News

AMPG: Productivity increases are no panacea without profitability

Joanne Rea, Australian Meat Producers' Group, 16/03/2015

Australian Meat Producer’s Group spokesperson Joanne Rea responds to Australian Farm Institute executive director Mick Keogh’s recent opinion piece ‘Grab for compulsory funds won’t help grassfed industry’. This will be the fourth and final article in this exchange – any further comments/debate can be continued in the comments section below this article…

OPINION

I can only agree with the basic economic analysis of Mick Keogh in his opinion piece of 10 March in Beef Central, but productivity increases are not a universal panacea without increased profitability and when it comes to MLA he seems to have an exaggerated perception of how much of the output is directed at increasing production productivity in any meaningful and profitable way.

The Senators who ran the Inquiry into grassfed levies and systems easily grasped, with new eyes, the structural impediments in the system and have given us seven very thoughtful and perceptive recommendations to use as a basis for an integrated whole of industry structure that will serve the interests of producers and revitalise the grassfed industry.

MLA has become the behemoth that is unresponsive, has a direction of its own and is uncontrolled by anyone including its statutory masters such as Cattle Council of Australia.

Quite rightly the Senators were shocked by how badly grassfed levy payers were served by the present system.

They were shocked by the very poor record of completed reports and the volume of commercial in confidence material. The percentage of funds which flowed to companies associated with directors is an extremely serious governance issue.

It is also impossible to see how patenting the output of research and selling it to competitor countries benefits Australian producers or processors.

It is obvious that the major beneficiaries of the research and marketing efforts have been the processors and supermarkets who have successfully managed to not pass too much of the customer dollar back down the supply chain. The cattle farmers of Australia have not been the major beneficiaries as claimed by Mick Keogh.

At any level if the managers of your money are using it badly or not for your benefit it is just common business practice to regain control of it. To characterise this as a “grab” for the money as is being done in some circles is inaccurate and offensive.

Most of the opposition to change has come from those who are comfortable beneficiaries of the present system. Grassfed levy paying cattle producers are not prominent among that number.

In submissions made to the Inquiry and appearances before the Inquiry across State and Territory borders, individual producers and organisations outlined what was a remarkably similar catalogue of the failures of MLA.

It was failure to respond to producers at the individual, organisational or producer peak council levels. There is no ability to influence policy, to choose or remove Board members, a failure to resist the undue influence of processors and failure at individual issue levels. Most importantly the Board lost the vision of Former Agriculture Minister John Anderson of what MLA was supposed to achieve. It became an animal feeding off itself buried in process and with no vision of the end game.

The consistency of criticism was so vivid that all Senators across party lines recognised recalcitrant problems.

With such consistency of failure as indicated by producers the only remarkable thing about this debate is that there are any supporters of the status quo. Australian Pork Limited model has been investigated and the embargoes on political activity are not overly onerous. Certainly the Senators did not see a problem. If there is an advocacy vacuum I am sure that there will be groups who fill the void.

There are no shortcuts and there is no grab for money.

Formulating policy on all seven recommendations will be a huge and drawn out job involving discussion and debate. No recommendation can or should be lightly dismissed.

The only levy money issued will be to a properly constituted body approved by the Minister. With producers able to elect the Board, unresponsiveness will attract the expected penalty.

If a body is monolithic and unresponsive, lobbying to have it changed is an entirely appropriate response.

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Comments

  1. Joanne Rea, 20/03/2015

    Philip, I think you may very well be right. They should never forget though the number of submissions which made the case that the system needs change. Thank you for your support.

  2. Philip Downie, 20/03/2015

    I just wonder how much these people, who have been around and don’t want change, are in the Ministers ear? Obviously from their time in the upper echelons they have access and contacts.

  3. Joanne Rea, 20/03/2015

    Sandy McConachie, Your section of the industry may not be dire, processing certainly isn’t at the moment with record profits made and the meat market is buoyant. There are enough statistics though on profitability and rising debt levels to show that the grassfed production sector is in dire straights.
    To say that the levy payers have control of the levies through CCA is just so much potted industry spin. What the Senate Inquiry uncovered was that not only was the grassfed sector suffering severe financial hardship but that they did NOT have any control of levies or policy.
    To blame the producers themselves is to be out of touch. Despite what the current witch doctory preaches there does come a point where productivity increases are not sufficient to cover the cost of investment and costs cannot be cut any further. This is the experience of a very high percentage of a very diverse industry. They are not all poor managers.
    You close your eyes to such details as processor consolidation and the effect of the live cattle ban which, although unacknowledged in some circles certainly exacerbated the effects of the drought and was felt nationwide.
    It has been obvious for some time that there is just no connection between many of those who claim to speak on behalf of the industry and the producers on the ground. What the Senate Inquiry did was expose that disconnect.
    These particular Senators did an excellent job or listening to producers, seeing the problems and coming up with a viable set of solutions. The industry should be grasping them with both hands and debating them fully.
    What is obvious is that there are industry figures who cannot accept reality and want no change or minimal change.

  4. Philip Downie, 18/03/2015

    I think we have forced productivity via the drought where did that get us? We shipped more beef than ever at lowest prices to the producer. As for looking in the mirror well I am sure it will be pretty crowded. You seem to think most beef farmers are unprofitable because they are hopeless. That would seem to defy most analysis. If price stay the same and costs go up what happens, profitability goes down. Producing more only helps the people further down the value chain not the producer. Mostly we understand what goes on and we don’t like it. When you provide money to someone you should be able to have a say in how it is spent and it should be spent for your benefit. I never said I wasn’t profitable, its not about me it is about the industry and proper practice. Plus I don’t hang out with Senators, Bob might though.

  5. Joanne Rea, 18/03/2015

    Sandy McConachie and Bob McCarthy,
    You are the ones who do not understand the industry and the roadblocks which prevent a fair share of the consumer dollar and the international buyer dollar from being passed down the supply chain.
    It has become an unassailable paradigm that supply and demand dictate price and it is time that that particular battlement was breached.
    “Unconscionable conduct” provisions in the UK include “unfair pricing provisions”. It would be an interesting exercise to test in court how payment under the UK provisions fared at below cost of production prices paid when world beef indicator prices were at record levels.
    In your comment you are denigrating the submission efforts of hundreds of grazing families who may not be making a profit no matter how forward looking they may be.
    It is only the blind who cannot see that the low single digit percentage productivity increases on offer do not cut the mustard.

  6. Bob McCarthy, 18/03/2015

    Well said, Sandy. What’s emerging at the moment is a populist witch-hunt.

  7. Sandy Maconochie, 17/03/2015

    Philip and Joanne et al, you have it back to front. Productivity drives profitability and not the other way around and if you are not profitable today maybe you’d be better to find something else to do. You guys are the modern day ABA., change for change’s sake. You have always had control of your levies through CCA who have had ultimate say over MLA, so your bashing of MLA is barking up the wrong tree. It seems your consensus with CCA is about collecting the levies ahead of MLA. Frankly hanging out with a few senators towards making our lives more profitable is in Gaga land. Despite your doom and gloom our industry is NOT dire. It always has and always will be driven by supply and demand, always a drought somewhere, and no elected representative will ever change that. Blaming MLA for for your own lack of profitability?? Try having a really long look in the mirror.

  8. Philip Downie, 17/03/2015

    Sandy what are these real industry issues we are ignoring or ignorant of, it would be great if you could enlighten us. Mick is a normal mortal, like the rest of us and if he is above question then we have a real problem. The issue he has preached is productivity. I say productivity will look after itself when the industry is profitable. Profitability drives innovation and productivity.

  9. Peter McHugh, 17/03/2015

    Sandy,
    AMGP started 5 years ago in Armidale with hundreds of grass feed cattle families turning out to rally for change. This was duplicated in Rockhampton again with hundreds of grass feed cattle families turning out. Since then the AMGP think tank members have spent thousands of dollars of their own money and hundreds of hours of their time to achieve viable change so there would be sustainability and profitability in their sector.
    Last year we saw a MLA levy senate inquiry into the grass feed cattle industry with again hundreds of submissions for change and agreement from the senators.
    This is not a minority and along with support from the hard working ABA and consensus from CCA, hopefully we will see real change to the grass feed cattle industry.
    The days of tens of millions of dollars spent between MLA and AFI without results for those they represent needs to be adjusted.
    PS Kerry Glasser we are trying to balance the moral in the grass feed cattle industry. I can assure you there are major issues throughout Australian Cattle Families unfortunately the MLA’s ivory tower was built with the help of GFC levies for the benefit of others.

  10. Joanne Rea, 17/03/2015

    Kerry Glasser, I don’t think anyone’s comments have been directed at MLA staff and certainly not mine. I have laid the responsibility with the Board and those whose job it was to direct the Board and policy. Change is difficult for anyone including affected MLA staff. It is also difficult for the estimated 46 families foreclosed upon or at risk of being foreclosed upon in the Longreach area alone with world indicator prices for beef at record highs for much of 2014.

  11. Joanne Rea, 17/03/2015

    Sandy Maconachie , I have nothing but the greatest respect for Mick Keogh and what he does but raising anyone to “guru” status and not questioning any of their opinions and attacking anyone who questions them as “silly” is the sort of narrow thinking that got the production industry into the dire trouble it is in. Policies and ideas need to be thoroughly debated with decisions made with optimum outcomes in mind. There have been too many closed doors.

  12. Loretta Carroll, 16/03/2015

    I can assure you there are many Southern farmers who fully agree with the concerns AMPG has with our current industry structures and thank them for initiating and guiding some well overdue change.

  13. Kerry Glasser, 16/03/2015

    In defence of the MLA Staff, (now thoughly demoralised) they can only do as directed by the MLA Board. Therefore all gripes should be directed to the MLA Board. As I understand it, MLA was set up as a service provider for the Red Meat industries, to be directed buy a largely un-elected Board. Talking to several current staff, they say that apart from still reeling from the traumatic axing of most of the brightest and experienced staff, they are constantly being bombarded by negative comments and complaints. Morale in the office is at a real low-point with most on the lookout for a more positive work environment. Such a shame as the people I know are young, energetic and are doing the best they can. Lets hope we start to get some positive ideas for them to work on soon.

  14. Philip Downie, 16/03/2015

    Who is Sandy Maconochie, sorry there are two of you, apparently. Anyway doesn’t matter, agree totally with what has been said above and have been saying same myself for sometime. The actual process, organisation may not be set but principles are correct.

  15. Rob Moore, 16/03/2015

    Sandy – you’ve had your dream run with the feedlot Industry and finally retired. You stick with your mates and let us sort out OUR business. Grassfed levies are no concern of yours. Meanwhile Joanne has made a lot of sense with her article here. Well done Joanne.

  16. Sandy Maconochie, 16/03/2015

    Who on earth is AMPG??? Seems it’s yet another minority group sprung out of the North. Anyway fortunately its ignorance of real industry issues preaches only to its own. By questioning sensible people like Mr Keogh is silly in itself.

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