Industry responses continue to flow in response to the Australian Competition and Consumer Commission’s (ACCC) update report on the Cattle and Beef Market Study released last week.
The Australian Meat Industry Council and Cattle Council of Australia have both challenged the regulator’s assessment the industry is dragging the chain on implemented recommended reforms.
In contrast the Cattle Producers Australia Implementation Committee has released a statement criticising industry groups for disputing the ACCC’s recommendations and report.
The Australian Meat Industry Council (AMIC) representing meat processors and retailers said it does not agree with the ACCC’S assessment that there has been too little progress on implementation of its beef market study recommendations, and that cooperation and transparency in the industry is limited.
AMIC does not agree with this assessment, which does not reflect the progress we have made and our commitment to openness and continual improvement,” AMIC CEO Patrick Hutchinson said.
“It continues the theme the market study has projected from the beginning, that the processing sector is a significant cause of difficulty in livestock producers maintaining profitability.
“We have always understood that transparency around key market information is vital for competition.
“This essential information is readily available, including cattle and beef production data from the ABS/MLA, carcase quality information through MSA supply chains and MLA’s Livestock Data Link. AMIC believes that there is not a strong enough case for the benefits to industry of mandatory price reporting.”
Mr Hutchinson said livestock price grids were made available to producers on request.
AMIC did not support a mandatory requirement making price grids public.
“Some processors may wish to publicise grids, but this is a commercial decision,” Mr Hutchinson said.
“It is AMIC’s view that livestock producers are proficient players in a free market.
“Responsibility must lie with the producer to make themselves aware of the market they are selling into, and under what conditions the trade will occur.
“Other data, like prices agreed between processors, wholesalers, retailers and exporters, is not relevant to the producer.”
The ACCC report notes that most processor cattle transactions are direct purchases from farmers. This indicates that it is a popular method of sale for a majority of producers. The saleyard system is still freely available to those that would prefer to sell through that channel.
The report also speaks to the potential development of derivatives mechanisms such as futures and options. While this approach might assist in managing price risk and volatility, we cannot assume that it will fix all ills. The US experience suggests derivatives markets for agriculture do not always accurately reflect true supply and demand-driven market value for the products themselves, but are often largely influenced by speculators and derivatives traders with no skin in the game.
Cattle Council of Australia also said it did not agree the ACCC’s assessment.
“The update had not adequately considered industry’s positions and Cattle Council continues to be frustrated by the lack of consultation conducted by the ACCC following the release of the initial study,” CCA president Howard Smith said.
“Several of the recommendations made within the study are simply not practical for industry to implement and would increase regulatory burden”.
Cattle Council said it sees competition policy as being an avenue in which to ensure that transparency is implemented to the benefit of producers in making decisions for their business.
However, this information must not risk undermining our international competitiveness.
“We know that our international trade partners have access to, and have utilised in the past, information published by the domestic industry in negotiations with Australian companies,” said Mr Smith.
“This is a risk to our industry that needs to be managed.”
Mr Smith said industry continued to work to:
“Cattle Council is committed to ensuring that the information currently available is able to be utilised by producers to inform their business decisions,” Mr Smith said.
“Over the coming financial year Cattle Council will be continuing to facilitate workshops and webinars with producers around better utilising information available currently in processor grids, market reports and other materials.“
The Cattle Producers Australia (CPA) Implementation Committee chaired by Taroom, Qld, cattle producer Dr Paul Wright, releaed a statement congratulating the ACCC for continuing to push for reform in the industry.
Dr Wright said existing industry bodies were “acting shamefully” in disputing the findings from the two Senate inquiries and the ACCC red meat study.
“To suggest the evidence has not been forthcoming fails to recognise the content of the dozens of submissions that were put to the inquiry,” he said.
Dr Wright said it was pleasing the ACCC had drawn attention to the stalled reform process.
“It is evident current industry organisations are not correctly structured and are not capable of accommodating the necessary reforms required by grass-fed cattle levy payers under the present industry structures,” he said.
“The recent update report clearly demonstrates the ACCC’s surprise at the degree of resistance against their recommendations from the many national industry bodies that represent the interests of some producers.
“It goes on to provide the view that much of the inaction relates to entrenched industry positions and a desire to keep the market impenetrable, limiting the bargaining power of producers and their ability to push for change.
“Commissioner Keogh says, inaction suggests that either industry participants do not understand the value of transparency, or it does not suit the interests of those who are in a position to make improvements.”
Dr Write said recent senate inquiries and the ACCC’s market study had consulted widely across Australia. For industry groups to say the ACCC was not listening to industry was a failure on their part to listen to producers, he said.
He said under the current structure grassfed cattle levy payers were largely unrepresented in the decision-making process.
“The CPA seeks to address these shortcomings in producer representation by mandating that every grassfed cattle levy payer has direct input and voting power in an organisation to specifically represent them.”
Dr Write said Cattle Producers Australia was recently established as an incorporated body in accordance with the historical, unified agreement back in 2015 of all grassfed cattle producer bodies to establish a new democratic organisation to represent all grass-fed cattle levy payers.
He said CPA’s constitution will stipulate direct grass-fed cattle producer voting power to determine its policy, and plans were underway to launch a membership drive in early June.