CCA grassfed levy proposal: What do other peak councils think?

OTHER peak industry bodies are wary about passing judgement over the Cattle Council of Australia’s bid to secure grassfed levies under an industry restructure proposal, before more details and clarity emerges.

As Beef Central revealed last Friday, (click here to view original story) CCA has effectively mounted a bid to implement appropriate reforms that would make CCA capable of accepting the role of being a producer-owned body that can also function as the representative body for industry.

In essence, what would happen is this:

A new beef producer body would be formed which has the authority for levy investment, has the capacity for policy development and is permitted to advocate policy positions on behalf of industry
The body will receive the Cattle Transaction levy and have the authority to disperse these funds to Meat and Livestock Australia and other service providers
Levy payers will be the owners of the company and eligible to register as members
The board of the producer body will be elected on a zonal or geographical basis, and
Existing committee and producer forum processes would be used as a consultative mechanism for levy expenditure.

Should it be successful in convincing agriculture minister Barnaby Joyce to implement such a structure, it potentially throws into question arrangements currently in place between MLA and other peak council groups, including Sheepmeat Council of Australia, Australian Lot Feeders Association and the Australian Meat Processors Corporation.

Beef Central approached the three bodies seeking their initial reaction to the CCA proposal.

What happens to joint programs?

The future of jointly-managed and funded industry programs will be an area that comes under close scrutiny under any move to adopt the CCA model, processors suggest.

Australian Meat Processors Corporation chairman, Stephen Kelly, said any proposal to change the direction of where grassfed levies go was a matter for discussion purely among grassfed producers.

AMPC chairman Stephen Kelly

“However, should a new entity be set up where MLA no longer receives the grassfed levy, but it is managed by a producer entity, we need to engage with the new group about what joint activities they wish to engage in. They may wish to continue with the status quo, but if not, then the industry needs to understand that, and make other arrangements,” Mr Kelly said.

“If CCA should get access to the grassfed levy, as is proposed, and decides it does not want to invest in some of the activities that have historically been jointly-funded, then that is their prerogative. But in that situation the processor group would obviously make other arrangements to either continue on with the same activity, or do something different,” he said.

The AMPC currently contributes to quite a number of jointly-funded programs with MLA, and has done for many years. These programs cover areas like food safety, market access, domestic promotion, biosecurity, and the management of NLIS and AusMeat.

To put the joint programs into some perspective, the financial contributions from the grassfed levy, grainfed levy and processor levy (and in some cases live export levy), together with Government contributions, cover a broad part of MLA’s total expenditure.

For example, the processor group contributes somewhere between $10 million and $11 million to those joint programs annually.

Mr Kelly believed that the joint activities supported by producer and processor were as essential now as they had ever been, and would continue to be so.

“It benefits the whole of industry, not one sector or the other,” he said.

Mr Kelly said there is nothing to suggest that jointly-funded programs were under any jeopardy for financial year 2015, with budgets and allocations already in place. It’s perhaps what happens after that where the attention will start to focus.

“It is unlikely that the Federal Government would make wholesale changes in this area without all of industry endorsing what is proposed,” he said.

“There’s been a lot of politics around what has transpired, and what has come out of the Senate inquiry, but it not for processors to either endorse or criticise what may, or may not come about. But what we would say is that whatever entity is put in place as the controller of grassfed levies, that we need to continue to work together.”

While some beef processors are in fact very significant levy payers in the grainfed beef levy stream, due to their ownership of commercial feedyards, the grassfed levies paid by processors are insignificant.

Prospect of ‘merger’ with grainfed sector?

CCA’s letter of intent to peak councils last week states that while the proposed new body will apply to grassfed levies only, it planned to approach the Australian Lot Feeders Association to discuss its possible inclusion in the new body.

ALFA executive director Dougal Gordon said it was on the public record that ALFA was supportive of a direct-membership, direct board election model, as applied within its own organisation.

“It’s something we have been encouraging CCA to consider putting in place for some years,” he said.

“However we’ve also stated on the public record (most recently in submissions to the Senate Inquiry) that ALFA is not in support of the direct use of levies for strategic policy development purposes.”

Mr Gordon said it was still too early to consider how jointly-funded project work would be carried out under any revised structure model, because that would depend on which permutation and model was put in place.

“As CCA’s letter shows, it has offered to amalgamate with the grainfed levy stream. If that was to happen, certainly the issues of joint funding would be far more easily resolved.”

“But there’s a lot we need to consider first, and it’s why ALFA has gone back to Cattle Council, seeking more detail. There’s a whole heap of ramifications that need to be worked through – how the proposed structure would work; what level of autonomy the grainfed sector through ALFA would have, in terms of its continued control of the grainfed levy; and how the board would work. This is still very much a concept only, and there’s just so much detail to be worked through before any judgements are made,” Mr Gordon said.

Sheepmeat Council president Ian McColl was shearing this morning, and was unable to respond by Beef Central’s news deadline.

While Minister Joyce does not have a deadline to meet in order to make any decisions about the restructure, he is obliged to respond to the Senate inquiry findings within 90 days. A month has now passed since the findings were released publicly on September 9.

Here’s Beef Central’s extensive coverage of the CCA levy proposal since the news broke last Friday: