Likely outcome of grassfed restructure now looking clearer

James Nason, 03/11/2014
Biosecurity programs underpinning Australia's multi-billion dollar beef industry are being 'run on the smell of an oil rag'.

The likely outcome of a three year restructure process is finally looking clearer after CCA voted to support the recent Senate Committee recommendation. Picture: Ken Hinze.

For the first time since the grassfed cattle industry embarked on a serious restructure process some three years ago, the likely outcome is finally looking clearer.

Key industry groups are now broadly aligned behind the same basic restructure model after Cattle Council of Australia (CCA) last week agreed to accept the main recommendation of the recent Senate Inquiry into the grassfed industry.

The model will see a producer owned and elected body – likely now to be a reformed version of Cattle Council of Australia – take over full control of the roughly $50 million generated in grassfed cattle levy revenue each year and matching Government funding for research and development.

At present grassfed levy funding and matching Government funding flows directly to the industry service organisation Meat & Livestock Australia, which in turn is overseen by the peak industry council CCA.

A common theme of feedback to the recent grassfed beef inquiry was the lack of control producers feel they have over how their levies are invested under the current structure, and the view that grassfed levies should be directly controlled in future by a board of directly elected producers.

CCA’s decision last week to support the first recommendation of the Senate Inquiry means there is now relative agreement among industry groups around the broader principles of how a producer body to manage the levy should be formed.

There is still much detail to be worked through before the industry can put a united restructure proposal to federal agriculture minister Barnaby Joyce to consider. (As the final model will involve a redirection of statutory levy funding and changes to legislation, it will require the support of Government to proceed).

However, it is also possible now to see a clearer picture of what the final body is likely to look like.

In a letter to industry groups last week Cattle Council said the new body would:

  • have the authority for levy investment, the capacity for policy development and be permitted to advocate policy positions on behalf of industry;
  • receive the Cattle Transaction levy and have the authority to disperse those funds to Meat and Livestock Australia and other service providers;
  • incorporate a vote of levy payers every few years to determine the rate of levy;
  • be owned by levy payers, who would be eligible to register as members;
  • have a board with each director elected on a zonal or geographical basis; and
  • use existing committee and producer forum processes as a consultative mechanism for levy expenditure.

As indicated above, producers who pay the cattle transaction levy would automatically become eligible to participate in the new body, and to vote in and stand for elections.

Issues such as how votes are allocated, such as on a ‘one levy-payer, one vote’ basis or via a two-tiered system combining a one vote per levy payer system with a separate register of votes calculated on the amount of levies paid, are among the details yet to be worked through.

Role of SFOs

Also, what role should State Farm Organisations play in the new body?

One common concern raised by producers about the restructure model adopted by Cattle Council of Australia earlier this year was that only two board seats were given to directly elected members while State Farm Organisations were each given one board seat each.

Many producers and organisations told the Senate Inquiry that the the board of the peak industry council should be fully directly elected to enable it to claim to speak for the entire grassfed cattle production industry.

Mr Matz said it was envisaged that the new board will be formed along regional lines with directly elected members representing each zone.

No board seats would be quarantined for SFOs.

However he said SFOs would still play an important role, perhaps at a committee/taskforce level below the board for example, in providing representation for producers on important state issues.

“We can’t ever walk away from the fact that 50pc of the legislation that gets developed is state legislation, so there is going to be cross over between what happens federally and what happens at state level.

“So there will need to be a close relationship between this body and SFOs, but I don’t see that as necessarily needing to be as close as it is now. It is more a matter of some type of associate membership or even just an informal relationship.

“The positives for State Farming Organisations are that they will no longer need to financially contribute to this organisation so therefore that will free up more of their resources to allocate to other priorities like State issues.”

Levy funding and agripolitics

Another key issue is whether this organisation would still be able to engage in ‘agripolitical’ work if it receives socialised levy funding.

Mr Matz said CCA’s proposal is that the new body will be able to undertake strategic policy development, which he says is different to agripolitcal activity.

There is an existing precedent in the constitution of Australian Pork Limited. APL is levy funded but is not permitted to engage in ‘agripolitical activity’, which is defined in its constitution as running a political campaign or contributing to political campaigns.

“We don’t think this body should be able to do that either,” Mr Matz said.

“But certainty we do think it should be able to advocate policy. And we think that is an appropriate use of the levy. It is not agripolitical activity, it is just advocating the policy position of the beef industry.

“And if I was Government I would be looking at that and saying that makes my job easier, because I know what the beef producers want, they have gone out and done the work for me, they have gone out and said, this is what we want done for our industry, so I wouldn’t be scared of a beef producer group advocating its policy at all.”

Does this leave MLA on ‘death row’?

Does the seemingly industry wide agreement on the basic principles of this model mean that MLA is effectively now sitting on death row?

“Not at all,” is Mr Matz’ rapid-fire response.

He says there will continue to be an important role for MLA if this model proceeds. The new structure would allow MLA to focus on its core business of marketing and R&D, without being concerned with policy and consultation processes which would be undertaken by the new body.

“All MLA would need to do is to talk to this new body, and this new body will talk to all beef producers,” Mr Matz said.

“MLA does do extraordinarily important work. I think there will be an important role for them if this structure was ever brought forward because we are talking about this organisation only having the ability to invest the money, and it would still need organisations there to do the work.”

Asked if he believed the restructure of MLA currently being undertaken by managing director Richard Norton may now be redundant if it loses direct access to the full grassfed levy, Mr Matz rejected the assertion.

“There is a lot of water to go under the bridge before this proposal may or may not even happen, and the work that Richard is doing is still important work that is happening right now to make MLA a more lean and mean and appropriate organisation.

“The industry is evolving and structures within the industry are evolving, the work that Richard is doing is an important part of that evolution.”

Mr Matz said another issue yet to be resolved was whether the new levy funded body would still require a voluntary membership component to provide voluntary income to fund work deemed to be outside the appropriate use of the levy.

“There are a lot of those detailed discussions we have to have and certainly I don’t have the answers to those questions, but hopefully I can facilitate a process that delivers the answers.”

  • Tomorrow – industry reaction, including what do these developments mean for MLA? Beef Central talks to MD Richard Norton




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  1. john carpenter, 03/11/2014

    The CTL should be converted to a slaughter levy.This would cut out live exports and fix the north/south divide problem.The attention of the new cattle corp could therefore be solely focused on the only thing that really matters i.e. improving the quality of Australian beef.There is no role in this restructuring for the SFOs or the CCA or MLA all of which have failed totally.

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