fed levy were supported with over a 95% majority.  A very active crowd, that was not hand picked by ABA, gave the strongest endorsement of a plan to reform Cattle Council.

Mr Bellinger said that a resolution to allow eight State Farming Organisation-reserved seats for an interim three year period was soundly rejected at the meeting. 

"The message is clear that producers want democratic control over their levy expenditure.

"A resolution that further endorsed this was for the Federal Government to form a task-force to implement the restructure as per the cattle producers' wishes."


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