Opinion

Industry restructure: ABA response to the ‘phantom steakholder’

David Byard, Australian Beef Association, 17/11/2014

The Australian Beef Association responds to last week’s article “Industry restructure: Let’s not reinvent the wheel to pacify the ‘vocal few’” written by an ‘anonymous red meat industry stakeholder’

 

Southern cattle saleA recent article in Beef Central by an unidentified author suggested that we shouldn’t try to reinvent the wheel to pacify the vocal few. He goes on to suggest that cattle Council have undertaken a review on the current representation. This restructure has had more twists and turns than a world cup final. (I agree).

In contrast to a World Cup final, people have been making rules as they go along. It has been suggested that Cattle Council has been kneecapped.

The truth is that for some years cattle Council have struggled with their finances and now there is a chance to get a democratically-elected producer board that is answerable to all levy payers.

This new board with a bit of goodwill and careful management, could be in fact, a cattle Council which has finances for a full knee reconstruction, as well  as funds to do other necessary surgery.

Some people suggest that producers have not had the experience in running a company with an annual turnover of $60 million plus. Simply rubbish! A board is set up to make policy and can bring in expertise to run the financials. There are plenty of farmers (big and small) that are more than capable of making board decisions.

MLA is sending producers to the wall with poor cattle prices? This simply is rubbish as MLA is a service provider to the red meat industry and their brief is R&D and marketing.

The fact is the red meat industry must have a level playing field in which to share the wealth. This is not the situation we see now. We see predatory pricing being the accepted practice which is accepted by all. Experts tell us that for the supply chain to be successful, all sections of that chain must be cooperative and share in any profits.

MSA is letting producers down with inconsistent grading? There is no disputing MSA is inconsistent in its present form, and the system has been watered down which causes  huge problems with inconsistent product.

AusMeat is letting producers down with its inability to modernise the language and standards? To me there is no doubt AusMeat Butt Shape is used in industry without any scientific evidence to support it, but there is plenty to support the fact that it has no relevance in yield. Dentition Y,YG, YP,PR and the doozy of them all the A cipher. Anybody sitting  for an exam would be looking to get an A grade pass. Anybody playing sport or being at the top of profession are considered A grade. Why would anybody call their poorest product A?(Could it be possible that this language is set up to deceive)?

Aust Beef themselves use the A as  top of the class when they undertake audits on processing works.

‘The fact is cattle producers are paying the lion’s share of MLA funding and one could argue that they are getting the least benefits.’

Processors are running the industry and reaping all the rewards? The simple fact is grass fed producers pay in $62 million collected as a statutory transaction levy. Processors collect $18 million from a statutory levy and then pay MLA $9 million as a service provider. They can then instruct MLA on how their funding is spent, in contrast to the producers,whose money goes straight from the government collection unit into the MLA . Unlike processors, producers have no ability under the present structure to control the flow of levies.

Processors refuse to pay for MLA marketing in overseas markets whilst producers have no choice. It is interesting to note BHP don’t pay for the advertising on motor cars. MLA is very happy with the results of their advertising and point to the fact that Australia is selling record quantities of beef into overseas markets and getting record prices. It is interesting to watch 90 CL trim double in the last 12 months. All this while producers try to keep the banks away from their door because of drought and a glut of cattle which inevitably leads to low cattle prices, whilst the meat of those cattle continues to bring record prices. It is worth noting that producers are getting some of the lowest prices ever seen in Australia when you take into account the costs.

The fact is cattle producers are paying the lion’s share of MLA funding and one could argue that they are getting the least benefits. Since the recommendations of the Senate, MLA & RMAC have been very busy telling producers of their value to the industry, with MLA claiming to be a completely different organisation than they were 12 months ago, and undertaking a reshuffle of staff with many staff being shown the door.

What’s the solution? Firstly we must identify every producer that pays a five dollar levy. Then and only then we can have a Democratic election for a cattle Council producer board elected by producers for the benefit of producers. This new board would have to face all levy payers on a regular basis.

This new board could collect all the $62 million grass fed levy and then pay MLA as a service provider. This is nothing new as the processors control their own levies through  AMPC and this would empower producers to have complete control of MLA as a service provider.

This sort of thinking will naturally bring about criticism from other sections of the red meat sector which have done remarkably well out of the present arrangement and would be loath to see the present structure change.

What is required is good will and the silent majority to actually make sure that changes will result in producers getting a fair deal for their  levy dollars.

 

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Comments

  1. john carpenter, 18/11/2014

    No one has done more to stand up for cattle producers than the ABA.The CCA didn’t even bother to put in submissions to the 2 ACCC enquiries into grocery pricing.The ABA participated in both highlighting cattle producers’ utterly pathetic share of the retail beef dollar.The Senate enquiry has basically recommended the ABA restructuring model than has belatedly and begrudgingly been accepted by the CCA.David Byard has done a great job and would make an excellent CEO for the new Cattle Corp.

  2. David Byard, 18/11/2014

    Mr Morton suggests that the ABA is to give all levies to the ABA. This is simply not true, as the ABA is on record saying that all levies should go to a producer organisation that is elected by all grassfed levy payers. This new organisation would control all levies and ensure that the MLA becomes a service provider beholding to grass-fed produceers. MSA a great system, DNA testing, independent graders, the list goes on. No reason that we can’t take control and make MSA the grading system that it should be. Aus-Meats, a necessary part of the industry badly in need of reform, hopefully the white paper will bring changes that are so badly needed.

  3. Andrew Morton (Eureka Beef), 18/11/2014

    The solution according to the ABA and Mr Byard is to give my levy dollars to them and everything will change, really??? What would the ABA suggest as an alternative to the Ausmeat language or MSA? It is all too easy to point out the problems and not offer a single alternative. One day soon it will rain, I will not have to sell down my herd and I will chose the market I sell into, this will improve the price I get and it will have nothing to do with the ABA as they set about deconstructing our industry.

  4. Doug ONeill, 17/11/2014

    I believe we as cattle and beef producers do not have a workable and futuristic structure and business plan to give us the responsibility and power to make urgent and necessary changes.
    When this structural blue print is in place,there should be a time line for change,if these changes are not put on the table for constitutional change as at a given date ,we then refuse to pay any transaction levies. The monies could be held in a special trust fund for funding the new business structure.
    What we are operating under is NOT WORKING!!,it is corrupt,it is out dated and research and dev.has proven that we need urgently to change our business model.
    May we all have the fire in our bellies and guts to stand up for what is ours and should be managed by we cattle producers.Bring on the rain?

  5. Andrew Dunlop, 17/11/2014

    Where are the record prices? I dont seem to be getting any of that!! The fact is US cattlemen are getting US$1.60 per pound liveweight for their cattle and we are getting around half of that. The gap has only widened, not closed despite us spending millions of dollars on an MSA grading system and millions of dollars on the NLIS system. Somebody is asleep at the wheel and we need drastic action and revitalisation of the industry.

  6. Grant Piper, 17/11/2014

    If the ‘experts’ thought it was no problem to identify and track all cattle with an NLIS tag, then it should be no problem to identify all levy payers.
    That said, no levy at all should still be an option we vote on.

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