CATTLE Australia is moving forward with plans to conduct a review of national cattle industry levy arrangements, as flagged at a conference in Darwin earlier this year.

“There is a case to be made to improve levy arrangements, including the collection and distribution of funds, to secure the future of this vital industry,” Cattle Australia CEO Dr Chris Parker said.

Cattle Australia president Garry Edwards announced the review at the Northern Territory Cattlemen’s Conference in March.

In a media release today the peak body representing Australian cattle producers said the “time is right” for the beef cattle levy to be reviewed “to ensure the funding system is appropriate for the modern challenges facing the industry”.

A $5 per head transaction levy is collected on the sale of cattle in Australia.

$3.66 from each levy paid goes to industry marketing and 92c to research and development through Meat & Livestock Australia, with the R&D component attracting matching funding from the Federal Government.

A further 29c from each levy is allocated to National Residue Testing and the balance – 13c – goes to Animal Health Australia.

The Cattle Transaction Levy was raised from $3.50 per head to $5 per head in 2006 and last reviewed in 2009, when levy payers voted to maintain the rate at $5 per head.

In today’s update Dr Parker said CA would work with other peak industry bodies “in taking a holistic view of the red meat production industry, its future needs and appropriate support from the levy system”.

“There will be wide consultation on both the case for and against change, and we must of course meet the levy principles set out by Federal Government.”

Nor would it be a quick process, with Cattle Australia anticipating it will take at least two years for the full review to be completed.

“But we must start now if we are to ensure that our industry stays in front of the game and maintains its position as a reliable source of safe, nutritious protein,” Dr Parker said.

Announcing plans for the review earlier this year, Cattle Australia President Garry Edwards said important parts of the industry were underfunded under current arrangements, and pointed to industry advocacy as an example.

“The levy system we’ve had in place for some time has worked, but it’s very rigid, and we’ve got significant parts of our industry that are underfunded based off that current methodology,” Mr Edwards said.

“So we will be looking at what is a sustainable modernisation of that moving forward.

“And we’ll ensure that the industry’s interests are achieved through an equitable based levy funding structure.

“We need to make sure that the balance between market promotion, research, what we do in residues, what we do in animal health, what we do in representation of policy and advocacy matters are appropriately funded.”

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A brief history of the Cattle Transaction Levy rate

The mandatory Cattle Transaction levy raises funds four primary industry activities: marketing and market development, research and development, National Residue Survey Monitoring and Animal Health Australia.

In 1998 the Cattle Transaction Levy was set at $3.50 a head.

In 2006, following a vote of 9800 levy payers (from an estimated population at the time of 80,000), the levy was increased by $1.50 to $5 per head, with the additional funds to be channelled into marketing.

The argument for increasing the levy centred around the perceived need for greater marketing efforts to help Australia sell an expected increase of 335,000 tonnes of beef production from 2006 through to 2009, due to industry investment and herd growth.

Proponents argued it was imperative the Australian industry build a competitive position in key export markets during the period that North America was precluded because of BSE, and to combat a perceived threat to export markets from South American beef powerhouses including Brazil and Uruguay.

Then-Agriculture Minister Peter McGauran placed a sunset clause on the levy increase, stating that before the end of 2010, industry would need to present the Government with a new proposal for a revised levy rate, otherwise it would return to $3.50/head.

In 2009, a review of the levy by Beef Marketing Funding Committee concluded that having created a competitive position, particularly in markets such as South Korea, it made little sense to reduce marketing expenditure in those markets “given the current and expected ongoing volatility in a highly competitive global meat marketing environment”.

The committee also noted that as marketing levy funds were not CPI adjusted (as they were subject to a flat rate levy), therefore real marketing expenditure was declining over time.

Additionally, projects including NLIS had lost their funding status and were now drawing on marketing funds.

A subsequent ballot by levy payers at the 2009 MLA AGM resulted in 72.5 percent of eligible levy payers who voted supporting the case for no change, meaning the levy remained fixed at $5 per head.

In the year the levy was increased, 2006, the primary price indicator for Australian cattle, the Eastern Young Cattle Indicator (EYCI) averaged 317c/kg.