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Barnaby responds to grassfed inquiry: backs grower restructure, but funding unresolved

James Nason, 15/07/2015

 

AGRICULTURE Minister Barnaby Joyce has tabled the Federal Government’s long-awaited response to the seven recommendations made by the Senate Inquiry into grassfed cattle industry structures and levy systems released last September.

The minister has agreed with some recommendations and rejected others, which will inevitably divide opinion across the industry.

By his own admission, his response to the senate inquiry process he initiated 20 months ago does not contain a silver bullet that will immediately solve all of the industry’s structural problems.

However, he says he is confident that grassfed cattle producers now have an effective pathway to create a “fearless and ferocious” national representative body that will provide them with a strong, independent voice and greater influence over how their levies are spent in future.

The Senate Committee’s major recommendation last September called for major surgery to grassfed industry structures, principally through the removal of grassfed levy funding from MLA and handing that revenue over to a newly created producer-owned and elected body.

Mr Joyce agrees some surgery is required, but his response is more key-hole than open-heart.

In short he has backed the restructure model presented to him by major industry representative groups back in February that will see the current Cattle Council of Australia replaced by a new board of levy-paying cattle producers directly elected by levy-paying cattle producers from each region of Australia.

That plan gives grassfed levy payers throughout Australia a chance to contribute to industry policy development and to vote on who represents and leads them. By giving every levy payer a say, it will in effect allow the new organisation to claim to speak for all grassfed levy payers.

But the big question still remains – how can and should that new representative organisation be effectively funded going foward?

The representative restructure plan the Minister was presented back in February is anchored upon the premise that by giving all levy payers a say, the new group should receive some levy revenue to help to fund its operations.

That would occur either through taking over full control of the grassfed levies from MLA, as the senate inquiry recommended, or by having a portion of the grassfed levy funding redirected its way. A loose budget proposal that was sent around for discussion earlier this year suggested that redirecting 38c of the $5/hd levy would give the new organisation $4 million in funding each year at current cattle transaction volume rates.

Minister Joyce’s response makes it clear that the Federal Government does not support removing grassfed levy funding from MLA and giving it to a newly establishing producer-owned and controlled organisation.

He says that would cause major disruptions by destabilising MLA to the detriment of existing long term R&D programs and other red meat sectors which rely upon the levy funded service organisation.

He also makes the case that giving levy funding to the new producer representative organisation would make it beholden to the Federal Government. This is because compulsory acquired levies are effectively deemed as a tax – once collected they belong to the government (see his accompanying opinion piece for further explanation on this).

If producers want an independent organisation that is free to express its views without fear or favour, he argues, it cannot do this if the Federal Government controls its funding base.

He believes that strengthening the Memorandum of Understanding between the new cattle representative organisation and MLA will be sufficient to give grassfed producers the control over their levies that they desire.

So does this rule out any prospect of the new organisation receiving levy funding in future?

Not necessarily.

Cattle Council of Australia has indicated it now plans to conduct a vote of all levy payers in coming months to ask if they would be willing to redirect a portion of their levies to the newly restructured representative organisation.

The minister has left the door slightly ajar on the possibility of this happening in his written opinion piece which accompanies this article.

In it he gives a commitment that if levy payers were to vote conclusively in support of redirecting a portion of their levy towards the new organisation, he will “assist where possible” to support that outcome being achieved.

“Assisting where possible” is not exactly a strong commitment, and it hints at the fact that if growers do conclusively vote in favour of redirecting a portion of their levies, they may still face an uphill battle to convince other Government departments to support giving compulsorily-acquired levy funding to a grower representative group, and then to win support for the legislative changes through the House of Representatives and the Senate.

In a further sign that there is not particularly strong support at Government level for levy funding in any form to flow to the new organisation, the Minister says the industry must remember that if growers do want to redirect a portion of their levy to the new representative organisaiton, it would still be accountable to the Government for those funds.

“On that basis I believe that a new representative organisation needs to develop alternate funding streams,” he writes. “As such I am pleased that RMAC will work with the grass-fed cattle industry on options to make this happen.”

So what form might those alternative funding streams take?

A spokesperson for Mr Joyce’s office told Beef Central the Government believes there is range of new and innovative ways to explore for the council to generate funding for itself and wants the council to focus on developing those streams.

He said the Government wanted to explore ways of helping Cattle Council to transfer intellectual property developed using grassfed cattle and sheepmeat levies that is now commercialised and generating revenue for MLA into a subsidiary with the revenue to flow to CCA and the Sheepmeat Council.

For example MLA has commercialised IP that is now already generating $5m in revenue a year, and is only set to grow. NLIS, PCAS and the True Aussie brand are examples of some of the potential revenue streams for CCA here.

RMAC will also be asked to fund an expert to help Cattle Council and Sheepmeat Council and other red meat councils to develop clearer ideas on how to build revenue and improve viability.

Groups such as the World Wildlife Fund or Animals Australia had demonstrated how funding could be generated in innovative ways through delivering value to their membership, driving direct memberships, and via information seminars, the spokesperson said.

One Senate Committee recommendation the Minister has rejected outright surrounds the disbandment of RMAC. Doing so would effectively result in the approximately $40 million red meat industry fund being lost to industry and returned to Government consolidated revenue, he said. RMAC played an important role in managing the red meat fund and provided a key forum for cross-sectoral communication in the red meat industry, but he wants the council to be more accountable and has asked it to come up with ways that it can “lift its game”.

Central to the creation of a new national representative body will be the establishment of an automated cattle transaction levy system that accurately identifies levy payers and levies paid.

In line with this aim, Mr Joyce said the Government is currently working to establish levy-payer registers in the red meat industry and other agricultural sectors.

He also noted that MLA was also currently investigating ways to establish a cost-effective, automated cattle transaction levy system. “As identification of levy payers is integral to the accountability of the levy system, the government will work cooperatively with Meat & Livestock Australia and industry to deliver this.”

MLA’s own self-restructure and moves toward greater transparency, activated in response to concerns raised about the organisation during the senate inquiry, also received a strong endorsement from the Minister.

“The government believes that transparent understanding of the expenditure of the levy can be achieved through several initiatives, not the least of which are current reforms being enacted by Meat & Livestock Australia,” Mr Joyce said.

To read the Federal Government’s full response to the Senate Inquiry into grassfed structures and levy systems click here

 

 

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Comments

  1. David Hill, 17/07/2015

    This opinion piece and the reply from Mr Maconochie leave’s us with some interesting alternatives! Firstly Mr Joyce’s spokesperson suggests the Grass fed sector should look to a funding model similar to that used by organisations such as WWF and Animals Australia, one would wonder how serious this should be taken( what sort of poster would we adopt that would tempt supermarket shoppers to part with there gold coins to support beef producers in there pursuit of lobbying opportunity’s)? The use of commercial IP was also mentioned, it wasn’t that long ago that we were hearing from NFF that ‘True Aussie’ would be the savoir of the whole agricultural sector, I’ve not heard to much lately! Mr Maconochie in his reply, quoting the ALFA model, which ‘leaves MLA alone to do its business’, (if this inquiry has told us one thing, it is that there is a lot of grassfed levy payers who are not comfortable with letting MLA do its own thing), ALFA is one of the ‘other red meat sectors which rely upon the levy funded organisation’ who have had influence over this decision, considering there have been other statements made about MLA funding, and given that Mr Maconochie maintains that CCA has always had control of grassfed levies, is he making this statement with the presumption that CCA has the same level of control as ALFA does? Is it time for a wider information article which provides more detail on who funds what, where those funds are spent, and what level of representation is afforded and on what basis at a wider industry representative committee level? Given the diversity of grass fed production in this country and the number of participants, consensus would be a lot harder to gain than it would be in the grainfed sector, never the less, I look forward to the”fearless and ferocious” national representative body, lets hope it comes with some bite as well!

  2. Sandy Maconochie, 15/07/2015

    Minister Joyce has delivered a sensible outcome to this ridiculously long debate ( or should I mean debacle). What has the process cost CCA et al, not to mention the Senate, yet again out of touch. Many have tried to convince these people that what the minister has now said it the logical way forward. The ALFA model has been successfully in effect now for decades, is not rocket science, leaves MLA alone to do its business that CCA has always had control of grass fed levies anyway. But low and behold it is about its funding! Agree with Joyce, get going and develop revenue streams, be more accountable and leave the levies (tax) alone. Once again, have a long look at the ALFA model !!

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