Beef producers supplying export markets could indirectly be slugged with a substantial new cost, following a Federal Government decision to back-down on earlier commitments to financial support for the AQIS export inspection reform agenda.
The decision revealed yesterday basically reneges on a part-funding commitment between the Government and commodity groups using export inspection services, including meat, dairy, live export and grain.
It is unclear at this point whether all commodity areas will be equally affected. Australian food exporters this morning expressed anger at the Federal Government's decision to end part-funding export inspection costs.
It is understood that Federal Agriculture Minister Joe Ludwig supported the financial support agreement put in place by former Ag Minister Burke, but was denied funds by Treasury as the process went to Cabinet. As a result, last week’s Federal Budget made no allocation to assist exporters in paying AQIS Service fees.
As is inevitably the case with such costs imposed on processors, beef producers will carry the burden of the charges, passed on in the form of lower livestock prices. Based on national cattle kill, one estimate suggested the cost per beast slaughtered could be about two thirds of the current cattle transaction levy figure of $5.00.
Whatever the amount, it will be inserted on the debit side of the ledger by processors, and factored into future pricing structures for livestock across Australia.
The shock decision will inevitably be a hot topic for discussion when the Australian Meat Industry Council’s Export Processor Council meets in Sydney today.
The AQIS reform process has been grinding-on for the past three years or more. While there has been some reforms implemented, the costs are still to be recovered by government, worth around $50 million annually.
An earlier Howard Government review found exporters should pay the full export fee cost rather than the 60pc they now pay. The Rudd Government agreed, but gave exporters a temporary reprieve, allowing them time to find more efficiencies within the export inspection system.
- See Shadow Ag Minister John Cobb's press release, issed later today, for further comment.