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RMAC responds to ACCC recommendations, blasts Senator’s criticism of industry leadership

James Nason, August 30, 2017

RMAC chair Don Mackay

The Red Meat Advisory Council has released its formal response to 15 recommendations made by the Australian Competition and Consumer Commission in its final beef and cattle market study report in March.

At the same time the council has also described as “disappointing and offensive” recent media comments by Nationals Senator Bridget McKenzie claiming beef industry leaders “continue to stick their heads in the sand” (more below).

In its final report in March, the ACCC urged RMAC to take on a policing role in the industry and to shoulder the responsibility of ensuring its 15 recommendations were implemented. It also wanted RMAC to report on the industry’s progress in implementing its recommendations to state/territory and federal ministers each year.

It was a big ask given that RMAC does not have direct authority for setting industry policy (that responsibility rests with each peak industry council), making it difficult for the advisory council to enact much of the change the ACCC had called for, as we discussed in this article at the time.

In a statement released yesterday which detailed its response to the ACCC’s recommendations, RMAC supported some of the ACCC’s recommendations and rejected others.

For example it has not agreed with the ACCCs calls for processors to make their price grids publicly available in a timely manner, arguing that grids are already widely available; and has not backed the call for a mandatory buyers register to be publicly available prior to the commencement of all physical livestock auctions, saying the ACCC has not made it clear what the benefits of such a move would be to the supply chain.

RMAC did support the ACCC’s call for national licensing of livestock agents, auctioneers and buyers, but noted that previous attempts to get State Governments to agree on such a move had not been successful.

RMAC also says the ACCC’s call for it to develop a uniform and independent complaints and dispute resolution process are outside RMAC’s scope, and said that it believes its role should not be one of “monitoring and compliance” as the ACCC recommended, but rather one of “information and awareness”.

 

RMAC’s formal response to ACCC report

In a summary paper released yesterday, RMAC said it understood the ACCC’s study was “formed on the basis of voluntary provision of information; and that in informing the Study insufficient evidence was received about the distribution of profits throughout the supply chain; and specific evidence based pinpoints in anti-competitive practices.”

“We respect the role of the ACCC in their role as Australia’s competition and fair-trading watchdog, and their new endeavors as part of the newly formed agricultural unit. We want to address the concerns and recommendations raised by the ACCCs Cattle & Beef Market Study – Final Report in an open and transparent manner.

RMAC said it had made the following commitments to bring improvement in the supply chain:

  • It had offered to host a Red Meat Competition Forum featuring key industry players and the ACCC prior to every AGMIN in order to connect industry with competition authorities and decision makers in real time rather than through lengthy Market Study processes;
  • It will write to the ACCC in relation to the above responses moving forward clearly outlining the positions taken and progress to date and continue to engage with the Agricultural Unit;
  • It will advocate for increased financial and technical expertise in the ACCC Agricultural Unit under the Agricultural Competitiveness White Paper to empower it as the competition watchdog for the agrifood sector in Australia.

RMAC’s response to each recommendation: (RMAC’s response to each recommendation in italics)

  • Recommendation 1: All processors and other major purchasers of prime cattle should make their price grids publicly available in a timely manner. “It is the view of RMAC that grids are widely available to sellers or potential sellers of cattle as standard operating practise.”
  • Recommendation 2: Buyers, agents and producer representative bodies (led by the Cattle Council) should expand their engagement with producers to enhance industry understanding of price grids and their interpretation. “A range of industry programs are in place to enhance this perceived or actual knowledge gap amongst the production community, including an Aus-Meat over-the-hooks dispute resolution process.RMAC supports these being refined and improved and understands significant work has been undertaken with this regard by a range of industry players.”
  • Recommendation 3: All buyers should simplify their price grids, where possible, to ensure they are easy to interpret and compare. “RMAC supports the simplification of grids where feasible that sends the right price signals for the right products. Across the RMAC membership there has not been widespread feedback either pre-or post-farm gate these are complex to deal with.”
  • Recommendation 4: Meat & Livestock Australia (MLA) should continue its work to improve the collection and public reporting of cattle sale prices, including:(a) reporting cattle prices across sales channels on the same basis so that indicative prices for each channel are easily comparable (b) making improvements to the reporting of prices throughout the supply chain, including wholesale, retail and export beef prices.

    “A range of industry programs are in place. RMAC supports these being refined and improved and understands significant work has been undertaken with this regard from MLA’s perspective where the competition law allows it.”

  • Recommendation 5: Data collection and reporting should be expanded to cover prices paid for: (a) direct (paddock) sales (b) OTH sales, noting that some processors pay prices over and above those quoted on their price grids, and cattle sold to the live export market.“A range of industry programs are in place to provide improved market reporting. RMAC acknowledges there is always room for improvement and understands significant work has been undertaken with this regard. RMAC will always encourage industry to provide market information where it creates value to any segment of the supply chain.

    RMAC also acknowledges and supports the impracticalities of a mandatory price reporting structure.”

  • Recommendation 6: Introduction of objective carcase measurement technology should be prioritised by the industry and adopted by all processors in a consistent manner as soon as possible. RMAC through the Meat Industry Strategic Plan 2020 supports the adoption of objective carcase measurement technology on a commercial basis.”
  • Recommendation 7: Data produced from objective carcase measurements should be shared for the benefit of the industry. “RMAC through the Meat Industry Strategic Plan 2020 supports the sharing of information throughout the value chain where it returns value and appropriate protections throughout the supply chain.The Australian red meat & livestock industry as a value chain should determine the process to achieve this and are actively collaborating with this regard.”
  • Recommendation 8: The Red Meat Advisory Council should develop a uniform and independent complaints and dispute resolution process. “RMAC strongly encourages business level dispute resolution processes; and understands that Aus-Meat has a broader dispute process available for over the hooks trading. Business to business dispute resolution is not within the scope of RMAC at this time.”
  • Recommendation 9: The carcase grading and auditing system should be strengthened by: (a)  increased communication and education about the process by AUS-MEAT and processors (b)  increasing the number of random AUS-MEAT audits of grading results and standard trim and publication of audit results relating to grading and standard trim. “Any integration and refinement of auditing processes is welcomed by RMAC; especially where it reduces cost of production pre-or post-farm gate.”
  • Recommendation 10: Carcase feedback should be clear and easy to interpret. To achieve this: (a) All buyers and agents who routinely deliver carcase grading feedback to cattle producers should ensure it is presented in a clear manner; (b) Buyers and agents,who routinely deliver carcase grading feedback, along with producer representative bodies (led by the Cattle Council) should increase their communication and education activities about interpreting grading feedback.“RMAC supports the simplification of feedback where feasible and understands there has been significant industry efforts to address this.”
  • Recommendation 11: A mandatory Buyers Register should be publicly available prior to the commencement of all physical livestock auctions.  “This is not supported by RMAC and our member group of councils as it is unclear what benefits this would provide to all players within the supply chain.”
  • Recommendation 12: Saleyards, commission buyers, auctioneers and agents should provide MLA with information that enables regular standardised market reports for each reported saleyard. “Cost benefits are the ultimate determinants of industry funded market reporting. This recommendation should be investigated to see whether there is a cost benefit to expanding the existing scope of work being undertaken by Australian red meat and livestock industry corporations by their levy investors.”
  • Recommendation 13: Selling agents should display the terms of auction in a conspicuous position at all saleyards. “This is already a broad practise; and is supported by RMAC to continue.”
  • Recommendation 14: Legislation should be introduced requiring standardised national licensing of livestock agents, professional buyers (applying to commission and salaried buyers) and livestock auctioneers. “This is a move that would be supported by RMAC and our member representatives. This does however require commitment from the Council of Australian Governments and their relevant jurisdictional portfolios. Previous government led attempts to raise a harmonisation scheme have been unsuccessful.”
  • Recommendation 15: The Red Meat Advisory Council should have prime responsibility for overseeing the implementation of the above recommendations, and for monitoring compliance with these. The Red Meat Advisory Council should report progress annually to state, territory and federal Ministers. “RMAC will provide continued leadership and facilitation support accordingly in relation to the ACCC Cattle and Beef Market Study – Final Report to provide increased information and awareness across the supply chain in relation to competition issues as opposed to “monitoring and compliance.””

RMAC angered by Senator’s criticism of beef industry leadership

In a statement released on Tuesday RMAC  independent chair Don Mackay also described recent media comments by Nationals Senator Bridget McKenzie, who claimed beef industry leaders continue to stick their heads in the sand and were not acting on the ACCC’s recommendations , as “disappointing and offensive to thousands of Australian exporters, farmers, feedlotters and food manufacturers across the country”.

“RMAC, our members and the business community we represent would be the first to support prosecutions of anti-competitive behavior,” Mr Mackay said.

“We expect leadership from decision makers like the Senator and ask her to come forward with evidence to back her allegations via the media.

“Senator McKenzie’s comments are offensive to our industry but also misguided and entirely inappropriate.”

Mr Mackay said RMAC supported robust competition policy settings that work for businesses within the supply chain.

“We take our responsibility as food producers in this country extremely seriously from gate to plate when it comes to matters of anti-competitive practices like conflicts of interests, collusion, bad behavior, or bullying and intimidation.

“As with other aspects in the supply chain from animal welfare to food safety, if there are players doing the wrong thing we believe they should be held accountable.”

Mr Mackay said that the Australian Competition and Consumer Commission’s cattle and beef market study report focuses principally on additional reporting and awareness activities.

“The 15 Recommendations do not justify how they will improve competition policy within the beef cattle value chain.

“In the absence of evidence from the ACCC we will continue to defend and promote the businesses within our supply chain who are doing the right thing.

“We will continue to engage with the ACCC Agricultural Unit to determine the best way forward to ensure the optimal competition policy settings for beef businesses.”

RMAC also called on authorities including the ACCC, the Department of Agriculture and Water Resources and the Agriculture Minister’s Forum (AGMIN) to reject the Senator’s comments, and asked also to come to the table to provide much needed industry reform.

“While demand is strong for Australian beef globally, a high cost domestic environment and growing competition from key international markets means that serious government-led reform is needed.

“We call on decision makers from the ACCC to the Minister for Agriculture to assist industry in getting this right, and to join us in defending and promoting this critical Australian industry.”

 

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Comments

  1. Andrew Dunlop, September 1, 2017

    CATTLE PRODUCERS MUST TAKE CONTROL OF THEIR DESTINY!
    Some 25 years ago I was involved in a project that identified a dearth of information on pricing in the supply chain and the lack of transparency compared to the supply chains of our major competitors (the US) and our major market (Japan). Both the US and Japanese beef and meat industries had huge volumes of price information available daily and were transparent. This allows bottle necks and arbitrages to be identified and commercial operators to flatten them out resulting in market efficiency.
    I had great hopes for AgInfos transparency study to resolve this issue but it appears to have run into administrative and implementation issues (in other words its been shelved).
    So we are still debating and not acting and implementing!
    Price discovery and transparency in supply chains generate confidence, efficiency and fairness!

  2. Rod Dunbar, August 31, 2017

    This is a bit rich coming from an organisation that was recommended to be would up and dissolved after a lengthy Senate Select Committee investigation in 2014 – 2015.

    Recommendation 5
    7.41 The committee recommends that the Minister for Agriculture dissolve the Red Meat Advisory Council. The committee further recommends that the Minister for Agriculture establish a new system to manage and disperse earnings from the Red Meat Industry Reserve Fund, in consultation with the industry.
    It is amazing that there has been an ACCC investigation when the Senate has really consulted widely, they actually travelled to the remotest parts of the country and formulated 7 recommendations based on what we the grass roots cattle producers wanted, and not one of those recommendations have been actioned.

    RMAC should not be commenting or submitting at all to anyone, it should be now a distant memory.

    The subject of this article should be irrelevant as well, as Recommendation 7 applies;
    Recommendation 7
    7.46 The committee recommends that the Department of Agriculture, in consultation with the cattle industry, conduct an analysis of the benefits, costs and consequences of introducing legislation akin to the Packers and Stockyards Act 1921 and Livestock Mandatory Price Reporting Act 1999.

    We would also like to see the report of the ANAO in Recommendation 4, to see just where the $ billions of our money has gone;
    Recommendation 4
    7.39 The committee recommends that the Australian National Audit Office conduct an audit of the cattle transaction levy system, tracing the levy from inception and focusing on the revenue from, and expenditure of, the respective components of the levy.

    Whilst we are bound in a socialist collective who enjoys political patronage from the federal government of all persuasions, with complete contempt for all of us at the Grass-fed level; we finance the whole structure and as long as the Processors have the control within RMAC over the grass-fed sector in this Government Structure we will always be the “Cinderella” producers like modern day Serfs.

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