News

Govt close to grassfed restructure response

James Nason, 09/04/2015

The man who holds the whip handle over the fate of the long-running grassfed cattle industry restructure process is expected to show his hand in coming weeks.

Agriculture Minister Barnaby Joyce commandeered the protracted and conflict-ridden cattle industry restructure process in November 2013 when he initiated a senate inquiry into grassfed industry structures and levy systems.

His actions were in direct response to the deep divisions plaguing the industry, starkly illustrated by the large number of discordant groups claiming to represent the interests of grassfed cattle producers.

The Minister said at the time that he had long heard concerns expressed by growers about farm-gate returns and a lack of control over their grassfed levies, and believed a Senate Inquiry offered the best way to confront and deal with those issues in a fair, objective and independent way.

The subsequent inquiry involved several public hearings around Australia and resulted in seven recommendations for industry reform which were handed down in September last year.

Chief among them was a recommendation for the creation of a new grassfed producer-owned body to receive and disperse cattle transaction levy funds for marketing and R&D purposes, funds which currently flow to Meat & Livestock Australia.

The committee also recommended the establishment of an automated system to accurately identify levies paid by each producer and to allocate precise voting entitlements accordingly; the reallocation of cattle transaction levies paid by processors on eligible cattle to slaughter levies (meaning those funds would flow to AMPC); a comprehensive audit of the existing cattle transaction levy system; the dissolution of the Red Meat Advisory Council; the revocation of the MLA Donor Company and a cost-benefit analysis of introducing US-style mandatory price reporting legislation in Australia.

The Minister made it clear during the restructure process that he wanted grassfed producer groups to come up with their own solutions and united model for reform.

In mid-February, several grassfed groups including the prescribed peak industry body the Cattle Council of Australia, along with the Australian Beef Association, the Australian Meat Producers Group and Concerned Cattle Producers, presented Mr Joyce with a unified industry restructure model.

Their model involved creating a new national grassfed cattle industry representative organisation to represent all levy paying cattle producers in Australia.

The model involves dividing Australia into 15 cattle producing regions and giving all levy paying producers the opportunity to vote for a grassfed cattle producer to represent their region on the new organisation.

That would create a national policy council of 15 directly elected councillors. From that group, a board of seven directly elected councillors would be elected to manage the organisation. The board could also be expanded with the addition of two skills-based members if required, or an independent president.

The grassfed groups’ unity model goes part of the way towards delivering on the Senate Committee’s first recommendation, but does not yet detail how it would be funded.

However, there is a clear expectation among the grassfed cattle industry groups involved that at least some levy funding should be re-diverted to help fund the activities of what would be a new and fully-consultative organisation for all levy payers.

CCA president Howard Smith told Beef Central earlier this year that the new grassfed levy-payer owned and dedicated organisation would have to be funded by levy payers in some way, with options including redirecting a portion of the levy and/or increasing the new body’s control over existing levies through the Memorandum of Understanding and Statutory Funding Agreements.

Most debate among the groups involved appears to revolve around the question of whether the new organisation should receive all or just some of the grassfed levy funds.

Critics of the model put forward have argued that a producer representative group should receive no compulsory levy funding at all and should stand on its own two feet through direct membership fees, conference proceeds and/or corporate sponsorships.

Following their presentation in mid-February, Minister Joyce told the media he expected to have a Government response to the seven recommendations of the Senate Inquiry and thoughts on how the cattle industry restructure should proceed by mid-April.

That brings us to where we are now.

The future of the entire restructure process as it currently stands now hinges on what Mr Joyce announces in coming weeks.

A spokesperson for the Minister’s office told Beef Central this week that a response was close to being finalised, but could not be formally released until all relevant Federal Government portfolios had signed off on it.

Any decision that relates to statutory levies and associated funds, for example, would also require approval from the Department of Finance and the Treasury.

One issue of significance in this debate surrounds the fate of the $44 million Red Meat Industry Fund, should the Senate Committee’s recommendation to wind up the Red Meat Advisory Council (RMAC) be adopted.

The fund is currently managed by RMAC, and is used to provide funding support to all red meat industry peak councils.

The fund was created following the windup of the Australian Meat and Livestock Corporation in the 1990s from money left over from processor and producer levies and the sale of Meat Research Stations.

While industry would naturally see the remaining $44m as “industry” money, Federal Government rules see it differently. Under prevailing scheme rules and guidelines, winding up RMAC would result in that funding being absorbed directly into Federal Government consolidated revenue, and likely to be lost to industry.

It is one of the many reasons why the whole supply chain is watching the Minister’s forthcoming announcement with great interest.

 

 

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