News

Has the ACCC thrown RMAC a massive hospital pass?

James Nason, 22/03/2017
Producers and industry stakeholders provide feedback to a forum held in Toowoomba as part of the ACCC's cattle and beef market study last year.

Producers and industry stakeholders provide feedback to a forum held in Toowoomba as part of the ACCC’s cattle and beef market study last year.

In the final report from its cattle and beef market study released earlier this month, the Australian Competition Consumer Commission laid responsibility for implementing its 15 recommendations on the shoulders of the Red Meat Advisory Council.

It could be argued that in doing this the ACCC has thrown RMAC one serious hospital pass.

RMAC has been asked to pick up the ACCC’s ball and run with it, despite having no direct authority to enact much of the change the ACCC is calling for.

RMAC’s role is primarily to coordinate, and foster close communication between, the peak red meat industry councils (Cattle Council of Australia, Sheepmeat Council of Australia, Australian Lot Feeders Association, Australian Meat Industry Council, Australian Livestock Exporters Council and the Goat Industry Council of Australia), and to enable the red meat industry to speak with one voice to Government when all peak councils have an agreed uniform position on an issue.

While RMAC is responsible for developing the Meat Industry Strategic Plan, which is largely a vision to guide the industry forward, the responsibility for setting strategic direction and formulating policies in each sector lies with the peak red meat industry councils.

RMAC has other important roles such as managing the red meat industry fund, which helps to fund the annual operating costs of each peak industry council, and overseeing the industry Memorandum of Understanding (more on this below) and developing the Australian Beef Sustainability Framework.

The ACCC does have the option of recommending that Governments change policies or enact legislative change, but rather than taking that option, in this case it has charged RMAC with the prime responsibility to implement its recommendations.

It also wants RMAC to play something of a policing role, by asking it to monitor the industry’s compliance with the recommendations, and to report on the industry’s progress to state and territory and federal ministers each year.

Is this a realistic expectation for RMAC?

For example, RMAC  is already facing a battle to convince processors to regularly publish their price grids, as the ACCC wishes. Processors have already expressed strong concerns about the potential negative consequences of this recommendation.

AMIC itself, the processor’s own peak council, would presumably be hard pressed to push through this outcome, particularly given that the two biggest processors in Australia – JBS and Teys Cargill – are not even AMIC members.

It would seem a recommendation like this would require legislation to truly enforce, and there is currently no legislation in place to support RMAC’s newly directed task of achieving this.

Other recommendations relating to livestock agents – for example establishing a saleyard buyer register, more detailed reporting of saleyard prices, and displaying terms of auctions – are more likely to pertain to a group such as the two national saleyard associations or the Australian Livestock and Property Agents Association, which are not RMAC members, than RMAC itself.

Developing national standardised licensing for livestock agents and commission buyers would require new legislation to be passed in almost every state.

Carcase grading and audits are effectively regulated by AUS-MEAT and under Federal meat export laws, and meat processors have responsibility for individual decisions about objective carcase measurement.

The recommendations related to improving data collection and reporting of direct-from-paddock sales fall under the responsibility of the National Livestock Reporting Service, a division of Meat & Livestock Australia.

One particular recommendation that would appear to fall clearly within RMAC’s remit is the call for the red meat industry to develop a uniform and independent complaints and dispute resolution process.

AUS-MEAT and some individual processors currently have such processes in place, but RMAC could develop its own process as another independent dispute resolution option for the industry.

ACCC: RMAC has responsibility for “whole of industry matters”

Asked why it has handed prime responsibility for implementing its recommendations to RMAC, ACCC agricultural commissioner Mick Keogh told Beef Central that ACCC acknowledged that no single organisation or level of government has the responsibility or the power to implement all of the ACCC’s recommendations.

Mr Keogh said RMAC, as the body with responsibility for “whole of industry matters” under the industry Memorandum of Understanding (MOU) – further detail on this below – comes closest to being an overarching body to progress the matters raised, although has no direct ‘power’ as such.

“The ACCC could have made a recommendation that the Minister direct RMAC to progress the matters raised (see clause 3.2b of MOU below) but generally took the view that it would be better for industry to progress these matters than the Commonwealth Government, noting that the option is available for the ACCC to revisit this issue in the event it seems progress is not being made.”

Peak Council status could be at risk

If sufficient progress was not made, it was possible more Government power could be brought to bear in future.

“It is also noteworthy that the MOU gives the Commonwealth Minister the power to prescribe which organisations should be recognised as Peak Industry Councils, and hence to receive a share of the income earned by the industry fund,” Mr Keogh said.

“It is not inconceivable that the Minister may, at some point in the future, decide that sufficient progress has not been made, and that as a consequence specific organisations should no longer be recognised as Peak Industry Councils.

“Of course, this would be a decision for the Minister, and the ACCC is making no recommendations on that issue in this report.

“It should also be noted that a Senate Inquiry into these same issues is yet to finalise its recommendations, but has engaged in very close consultation with the ACCC about its findings and recommendations.

“It is open to that Senate Inquiry to make stronger recommendations about the role of the Australian Government in implementing changes within the industry, and that would seem more likely in the event that RMAC and Peak Councils appear reluctant or incapable of taking on the reforms that have been recommended.”

The Senate Inquiry into competition issues in red meat processing is technically scheduled to hand down its final report next week on March 30, but it seems likely that deadline will be further extended, because more public hearings are still planned.

When the ACCC’s released its recommendations earlier this month, Beef Central asked RMAC if it felt the responsibilities it had been given were within its remit or sphere of influence.

CEO Anna Campbell said at the time that RMAC was still considering the ACCC’s recommendations and would respond in due course.

It would seem a formal response from RMAC is not likely until after its board (which comprises the presidents/chairpersons of the red meat peak councils) holds it next formal quarterly meeting, which is scheduled for next week.

 

Extract from Red Meat industry MOU:

3.2 Role

The role of RMAC will be:

(a) to consult with the Minister on agreed whole of industry matters including matters arising out of licensing and quota administration;

(b) to respond to the Minister on issues the Minister raises with it;

(c) to be custodian of the MOU and MISP and promote and guide the assessment and progressive development of these understandings and plans;

(d) to develop and keep current a reserves investment strategy (within conditions for the transfer of assets determined by the Minister) which has regard to, among other things:

(1) the need to fund Peak Industry Councils from income from net industry reserves; and

(2) any other application of net industry reserves for the benefit of the industry that is permitted under the conditions for transfer;

(e) to administer, and to report to industry on:

(1) any distribution of income from net industry reserves which is allocated towards funding Peak Industry Councils; and

(2) any other amount available from net industry reserves administered by it under conditions for the transfer of assets determined by the Minister;

(f) to co-ordinate and fund development/update of MISP with Peak Industry Councils as well as monitor and report on progress in delivery of its responsibilities;

(g) to review and provide support to the effective working of the interface between the Companies (as set out in the Statement of Principles) as regards fund flows, contracts and AUS-MEAT or partnership arrangements; and

(h) to foster harmony on appropriate issues and provide a forum for prevention or resolution of conflict across industry sectors or Companies.

 

 

 

 

 

 

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Comments

  1. Loretta Carroll, 23/03/2017

    James you raise some very good points and it is concerning that the ACCC have made these recommendations when RMAC does not have legal authority or the organisational remit to take this role on.

    I also read with interest Mick Keogh excellent article on the 20th regarding transparency where he refers to a recent report by the E U Commission on improving competition in agriculture. Out of their recommendations was a call to increase market transparency so as to foster effective competition along the supply chain. The report recognised downstream operators usually have a clear view of the market while farmers – often fragmented and small – do not.

    Along with other benefits Mick discusses the need for accurate and complete market information to support evidence based policy measures and emphasises a key factor in ensuring markets remain competitive is market transparency and that transparency ensures gains within the market are distributed equitably. What strikes me are the similarities between the E U report and the detail in our very own Milestone 2, 3 and 4 reports investigating price transparency which clearly favoured mandatory price reporting.

    Let’s hope the senators show some leadership and and action real reform.

  2. Tom Morris, 23/03/2017

    Thrown a hospital pass? What about another metaphor for a country that is punch-drunk on regulation?
    The amazing thing about all this is that the ‘clear-headed thinkers’ just don’t see that our industry is slowly pricing itself out of world markets. In fact we are pricing ourselves off our own Australian menus and we are getting wind burn from the speed at which pork and poultry consumption figures fly past us.
    Has anyone ever stopped to think what the ‘cost of compliance’ is for our industry? Every regulation has a cost to implement, a cost to audit, a cost to maintain the systems in the business to comply with that regulation. It has been sold to us in many forms; keeping us safe, protecting the environment, saving the Barrier Reef, protecting market access, protecting us from ourselves etc.. Most commonly though, as Quality Assurance and it is simply dismissed as the ‘cost of doing business’.
    Why not quantify it and call it what it is, the ‘COST OF COMPLIANCE’? How much is it?
    Every small business that talks to politicians talks about ‘cutting red tape’. I think one of our Prime Ministers even set up a ministry to ‘cut red tape’. Where are those results from that initiative for our industry? What red tape has been cut? I think pollies cut red tape in two; give it to bureaucrats to sort out and then it comes back as four pieces of red tape.
    As a southern NSW producer who sells weaners off the cow, I often wonder how many of my weaners are consumed along the chain in meeting the horrendous cost of compliance in our industry? I know we have to pay for it because the processors pass all the other costs down the chain to us. They tell us they can’t pass them up the chain because they can’t compete in world markets. You know the old stuff about we are twice as expensive as America, five times as expensive as Indonesia to process cattle.
    Surely the clever guys at Beef Central can tell us how many hundred thousand head of weaners nationally are being consumed in servicing our industry’s ever-growing ‘cost of compliance.’ I think we would be shocked! I wouldn’t mind a few of my weaners back, please.

    Thanks for the ‘homework’, Tom. We’ll endeavour to do some consultation with processors over representative costs, and put some sums together as you describe in an article. Editor

  3. Katherine, 22/03/2017

    RMAC has one staff member who is called the CEO!!!! An organisation that has no power, no capacity to complete the assignment prescribed by ACCC. RMAC is a small organisation with little relevance especially as JBS and Teys both chose to reject AMIC, a member of RMAC. Wasn’t there questions raised last year that RMAC would fold?

    Full disclosure on names required for future comments, please Katherine, as per our long-standing reader comment policy. Here’s the reason why. Editor

  4. Eion McAllister, 22/03/2017

    Governments just love to have a one stop shop where they can have significant influence by restrictions placed on so called peak bodies via the MOU’s and legislative frameworks that they are established through. They love to be able to say that they have consulted and have so called industry support through the imprimatur of bodies. It is evident that the peak Councils have many and varied views and it is really difficult for an overarching body to represent everyone’s position with conviction or success. Keogh making the point that the Minister, read Government, has the power to select who they want to be the peak representative body, shows the elephant in the room which is always there. The RMAC always has to be “careful” in its relationship with the Minister because it’s survival depends on Ministerial support. It would be difficult to believe that the ACCC hasn’t had some interaction with the heirachy about the contents of the recommendations by the ACCC and the cats that are among the pigeons within its pages. To expect the RMAC to be able to bring significant changes into the industry is to my mind a bit of a wishful thought. It really has no great capacity to deliver change of the scale that the recommendations encompass. I wonder how this can be implemented when the Minister is virtually silent on priorities and must clearly see the limitations that RMAC has to operate within. I can see the significant conflicts that are going to come out of the progression of these issues and RMAC seems to be given a truly poisoned chalice and not much in the first aid kit.It seems that the government really doesn’t seem to want to say very much. Saying it wants the industry to sort it out without stating what it sees as being the key reform priorities and some vague ambiguous statements about possible intervention by the Minister if things aren’t happening quickly enough under RMAC’s efforts. How can the Minister measure the success of the RMAC’s efforts and decide to intervene if he is not on record about where it’s efforts need to be and what support he is prepared to provide it with? If not , the RMAC would seem to be set up for a fall. But then I am only a lowly producer and very low on the food chain within this industry so what do my my thoughts really count for?

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