News

Industry restructure: Where does Barnaby stand?

James Nason, 05/12/2014

Producer forumWhere is Barnaby on the grassfed cattle industry restructure debate?

It is a question increasingly being asked as a restructure process that began in the grassfed cattle industry threatens to engulf Australia’s entire red meat sector.

It is almost three months since a Senate Inquiry Mr Joyce instigated into grassfed industry structures and levies handed down its final report and recommendations.

Mr Joyce initiated the inquiry in November last year just two months after taking over the agricultural portfolio, in response to grassfed producer concerns about the performance of their peak industry council Cattle Council of Australia and the levy-funded service organisation Meat and Livestock Australia.

The ensuing inquiry opened a Pandora’s box of deep-seated industry divisions, diametrically opposed views on restructure solutions and far-reaching recommendations for change that went far beyond the grassfed cattle sector alone.

The committee’s first recommendation called for the re-direction of all grassfed levies away from Meat & Livestock Australia and to a new grassfed producer owned, elected and controlled group.

Other sectors face serious ‘collatoral damage’

Removing more than 60pc of MLA’s existing revenue would inevitably affect its ability to continue to operate as it currently does, which has ramifications for all red meat sectoral groups that also pay levies to MLA and rely upon it to conduct research, marketing and extension services for their own industries.

Senators also recommended that grassfed and grainfed levies paid by processors on cattle they own be re-directed in future to the Australian Meat Processor Corporation (AMPC) instead of to MLA.

This is a big deal for the grainfed sector in particular. An estimated 60pc of the $8 million generated annually in grainfed levies is paid by processors on cattle from their own grain-feeding operations.

The reclassification of these grainfed levies into processing levies would have serious implications for the operating budget overseen on behalf of the grainfed sector by the Australian Lot Feeders Association.

A further recommendation called for the Red Meat Advisory Council (RMAC) to be dismantled.

The council provides a formal forum for all red meat industry peak councils to discuss issues of cross-sectoral importance, and to speak for the red meat sector with one voice when a majority position between peak industry councils on an issue is achieved.

An important point here is what would happen to the red meat industry fund currently managed by RMAC if the council is disbanded and wound up?

The fund, left over from the windup of the AMLC, comprises revenue initially generated from processor and producer levies and the sale of Meat Research Stations. It now stands at around $44m, and is used to provide funding to support the operations of the red meat industry peak councils.

Existing rules around RMAC suggest that the fund would be swallowed back into the Federal Government’s Consolidated Revenue account in such a circumstance. While that outcome would undoubtedly be challenged by the processing and production sectors, it highlights some of the serious broader issues at stake in this onging restructure process.

In effect, the recommendations from the grassfed inquiry, if enacted, could cause serious collateral damage beyond the grassfed industry.

It is why the broader red meat sector is now anxiously awaiting some signs of direction from the Federal Government as to how it plans to proceed now the inquiry is done and dusted.

CCA and ABA working on unity plan

In the meantime the two main grassfed sector groups are currently working together in a bid to bring the Senate Committee’s first recommendation for a new grassfed producer body to control all grassfed levies to fruition.

The Cattle Council of Australia (CCA) and the Australian Beef Association took opposing views into the Senate inquiry.

The CCA wanted to be given a small portion of the annual levy, around $3-4m a year, to improve its resourcing and oversight capabilities, and was otherwise happy to keep MLA intact in its current form.

The ABA and other groups on the other hand were very unhappy with existing industry structures and wanted the entire grassfed levy to be handled by a directly-elected producer body.

This is the position the Senate Committee ultimately favoured in its recommendations.

In the months since the inquiry the CCA has changed its position to match with the ABA and the Senate Committee’s view.

It now supports the concept of replacing its board of mainly State Farm Organisation appointed directors with a board of directly elected directors, voted on by all levy-paying cattle producers, and to take charge of the full grassfed levy.

CCA has justified its policy U-turn as a necessary compromise required to bring grassfed cattle industry groups onto the same page in order to keep the restructure process moving forward.

Critics have interpreted its sudden shift as a last minute attempt to grab full control of the levy after it became clear its earlier plan was not going to win support.

Either way both the CCA and ABA are working together to develop a final “unified” restructure proposal to present to Mr Joyce.

How to demonstrate “grassfed industry unity”?

Throughout the entire grassfed cattle industry restructure process to date, the Federal Government’s mantra to industry has focused on the need for “unity”. Any grassfed industry restructure plan must have the demonstrated backing of all grassfed sector groups before we will consider it, has been the basic message from Government to industry leaders over the past three years.

However, does that still apply now that the restructure plan favoured by the main grassfed groups will have serious ramifications for other red meat sectors beyond the grassfed industry alone?

Another important question is whether the Minister will accept a unity restructure plan presented to him from CCA and the ABA and other groups as having the support of a majority of grassfed producers.

There are an estimated 50,000 cattle producers in Australia (or more depending on which group’s figures you use).

The CCA’s membership comprises about 15,000 cattle producer members of State Farm Organisations across Australia, and around 200 direct-fee paying members. The ABA claims to have about 1000 paid members.

That leaves about 36,000 producers who are not technically members of either group.

If CCA and ABA can agree on a final restructure model, can the minister accept that plan as being the preferred restructure model of the “grassfed cattle industry”? Or will he require that any plan the CCA and ABA develop be put to a survey or plebiscite of all grassfed levy paying producers before it can be accepted as having majority industry support?

Mr Joyce, the man who initiated the inquiry, is now arguably the only person who can provide some direction to the industry in the face of growing uncertainty in the wake of the inquiry.

Technically a Government has three months to respond to Senate inquiry recommendations, although inquiries often pass without receiving a response from Government.

The three-month ‘deadline’ from the grassfed cattle inquiry expires next Tuesday, December 9.

Since the report was handed down on September 9 Mr Joyce has given no public comments on whether the Government will act on the recommendations or if and how the Government plans to progress the restructure issue from here.

A spokesperson from Mr Joyce’s office told Beef Central this week that the Minister was “still considering the recommendations of the inquiry”.

“He will be responding soon,” the spokesperson said.

“This will include consulting widely with industry organisations.”

Until then, a divided industry waits.

HAVE YOUR SAY

Your email address will not be published.

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.

Comments

  1. Edgar Burnett, 12/12/2014

    Well said, David, well said!

    Bring it on Barnaby!

  2. David Byard, 06/12/2014

    Where does Barnaby go from here? The ABA has stated from the beginning that the first step in any re-structure shold be to identify all producers who pay a statuary levy. Once identified we can have a refurendum of all grass-fed producers to decide what they would want. This refurendum would not include processors or any other group in the red meat industry. This of course would decide which way any new structure would look and would express the wishes of all producers and not the wishes of groups like ABA, CCA, MLA, whoever.

  3. bill nicholas, 05/12/2014

    john. you want a free enterprise industry. doesn’t supply and demand have the most effect in setting prices. $5 per head won’t make much difference.

  4. john carpenter, 05/12/2014

    Grant Piper,three cheers.The passage of the Australian Meat and Livestock Act 1997 is the root cause of the poverty and hardship that has been visited upon cattle producers.This is one of the most diabolical Acts ever passed by an Australian parliament because it effectively nationalised every cattle producing farm and forced them into a collective,soviet style framework run by the plutocrats in the SFO’s and complete with a Marxist/Leninist central plan known as the “Meat Industry Strategic Plan” or to use Orwellian phraseology the “MISP’.We are are now on MISP #4 the previous three having delivered the lowest cattle prices in the world to Australian cattle producers.Being “PRESCRIBED BODIES” under the Act the CCA and MLA are tools of government policy and completely impervious to any advise,pleading or cries for help from cattle producers.The whole system stinks and is intolerable abuse of our freedom.The LNP created this mess and they have to fix it.Hiding behind the advise of the Sir Humphries’ in the DA is not going to cut it with cattle producers anymore.This government is facing an electoral disaster so now is as good a time as ever for bold,Roger Douglas,type reform.Repeal the hated AMLI Act,implement the Senate enquiry recommendations,dissolve MLA and appoint a special investigator to find out where all our money went.

  5. Grant Piper, 05/12/2014

    The $44 million is irrelevant to us, the producers, as we have seen no benefit from it. Similarly for the MLA structure – it has worked consistently against producer interests. We should not reward failure, as measured by producer returns, with a further legislated monopoly ‘peak body’ that has been bought-off by the Government before it begins (by bought-off I mean accepting Government contributiuons – once you take the $$ you are neutered). We need an effective lobby group to represent us and speak loudly with clarity when needed. Not more compulsory unionism.

Get Beef Central's news headlines emailed to you -
FREE!