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Deadline nears for Senate beef inquiry submissions

James Nason, 18/02/2014

A total of 27 submissions have been received so far for the forthcoming Senate Inquiry into organisational structures and levy arrangements in the grassfed cattle industry.

The opportunity to lodge submissions closes in 11 days time on March 1.

From that date the Senate Rural and Regional Affairs and Transport Committee will commence a series of public hearings, beginning in Canberra on March 7, before reporting back with recommendations to Government on Monday, June 30.

The inquiry was instigated at the request of federal agriculture minister Barnaby Joyce late last year, in response to what he described as repeated criticisms over a long time about the effectiveness of organisational structures and compulsory levy systems in the grassfed beef cattle industry.

Mr Joyce said at the time a Senate Inquiry offered the fairest way for all interested parties to lay their cards on the table, and then for an independent committee of Senators from all sides of politics to consider whether existing structures and levy systems were performing adequately.

At this point it is unclear what will happen should the committee conclude on June 30 that existing arrangements are not meeting the industry’s needs, but if so a Government-led industry restructure would seem a likely outcome.

The submission process allows any member of the public to lodge a written statement outlining their views. Several of the 27 submissions lodged so far are from authors who indicate an alignment with the Australian Beef Association, which has long argued that existing industry structures put in place following a review by then agriculture minister John Anderson in 1998 were undemocratic and inadequate to address the needs of the industry.

Recurring views contained in submissions received to date include:

  • Since the inception of MLA and a compulsory cattle transaction levy of $3.50/head (later rising $5/head) in 1998, and despite expenditure of $1.6 billion in levies and matching funding since that time, farm-gate prices for cattle producers have not improved in real terms, while costs of production have soared. During the same time per capita beef consumption has fallen dramatically while chicken consumption has grown, underscoring the view of several submissions so far that MLA has failed to deliver value to grassfed producers who have no choice but to pay for it;
  • An often-expressed concern is that producers are not receiving a fair share of the final value of their product, with many submissions blaming this on a lack of competition in the processing and retail sector.
  • Many submissions also state that MLA or any future organisation that replaces it should only represent the production sector, stating that it is not possible for one organisaiton to fairly represent producers and processors. “As producers we want the highest possible price for our beef, processors want to buy our beef at the lowest price, how can one body fairly represent us both? There is too much conflict of interest, this is an untenable situation,” was how NW Queensland cattle producers Ryan and Tracey Hacon explained their concerns.
  • Several submissions describe the existing voting structure as undemocratic, stating that producers who contribute the greatest share of MLA's revenue have little ability to influence the make-up of the MLA board or decisions on how levies are invested. Despite paying a $5 compulsory levy, some submitters have expressed frustration that membership of MLA is still not automatic, and that they must apply to become a member as a separate action and then apply for voting entitlements in time for each MLA annual general meeting. “Compulsory taxation should at the very least mean automatic membership and voting entitlement,” producers Colin and Jocelyn Gordon said in their submission.
  • Others criticise the MLA board election process. One submitter asked why, when there were three vacancies to fill on the MLA board and more 90 candidates applying for those positions, MLA members were given the choice of only three candidates to vote upon at the AGM, with the remaining candidates already discarded by a selection committee containing three sitting MLA board members, one delegate each from ALFA, CCA and Sheepmeat Council and three  producer-elected representatives.
  • Cattle Council of Australia’s decision to accept direct levy funding from MLA has also been criticised, with opponents stating that the peak grassfed representative organisation can not maintain independent oversight of MLA when it has to go “cap in hand” to MLA for the money it needs to keep operating.
  • Some want to see the full Cattle Council board elected from a vote of all producer members, with no influence from State Farm Organisations at all, and believe it should be given full control over the expenditure of the $50m plus generated in grassfed producer levies every year.
  • Opposing calls for CCA to receive direct levy funding, the Australian Lot Feeders Association in its submission warned that any move by CCA to use levy funds for “strategic policy development activities” would stymie long-term structural change, raise conflict of interest issues and create transparency and accountability concerns. It suggests CCA should adopt a similar model to itself, based purely on revenue from direct memberships, conducting industry events and corporate sponsorship, with no SFO membership at all. “A direct membership model would lead to improved linkages, transparency, accountability, services and financial options for the organisation,” the ALFA submission states.
  • A number of submissions suggest the Cattle Transaction Levy should not be set a flat rate, and should instead be based on a percentage of gross sale value, and therefore adjust up or down in line with the market value of cattle. Numerous submissions also called on the beef industry to adopt the voting system similar to that used by the wool industry, where every levy payer is automatically entitled to a vote, and a referendum of growers is held every three years to determine the level at which compulsory levies are set for the following three years.
  • A commonly expressed sentiment was that the costs of beef cattle production should be regularly monitored in future and that those costs be reflected in what is paid for cattle to maintain a profitable production sector going forward. “Prices have remained too low for too long and there is no incentive to keep going,” Northern NSW cattle producer Mike Kena wrote.  “Australian meat is sold all over the world and achieves prices in line with best world standards yet the price paid to farmers at the farm gate is in line with that of third world countries, where their costs of production are much lower,” producer Christopher Walton said in his submission.

While most submissions lodged to date express clear support for structural change, one lodged by the Australian Registered Cattle Breeders Association warns against a dramatic overhaul.

“ARCBA believes that industry restructure put in place in 1998 by the then Agriculture Minister, the Hon. John Anderson, has served the industry well and has been a big improvement on the situation that existed before the change,” ARCBA executive director Steve Skinner writes.

“A key feature of the restructuring was the appointment of peak industry councils who provide the oversight of the expenditure of the transaction levies, which is then carried out by professional service provider bodies such as the MLA and AHA.

“In this regard, ARCBA considers that the current review should concentrate solely on governance issues surrounding the grass-fed cattle transaction levy and not delve into the other areas of the industry’s structures.”


To view existing submissions so far or for details on how to lodge your own, click here to visit the Senate Inquiry home page. 

 

 

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