Two key red meat industry councils were yesterday singled out for a stinging Parliamentary blast by the Senator heading an inquiry into the red meat processing sector.
Senate Rural and Regional Affairs and Transport committee chair Barry O’Sullivan told the Senate yesterday that it was time for Cattle Council of Australia and the Australian Meat Industry Council “get on with the job” and improve representation of members.
The Cattle Council of Australia was not sufficiently reflective of the 50,000 grassfed cattle producers in Australia, and “they need to be”, the Senator said.
While the council was well and truly down the path of transition to becoming a stronger peak industry body, it was going much slower than it should.
“We are now at about the eighth month,” Senator O’Sullivan said.
“A transition body is in place, trying to agree on the finite details of how they will be funded, operated, measured and audited, but my message to them—I have said this privately and I will do so publicly—is: get on with it, get it sorted and get out there so that you can provide a very strong and cohesive voice for all the pastoralists and beef producers around the country.”
CCA: Restructure needs govt support
Cattle Council president Howard Smith told Beef Central in response that the Council had been pushing towards structural change since 2013, but implementation of the new structure could only be progressed with government support.
“I have said before that key for the new organisation is the ability to focus on delivering the best outcomes for grassfed producers, instead of being impeded by funding concerns – which is why we continue to work closely with the government to progress the issue and achieve the best outcome for Australian grassfed beef producers.
“Cattle Council have acknowledged the issue has consumed vast industry resources over the past three years and look forward to ‘getting on with it’ as we meet to discuss the issue with the government over the next couple of weeks.”
Processor representation
The Senator then turned his attentions to Australian Meat Industry Council, which represents meat processors.
“Two of our biggest processors are no longer active members of the peak industry body, so, again, that peak industry body cannot speak with the authority of the whole packer sector, as it is known, or the processing sector,” he said.
“My message to AMIC—again, I have said this privately and I say so now publicly—is to get on with the job; get yourselves back into a position where the peak body speaks with one voice on behalf of this very important part of the industry.
“These problems impact on the Australian Meat Processor Corporation because they, in effect, are the research and development and marketing arm of the sector and if they do not have a cohesive peak body then, of course, decisions that they make will sometimes only reflect the views and attitudes of some of the members of the industry and not all of them.”
AMIC response
In response, the GM of AMIC’s Processor Group, Patrick Hutchison, said the council remained committed to a unified approach for tackling the risks impacting Australia’s red meat industry.
“AMIC continues to work with its members, other processors and stakeholders including government and other peak industry councils to enhance the industry’s position globally.
“Our immediate priority, supported by the whole processing sector, is to address critical policy matters that are impacting the competitiveness of the red meat industry such as non-tariff trade barriers and the significant cost of regulatory compliance.
“AMIC, together with its service company Australian Meat Processor Corporation, as a collective processor representative group, continue to work hard to achieve positive outcomes in these areas.
“With greater stakeholder collaboration, we can deliver substantial improvements that benefit the entire industry supply chain.”
Further issues raised by AMIC included that Australian red meat processing was a major manufacturing sector, employing significant numbers of blue collar jobs, many in regional Australia, and was a highly export orientated sector facing significant international competition.
It faced significantly higher costs of production compared with our major competitors such as US and Brazil, while Australia had a significant cost disadvantage through higher levels of red tape and regulation and energy costs.
Producers and processors need to be ‘as one’
Senator O’Sullivan said the production and processing sectors had a very symbiotic relationship, but needed to be “as one”.
Embracing emerging technologies such as DEXA objective carcase measurement units would help to create a more independent, competitive and fairer environment in the relationship between pastoralists and producers, he said.
“It is not a new technology—it has been around for decades—but currently, in its enhanced form, it is almost ready to roll out across the beef processing industry in this country.
“For the first time, testing will be independent—if you accept that a platform that operates effectively and consistently is independent of human influence and interference. It certainly provides the opportunity for objective carcass testing.”
“Why is this significantly important?
“It is important because it does not matter where a producer’s cattle are sent for slaughter; they want two things. They want to be treated fairly in terms of being paid for the commodity, and that payment is of course underpinned by a description of the carcase yield. That is the first thing they want and need.
“The second is that they want feedback in terms of the data that is collected through the use of this technology so that they can make on-farm decisions about breed plans and patterns, genetic selection of size, and dams and so on, right through the entire industry.
“What will that do? That will underpin us and continue to reinforce the reputation that Australia has in the world as being the prime producer of quality beef. Why is that important, Mr Acting Deputy President? You know the answer: we are a trade exposed nation, where over 70 per cent of the beef that is processed in this $12½ billion industry is exported.”
The prospects for the further export of this commodity are very promising, with Australia currently in discussions to sell beef to India.
He said it was very important for the Government to support the industry to get itself into the very best position it can.
Govt will support, but industry must fix itself
But that support should come in the form of tools and pathways which allowed the industry to fix issues itself.
“I say to our government that we need to stay out of this as long as we can whilst we encourage industry.”
“The industry needs to repair these issues and to manage their own affairs without government being involved. Nobody wants more regulation or legislation in any sector, particularly in agriculture and particularly in the beef industry. They need to be urged to fix these things themselves.”
When Barry O’Sullivan says processors and producers “need to be “as one”” he is insisting on a relationship that is impossible to reconcile. It’s like saying Hillary Clinton and Donald Trump should be as one; that the mere fact of coming together would reconcile their differences!! Surely he’s not serious?
Somewhere along the track the Senator seems to have conveniently forgotten that there was a Senate inquiry that discussed all these matters that he and the so called “industry” are trying to rehash; why have the 2014 – 2015 Senate Committee’s recommendations not been implemented?
For the first time in history the Senate did consult widely at the grass roots level but the Canberra bureaucracy refused to implement any reforms at all. The RMAC which is at the centre of this current debate was earmarked to be disbanded, which is ironic really as it along with many other participants in the nationalized “industry” are the reason that the structure has never worked to deliver any sort on equitable share for producers since 1997 and never will, because its dominated by processors.
If O’Sullivan and the Liberal Party simply cannot let go the strings of the Collective that they formed in 1997 and deregulate as the Senate Committee recommends and implement a Stockyards and Packers Act like the United States has, then nothing will happen with regard to Producer Economic Equality. The processors hold the whip hand the same as they have since 1997 and for a century before; forcing producers to be a Cinderella partner to processors under federal legislation (AMLI Act) where they have the controlling interest, has never and never will work for us; it will always favour the Processors.
NLIS, LPA, ESCAS and all the other mandatory “programs” do not put one dollar in the producer’s pocket they only favour the processor economically but they have all been financed by us, the producers. DEXA objective carcase measurement units are the same; we mandatorily finance the new DEXA system (under MLA) to benefit the Processors. The world that O’Sullivan portrays that the processors will voluntarily hand back their perceived profit in any of these “programs” is farcical.
We believe that there is only one way that Producer Economic Equality will achieved that is through federal Legislation, either by the enactment of a US style Stockyards and Packers Act (in its entirety) or a compulsory market price share (under s17 and s18 AMLI Act) based on a percentage of the Urban Retail Price and the Portside Export Price to be mandated as the Registered Producer’s Share of the Red Meat dollar.
We do not believe that any form of compulsory CCA/Cattle Government style of mandatory Cattle Industry representation is either a good idea, necessary or helpful. It will be costly, bureaucratic and will not achieve one dollar of economic benefit to producers, but we will have to pay for it, mandatorily. We strongly believe that CCA should be deregulated and be funded by its members, voluntarily; it is currently funded at least partially by Government, and operates too close to Government.
Also, the proposed CCA restructure undermines our federal parliamentary principals; in this country we vote for candidates to sit in Parliament to represent us, our business, our economic future and our way of life; if our current representatives are not representing us to our liking by failing to safeguard our economic future, as has been the case during the last 20 years, then we should seek representatives to vote for that will.
Government loves the idea of peakbodies as they can go and “consult” with a small number of organisations and claim that their policies are industry supported. O’Sullivan wants a one stop industry shopfront. Just goes to show how little he really understands about the nature of the industry. Peak bodies are organisations that rarely seem to represent the overall interests of the producers and in the case of the beef industry have a funding pipeline that circumvents the need to be producer responsive. Levies are made on the sale of animals and then the squabble about who gets the cash starts. Each bureacratic organisation soaks up heaps of the fund pool in their own little empire employing a raft of “experts” and “projects” that lock producers into higher costs of production. I would suggest that there is also a great deal of mistrust and disappointment between producers and industry bodies as history shows their record of delivering for them is very patchy despite the good intentions. So much that happens in the beef industry today is about shifting risk back down the supply chain. It seems the intention that costs should be sheeted back to the producer wherever possible.
I think your readers may be interested to hear from the two CEO’s of the large meat companies as to why they are no longer members of AMIC.
Perhaps it is because they are unable to wield the same power within AMIC as they are in the saleyards or possibly poor advice from of their lobbyists or simply a lack of business statesmanship
The ACCC Beef Study Interim Report highlighted many problems exist in the beef industry and Chair, Mr Rod Sims has publicly expressed surprise at the imbalance of power between growers and processors. We need to develop regulations to protect farmers and consumers and for that matter processors.
We have the Australian Stock agents Association in denial of any evidence of collusive behaviour in sale yards; we have retailers and processors unwilling to provide transparency; we have MLA downplaying the need for mandatory price reporting; and when there may have been consideration for independent graders in processing plants, MLA suddenly launches DEXA, at a $150 million cost to the producer and we still cannot get a weight at point of sale at sale yards. I’m not confident that ‘industry’ will fix these things themselves.
As a fan of Barry O’Sullivan I think on this occasion he might have the bull by the tail . Barry goes on to say CCA must work to improve representation of members, the simple fact is there is implementation committee working together, to try and get a pathway forward for a truly independent organisation to improve representation of the grass fed cattle producers, this has been incredibly frustrating process. RMAC has had a report tabled explaining how peak councils could be funded, this is a top secret document that may never be published, to me this shows how ridiculous the situation is, As cattle Council have confirmed that funding concerns are the biggest problem facing CCA, Barry’s message to AMIC – to get on with the job and speak with one voice. The processors employ full-time lobbyists to walk the hallowed halls of Canberra, producers organisation operate on a shoestring budget and have no such luxury. Most of the grass fed levy is passed through the MLA which is in contrast to processor levies. The point is that people tend to forget that without producers there is simply no industry and no processors. Barry makes the point processors and producers sector have a very symbolic relationship that needs to be as one, I can’t see this ever happening as processors and supermarkets want to pay as little as possible for stock and are totally against price transparency. Enhancing new emerging technologies such as Dexta objective carcass measurements would help create independent competitive and fair environment. On this point I firmly disagree, the simple fact is Dexa is unproven, added to the fact that we are told that company graders will make the final judgement and it also appears that trimming before the scales will continue. It appears to me that trimming varies from plant to plant and interpretation of grading varies from plant to plant. My understanding is Dexa will not fix these problems in the immediate future.