Articles in Beef Central during the last few days of January have confirmed that there is still life in the grassfed cattle restructure process with the State Farm Organisation (SFO) based Australian Farm Institute being appointed by the Red Meat Advisory Council to review Peak Council operating and funding models for grass fed cattle and red meat sector representation. A move that has been welcomed by Agriculture Minister Barnaby Joyce.
The Australian Farm Institute (AFI) published a report in March 2014 on the options available for Australian farmers to improve advocacy representation.
The AFI report compared the effectiveness of Australia’s agricultural representative advocacy bodies to those in New Zealand, Canada and France, and found that the existing Australian representative advocacy models were the least effective.
The most effective overseas rural advocacy models were those that provided services and products to members in addition to advocacy services and the AFI report concluded that rural advocacy models that only provided advocacy services and relied on voluntary membership fees or funding were unsustainable in the long term.
The AFI report also observed that the provision of a combination of services and products to members in addition to advocacy services strengthened the relationship between the rural representative body and its members, resulting in less likelihood of membership loss as a consequence of policy disagreement.
It is worth noting that a number of successful overseas rural advocacy representative bodies such as the American Farm Bureau and similar bodies in France fund their activities from a combination of membership fees, fees from services and levy funds.
Indeed the American Farm Bureau’s discounted additional services to members are so popular that they have a membership of around 5 million even though America has only 2 million farmers.
The National Farmers Federation August 2014 Newgate Review of the Future of Australian Farm Sector Representation also found that the funding and governance structure relationship between SFO Peak Councils dependant on SFO funding were of particular concern and recommended fundamental changes to the current rural representative structures.
So the stage is set for the long overdue fundamental reform of the grass fed cattle and red meat sector representative structures in 2016 which fortuitously also happens to be an election year.
Cattle Council of Australia (CCA) says that a new grass fed cattle producer advocacy model can only proceed if and when a viable sustainable funding model can be identified. The simple reality is that levy funding would be the most sustainable funding model. The industry groups which had originally agreed on the proposal for a new grass fed cattle industry representative body with a board directly elected by grass fed levy payers hoped that the Federal government would allow the new Grass Cattle Co. to be funded by income from the five dollar statutory levy, given that it will represent all grass fed levy payers.
Minister Joyce left the door open in his Beef Central Opinion Piece article last year and said that he would consider supporting the call for some of the $5 marketing levy to be used to fund the operations of the proposed new grass fed cattle representative body provided that at least 60% of grass fed cattle levy payers voted in favour of that proposal.
It seems to me that the Federal Government would find it difficult to ignore a call for some of the grass fed marketing levy to be used to fund the new grass fed cattle representative body if the vast majority of grass fed cattle producers voted in favour of that proposal and appropriate restrictions on the new Grass Cattle Co. using levy money for agripolitical purposes were put in place.
CCA already have a so called “service” contract from MLA for $750,000/year to help fund its operations. CCA also receives funding from the reserve levy fund which originally was funded by statutory levies and Australian Pork Limited, Australian Wool Innovations Limited and other rural bodies with boards directly elected by their levy payers, subject only to appropriate agripolitical restrictions, all use levy funds to fund policy development and advocacy to Government on the implementation of those policies as well as providing joint marketing and R &D services to their levy payers.
In response to a question in Beef Central in December in 2013 Minister Joyce said he would be guided by the forthcoming Senate enquiry into the red meat industry structure in the grass fed cattle industry. At another meeting in Townsville in 2013 the Minister told producers that they would have to abide by the Senate recommendations. Could it be possible that the Minister is the only one that is now not abiding?
To the Minister back in 2013, it was quite simple, he said: “I have one group come in and tell me the other group of people are terrible and the other group of people tell me the first group are terrible and it goes round and round in a circle and everybody’s talking behind one another’s back – so let’s act like adults, let’s lance the boil and fix the problem once and for all”.
To my way of thinking the boil has been lanced. The Senate made seven very definite recommendations and the Minister should now be working actively and constructively with the grass fed cattle industry to implement those recommendations.
For their part CCA have been reduced, as a matter of necessity, to enter into a so called “service agreement” with MLA in order to be able to carry out their functions under the current industry organisational structure. In other words CCA have been reduced to taking money from the very organisation that they are supposed to oversee. Conflict of interest? You bet.
In the meantime CCA told the industry at the MLA AGM last year that it only has enough funding base to continue funding it functions under the current red meat organisational structures for the next eighteen months.
There is a very real danger in these circumstances that the imperative for CCA to find an adequate refinance package will become a higher imperative and focus than the need to meet their policy setting and service provider oversight obligations under the current organisational structures whilst attempting to at the same time steer the grass fed cattle industry through the crucially important organisational reforms.
In other words CCA’s focus on the refinance package may detract from its efforts on the restructure package and its ongoing role on policy development and MLA oversight.
Previously CCA had admitted at Senate hearings that MLA funding has compromised its ability to actually oversee MLA, which as a Peak Council is one of its more important roles. Grass fed cattle producers put $67 million into the MLA and CCA is there to ensure that producers get good value for the money spent.
It was interesting to go through evidence given by CCA at Senate hearings in March 2014.
According to CCA, its works hard to protect and enhance producers’ interests and is proud of what it has achieved with the limited resources available to it, but it knows it needs to develop the capacity to do more but are limited with resources to do this.
One Senator suggested that CCA should get more MLA levy money, “so as to allow you to do your job”.
CCA’s response was spot on: “To start with the levy is grass producers’ money; it is not MLA’s money. It is our money and we are supposed to have oversight of MLA.”
The Senator then asked CCA: “Do you have oversight?” CCA replied: “This is our role. We are underfunded, and cannot do it adequately. And this is what we are making a representation about today; the fact is we need to be better funded to be able to do a better job.”
CCA suggested that a poll of the majority of people could ensure that producers got part of the levy. CCA stated that producers were crying out for change.
Who could disagree with CCA that producers are still crying out for change?
Minister Joyce suggested in his comments welcoming the appointment of AFI to carry out the review into Peak Council operating and funding options that the appointment of an additional grass fed cattle member onto MLA’s board selection committee would help ensure is more transparency and producers get better money value for money. The trouble is that under the current MLA constitution the selection committee nominate the new MLA directors for election to board vacancies but levy payers only get a chance to anoint those selections MLA director. If there are three vacancies on the board the selection committee only nominate three people to fill those vacancies which surely in anybody’s language is a clayton’s election? So in real terms the appointment of an additional grass fed producer onto the MLA’s board selection committee can be described as a clayton’s reform.
MLA has conducted research into identifying all grass fed cattle levy paying producers to enable a plebiscite and the election of the board of new Grass Cattle Co. The MLA report on this research has been out for months.
Minister Joyce has welcomed the RMAC announcement of the appointment of AFI to review funding models for grass fed cattle and red meat sector representative Peak bodies and has pledged that the government will “continue to ensure that producers-levy payers have a strong voice in 2016 through the continued implementation of the government to the grass fed levy inquiry and ….the broader levies inquiry due in the coming months”.
I hope that this review on grass fed cattle and red meat sector Peak Council funding models does not just turn out to be just another paper on grass fed producer reform. The time for talking, the time for reviews of earlier inquiries, is coming to an end.
It is common ground amongst all rural industry groups and institutions that the current organisational representative structures have outlived their time and are no longer sustainable either from a funding or operational perspective in the long term.
The time has come to get on with the implementation of the reforms recommended by the Senate Inquiry into grass fed cattle levy funded structures and systems that Minister Joyce convened.
- David Byard is the chief executive officer of the Australian Beef Association