Live Export

Cost recovery must also include cost efficiency: Cattle Council of Australia

Guest Author, March 23, 2021

Cost recovery is not a new concept for cattle producers, who are used to paying their way, but critcially, cost efficiencies also need to be explored as part of any assessment of effective regulation, writes Cattle Council of Australia president Markus Rathsmann in this opinion piece in response to Department of Agriculture proposals to increase cost recovery measures for livestock exporters.

 

GIVEN the dependence on the live export industry for many of our members’ and the contribution it makes to their livelihoods, particularly in Northern and Western Australia, Cattle Council is taking an active interest in the live export cost recovery process underway.

Markus Rathsmann

Cost recovery is not a new concept for producers, who are well accustomed in paying their way. When it comes to the live cattle export market, producers want a supply chain of high integrity that doesn’t leak, that has a culture of immediate self-reporting, and is underpinned by a competent, effective and cost-efficient regulator.

The flagged cost recovery measures are projected to rise from $8.5 million in 2018 to $24 million by 2023.

We await further details on the path to cost recovery, but critically, cost efficiencies need to be explored as part of any assessment of effective regulation. This includes the cost of market access, the efficiency of the regulator, and consideration of social good.

Live cattle export performance is judged by the weakest link, even though the majority of exporters do the right thing. Poor performance by one operator on a single voyage brings all live exporters into disrepute and leads to increased regulation.

On the back of the 2018 Awassi live sheep export disaster, Agriculture Minister David Littleproud to his credit acted decisively and quickly in instigating several major reforms and inquiries including the McCarthy Report, Moss Review, introducing Independent Observers onboard ships, and establishing the Office of Inspector General for Live Exports.

The Moss Review highlighted the Australian public’s active interest in the live export industry and its high expectations on animal welfare. A significant portion of the new regulation and reforms have been for transparency and public interest.

These measures helped rebuild public confidence in the live export sector. In 2019, the live sheep trade was under threat of closure by an expected Labor Government that committed to ending live sheep exports. Still feeling the impact of the live export ban of 2011, many cattle producers were left asking if they would be next in line.

All agricultural industries are faced with cost recovery challenges.

The meat processing industry is already paying over $100 million per year in cost recovered charges. As a trade exposed industry exporting about 75% of production, the beef cattle industry needs to be internationally competitive. This means we need as many profitable markets as possible. The competitive nature and tight margins in all beef cattle supply chains – live export, grain finishing, processing, or restocking – mean that increased regulatory costs are inevitably passed on to producers.

Cattle Council will work through the details of the regulator’s cost recovery proposal with the Minister, his department and our relevant State Farming Organisation members.

Earlier articles:

Live exporters facing huge cost surges under Federal cost-recovery plan  Feb 25

$15m livex cost hike amid Ag Dept’s efficiency claims riles exporters Mar 3

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Comments

  1. Paul Wright, March 25, 2021

    Cattle Producers Australia (CPA) views with consternation the imposition of potential significant regulatory charges that may in any way compromise the continuance of Australia’s live export trade. CPA recognises the live export trade as an essential pillar of a profitable and sustainable cattle industry of vital benefit to the Australian economy in general and Australia’s grass-fed cattle producers in particular.

    The importance of the Australian live cattle export trade to the wellbeing of Australia’s grass-fed cattle producers was dramatically shown during the 2011 “live export ban” imposed by Agriculture Minister Ludwig of the Gillard government. A live export ban decision that Justice Rares described when he handed down his decision in Brett Cattle Company Pty Ltd v Minister for Agriculture [2020] FCA 732 as being made ‘ with reckless indifference’ to the ‘consequences that persons in the live cattle export industry would suffer economic loss’

    The imposition of potentially significant regulatory cost recovery charges could again undermine or strain the viability of Australia’s live export cattle trade and usher in a mini or major repeat of the dismal consequences of the 2011 live export ban.

    CPA urges Government and Industry to arrive at a workable and sustainable resolution to this “cost recovery” issue.

    Thanks for your comment, Paul. Re your statement, “The imposition of potentially significant regulatory cost recovery charges could again undermine or strain the viability of Australia’s live export cattle trade and usher in a mini or major repeat of the dismal consequences of the 2011 live export ban.” Shouldn’t the same concern be expressed for the meat processing industry? Processors and live exporters are often competing for exactly the same cattle in the market. The current situation certainly does not represent a level playing field, in terms of regulatory cost recovery. Editor

  2. Helen Armstrong, March 24, 2021

    In asking for cost recovery, the government needs to demonstrate that their costs are efficient as well as effective.

    For instance, producers don’t need to be paying lawyers rates for clerks to copy paper. I hope that the government can demonstrate there is no ‘wastage’ padded into their costs.

    I would like to see the cost audit that underlies the charged cost recovery.

  3. BAZ HURST, March 23, 2021

    Is the “Govt. Cost recovery including the cost of the “Independent Observer Program” ? If so, what is the total cost expected to be recovered?

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