Processing

Processors consider representation model based on ‘manufacturing’ instead of ‘ag’

Jon Condon, 22/06/2017

IS there a better or more effective model for red meat processing sector representation than that which currently exists?

The question is being explored within the Australian processing industry currently, but answers are still some way off.

Just one of the options being explored in the early stages of deliberations is whether beef processors would be better-served in building their voice in Canberra by aligning with the Australian manufacturing sector, rather than agriculture.

There’s certainly a compelling argument that meat processing is as much, if not more akin to the manufacturing industries than agriculture, with its heavy labour requirement, its ‘fabrication’ function, and other matters like industrial relations and regulatory burdens.

A number of Canberra politicians apparently see merit in an alignment with manufacturing, Beef Central was told.

What often gets missed under current agriculture-aligned arrangements is just how significant meat processing is in terms of regional/rural Australian employment. In almost any town or city (like Townsville, Rockhampton, or Casino) where processing operations occur, the sector is inevitably the largest local employer.

To some extent, the fact that processors rely on cattle or sheep as their ‘raw material’ is almost incidental. Edgells, for example, sees itself as a frozen and tinned food ‘manufacturer’, not as an extension of the horticulture industry.

It’s not to say, however, that should red meat processors ultimately decide to make such a move, that it would represent any sense of disloyalty to the cattle or sheep industry. It would simply be about better ‘cut-through’ in the hallways and meeting rooms on the ‘hill’ (Canberra’s Parliament House). Strong connections would continue with the livestock and lotfeeding sectors, just under different arrangements.

Some of the participants in a series  of recent workshops on the topic of alternative industry structure have said a ‘clean sheet of paper approach’ is necessary, if processors are really serious about moving the industry forward.

Here’s a quick summary of current processor representation arrangements:

  • The Australian Meat Industry Council (AMIC) is the peak council representing the post-farm-gate meat industry – meat processors, retailers and smallgoods manufacturers. Within the AMIC structure, there are a number of processing industry-specific sub-groups, including the Australian Processor Council, National Export Meatworks Processor Councils (beef and sheepmeat) and National Meat Processors Council. As the industry peak council, AMIC confers with members, governments and industry groups to influence policy and provide technical and other advice to the industry.
  • The Australian Meat Processor Corporation (AMPC) is the Rural Research and Development Corporation that supports the red meat processing industry. AMPC’s mandate is to provide RD&E services that improve the sustainability and efficiency of the sector.

Representation issues

Beef Central has pointed out earlier (and attracted some AMIC criticism for doing so) that neither of the nation’s two largest beef processors choose to be members of AMIC, and have not been involved for at least four or five years. The absence of JBS Australia and Teys Australia knocks out close to 40 percent of the national beef kill, in terms of AMIC’s ability to be truly ‘representative’ of processors in discussions with government.

Third largest processor NH Foods at one point also went within a whisker of parting company with AMIC.

The common reasons given among non-members has been lack of performance within AMIC.

“AMIC has been asleep at the wheel, and does not reflect the industry’s priorities, especially with the federal government,” one large non-member said. “Our business was not going to be locked-in to the AMIC model. We want to see change, and one clear, and effective voice for the industry, which is not happening now. That’s why we participated in the recent workshops,” the processor said.

“Until some of the current problems within AMIC are addressed, there is no value proposition for us to be members,” another major non-member said.

Part of the organisation’s challenge is in representing the interests of both very large, and very small processors, but more common is the suggestion that some within the ranks of AMIC representation, are working more for their own individual or regional interests, rather than the broader industry. The lack of any weighting in voting based on processor size also comes up, from time to time.

All processors spoken to, however, have a clear appreciation of the value of a single truly ‘representative’ body to take the industry’s case to government.

Workshops explore way forward

Two low-key voluntary processing industry workshops have recently been held to explore the representation issue. Beef Central understands attendance included about ten of the nation’s largest processors – both non-members, and prominent members of AMIC including Australian Country Choice, NH Foods, Thomas Foods International, NCMC, Fletcher International, Hardwick’s and others.

Two different interpretations of how the talks were initiated have been offered. One is that the process was driven squarely by critics of the current AMIC model. The other is that AMIC itself was ‘driving the bus,’ and that the workshops were part of a larger AMIC/AMPC initiative.

Queensland Senator Barry O’Sullivan, through his membership of the Federal Senate Inquiry into the Red meat processing sector may also have helped kindle the recent industry dialogue. He has made repeated references to the fundamental need for a ‘united and representative’ processing sector during the recent inquiry.

Some say the current talks are influenced, also, by the Senate Inquiry itself. There’s a feeling in some circles that the industry needs to get on the front foot in terms of making some decisive structural decisions, in advance of the inquiry’s (repeatedly postponed) final report deadline, now likely some time after a final round of hearings in August.

A range of views were apparently expressed at the recent workshops. Some felt that any new organisation should be exclusive to beef and sheepmeat processors/exporters owning ‘bricks and mortar’ in the form of meat plants, and excluding non-packer exporters (those who operate a beef supply chain, but get their cattle killed by toll processors on their behalf). Others felt the body should be exclusive to tier-two export processors, excluding tier-one export plants. Both issues raised tensions around the room at the workshops, apparently.

The original talk around the review process a month or two ago described the movement as a ‘breakaway’ group, but that term quickly changed, to an ‘industry-wide’ approach. A name even came up in discussions about a potential leader for a revamped processor body: ex Labor Prime Minister, Paul Keating, who now includes Canberra lobbyist on his CV.

“There’s still good scope for the review to progress, but it needs the will of processors – both AMIC members and non-members – to continue to drive it forward,” one large processor told Beef Central.

“It needs people to stand up and walk away from the AMIC table. Until that happens, a deal’s not going to get done with the vested interests involved,” a non-AMIC member said.

“The current industry model is based on a constitution from the 1960s. It does not necessarily service well the industry’s needs in 2017. It’s in the industry’s best interests for this debate to be had.”

Other outcomes from the processor representation review are that it may provide further stimulus for grassfed cattle producers to achieve positive change in their own sectoral restructure, and potentially provide avenues for discussion over future industry funding mechanisms other than MLA.

Early meetings with Industry Minister Sinodinis

Beef Central’s discussions with AMIC over the developments have been strongly coloured with the view that there is no need to ‘re-invent the wheel’, and that the opportunity exists to initiate reforms from within.

AMIC’s processor group general manager Patrick Hutchinson said AMPC, as the processing sector’s R&D organisation, linked to its 2022 industry strategic plan, investigated on behalf of industry what options were out there for processor representation and advocacy, into the future.

“That’s where the genesis for this review process started,” Mr Hutchinson said.

“The overall outcome from the recent workshops was that AMIC has given an undertaking to look at the independent EY report, and to see what we can do, to more effectively target our advocacy activity.”

“There’s been a lot said about potential changes to the Memorandum of Understanding, and who AMPC reports to – whether it be agricultural or manufacturing aligned. But that’s just a suggestion from the report, worthy of scrutiny – there’s nothing concrete about it.”

AMIC was also looking closely at the Australian Farm Institute’s industry peak council review, issued at the end of December, through the Red Meat Advisory Council. It is also monitoring with interest the progress within the parallel Cattle Council of Australia structural reform and funding process.

AMIC last Thursday held its first meeting with Federal Industry Minister Arthur Sinodinis – where the manufacturing sector resides, and which includes a ‘food processing groups’ representation within its ranks.

“The primary purpose of that meeting was to explore what alignment could be created, and how that might be made work effectively – but this is a long process,” Mr Hutchinson said.

“There’s a lot to be determined. Does AMIC just pick up its bags and walk over? Is there the structure there to simply pick up our bags and move? Does that department of Industry want us to walk over? How would the levies management unit work? There are a whole host of issues to be examined before this can even start to be examined as a serious prospect.”

The underlying objective, Mr Hutchinson said, was to examine how AMIC, or some other vehicle, can best represent the full processing constituency – including those non-aligned companies.

However he made the point that the size and diversity of some large Australian red meat processors was so great, with major developments in value-adding divisions, R&D, transportation and other areas, that they no long simply ‘put meat in a box.’

“They may align themselves more with the Food and Grocery Council style, or Business Council of Australia style of representation,” he said.

“As much as we want all red meat processors to be part of an AMIC or other peak industry organisation model, at the same time, the amount of services that we can actively provide them across the broad extent of their diversified businesses has a limit.”

“They may be looking for broader representation across every part of the businesses they are involved in, rather than just processing cattle. We respect those processors’ decisions in that area,” he said.

“But the positive out of what has occurred recently is that it has given us the opportunity to look at more effective ways to advocate on behalf of all processors, and the development and management of policy.”

“And there’s already been a whole lot done in a short space of time.”

 

 

 

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Comments

  1. Jock Williamson, 26/06/2017

    This is just plane obvious…. abattoirs are no more agricultural than clothing companies: they by a raw material (the beast) and manufacture beef and beef by-products from that beast.

    additionally, people who have propertys that grow cattle on them are not beef producers… they are cattle producers!

  2. Dick Morgan, 23/06/2017

    I’ve been out of the industry for a long time. But from what I can gather it seems to me that meat processing is becoming very much a hi-tech manufacturing activity. And there is more to come. Digitization at all stages, data collection, mechanization, robotic processes etc etc. Even 3D printing of a beef steak!.

    Right through the whole production process: The digital information from the live animal. The kill. The inspection. The fabrication. The weighing. The packing. The description. The freezing/chilling/storage/transport. Pretty well everything robotically automated. Very little human involvement (or maybe a whole lot of other human involvement but with quite different skills)

    Is this a picture of the future? If it is it will need its own representation in Canberra and other places.

    We think your comments are right on the money, Dick. Editor

  3. Natasha Wing, 22/06/2017

    If you look at the basic difference in definition between agriculture and manufacturing the answer seems obvious, I’m surprised it has taken this long.

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