A strong appetite for red meat industry structural reform has been highlighted in submissions published this week in response to the Red Meat Memorandum of Understanding (MOU) Review Green Paper.

Many of the 31 submissions published by the taskforce overseeing the review appear to favour more sweeping than marginal change and, in particular, a reduction in the number of bodies that oversee industry affairs.

Stakeholders were asked to provide their feedback on four red meat industry MOU reform options in late January, comprising:

1. Improving the existing MoU, which would involve some redrafting and piecemeal changes but largely leaving existing provisions in place;
2. ‘Law of the jungle’, involving cancelling the MoU, removing RMAC and existing Research and Development Corporations (RDCs) and allowing new arrangements to evolve to suit specific industry-segment needs;
3. Hybrid model, which would merge the functions of peak industry councils and service providers and rationalise RDCs to two (a hybrid of options one and four);
4. A revitalised red meat industry led by a new organisation, which would involve a significant redrafting of the MoU to provide for one supply chain-oriented R&D service provider with an enhanced advocacy function, under a proposed hypothetical name of Food Protein Australia.

The review paper also encouraged stakeholders to suggest a fifth option if they preferred.

31 of the 50 or so groups and stakeholders that provided submissions were happy for their submissions to be made public, and their submissions can now be viewed on the RMAC website here

The taskforce overseeing the review will now use the feedback provided to develop a white paper and to identify a preferred option, with the white paper expected in mid-2019.

Varying degrees of desired change

The two major peak industry councils representing producers in the red meat industry, the Cattle Council of Australia and Sheep Producers Australia, had differing views on the degree of change needed.

Cattle Council of Australia’s submission said the current model of having Research and Development Corporations (RDCs) for each sector fails to address whole-of-industry issues, or the growing need for cross-industry solutions for both industry and external stakeholders.

Cattle Council recommends the next Meat Industry Strategic Plan (MISP), which is currently being developed for the 2020-2030 period, consider separate ‘cross-sector organisations’ to deliver research and development, marketing, industry good programs, and industry systems functions.

The peak cattle council recognises the role of RMAC as a single voice for industry on industry-wide, national issues and in issues or crisis management.

However, it does not support the contention that having all peak industry councils and service providers under one umbrella organisation will address the individual needs of each different sector, or eliminate the natural tensions that arise through competition.

“While the red meat industry continues to strive for a unified voice, this will not always be possible or realistic,” the CCA submission states.

“Thus the MoU provides for mechanisms to promote consensus where possible, but when it does not, for the minority view to be also clearly communicated to government and other interested stakeholders.“

The CCA says rolling all service delivery and oversight organisations into one would also create governance issues.

Its submission emphasises the importance of strengthening and clarifying the MOU to ensure roles and responsibilities of all participants are clearly outlined and areas of overlap and duplication are reduced.

Sheep Producers Australia favours a more dramatic restructure that would streamline industry organisations into two bodies: one that combines the functions of RMAC, the peak industry councils and some components of the Research and Development Corporations (e.g. marketing); and a second organisation that incorporates the research and development functions of each of the three RDCs.

Sheep Producers Australia argues there are too many small, national organisations representing the red meat industry at present, and few have the scale, resources and capabilities to operate effectively at the highest levels of industry and Government.

SPA says a new single and well-resourced organisation is needed to represent the red meat value chain.

It would focus on the ‘really big issues’ and be able to assist senior industry and politicians, from the Prime Minister down. It would help to drive the strategic thinking, applied research and innovation of the sector and work closely with the National Farmers Federation (NFF) and dynamic State Farming Organisations, who have a critical “grass-roots” role to play in shaping the thinking, knowledge and behaviours of farmers. It would also provide strategic guidance to one new research and development corporation.

The views of State Farming Organisations also varied from tweaking the existing MoU to backing much stronger change.

AgForce said it believed in a strong representative voice for the red meat industry, a role RMAC currently provides, but each sector still needed to be able to retain its own voice.

“AgForce is not opposed to the idea of a new group, if this leads to improved transparency, effectiveness and political clout. However each sector must maintain the ability to clearly articulate their desires and pursue issues important to the sector.

“For example the processing sector dominates the live export sector in size and financial capacity.

“A new system must accommodate the competing interests of live export and the meat processing sector such that each sector has control over their own R&D and levy spend.

“Further the line of sight of all PIC’s have to their levy spend on R&D must remain clear and achievable.”

The Northern Territory Cattlemen’s Association supported the first option – improving the existing MoU – but moving to the third option – merging the functions of peak industry councils and service providers and rationalise RDCs to two – upon further detail and consultation about the proposed model.

WA Farmers also supports improving the existing MoU but also rationalising industry bodies to reduce duplication.

“WA Farmers is supportive of RMAC as the single voice for industry on national issues, but does not support one umbrella organisation to support the individual needs of different sectors.

“Streamlined and reduced duplicative structures that support the current environment of the industry are preferred.

“The power of maximised industry representation from grass roots through to national representation should not be overlooked, and it is for this reason WAFarmers does not support the formation of a single large service provider.”

Livestock SA favours structural change in line with the third ‘hybrid option’, comprising an ‘RMAC-style overarching body’ that manages cross commodity and whole of industry issues; a single sheep peak industry council incorporating Sheep Producers Australia, Wool Producers Australia, Australian Livestock Exporters Association (and possibly the Goat Industry Council of Australia); a single cattle peak industry council incorporating ALEC and ALFA; a single processor peak industry council and a single RDC incorporating MLA, AWI, Livecorp and AWI.

The Tasmanian Farmers and Graziers Association advocates minimal change as outlined in option one, updating the architecture of the existing MOU to strengthen and clarify industry roles and responsibilities and encouraging industry collaboration to speak with a unified voice.

In easily the most extensive submission published at 122 pages long, Cattle Producers Australia proposes and makes the case for its own Option 5 – “a red meat industry organisational structure comprised of strong unified representative sectors who engage with their members and respond to win customer and consumer favour while gaining community support for its management of the social and environmental challenges that emerge”.

In effect the CPA position is an amalgam of options 1,2 and 3.

It would include:

• a multi-sector, whole-of-supply chain representative body capable of delivering robust representation on issues agreed upon by industry sectors;
• each industry sector would have a two-company organisational structure comprising a levy funded R&D corporation and directly elected peak industry council (similar to the AMIC/AMPC and ALEC/Livecorp structure currently used in the processing and live export sectors)
• MLA would remain as an R&D service provider for the red meat industry as a whole and for each of its sectors;
• The Red Meat Reserve Fund would be redirected and proportionally allocated to each industry sector Peak Industry Council to invest and control.

Some submissions questioned whether RMAC should be driving the red meat MOU review process, given that a number of senate inquiries and the ACCC beef and cattle supply report recommended RMAC be disbanded.

A submission from the Angus family’s privately owned paddock to plate and branded beef exporter Signature Beef suggested RMAC’s existence undermines the authority of the individual Peak Industry Councils.

“It is deemed a failure when industry cannot reach consensus when it actually should rather be seen as a position of real strength when it can,” the Signature Beef submission stated.

“The default of position in an industry that enjoys competitive tension should not be consensus.”

The Signature Beef submission recommends RMAC be disbanded in favour of industry holding a quarterly meeting between the Peak industry Council chairs and the Federal Agriculture Minister.

It also advocates creating a standalone RDC body for the entire red meat industry; recentralising research extension services; developing a smaller marketing and advocacy service provider, directed by the PICs with control of levies; and forming a new united cattle body with a directly elected board and a flat membership fee of around $100 per year, that must be paid in order for members to vote.

The submission says a proliferation of committees has undermined functionality of industry structures, given processors disproportionately higher representation than cattle producers, inhibited transparency and resulted in a volume of work that cannot be effectively oversighted by Peak Industry Councils.

Sheep meat processor Fletcher International supports bold reform to reform industry structures.

It points out that the current MoU is 20 years old, is complicated and tied up in administrative red tape, and in effect is obsolete.

It also uses the success of the non-levy funded mutton industry to question the value of levies:

“Some industry administrative bodies would have levy payers believe they have achieved all the gains in the last 20 years market access, R&D, on-farm efficiency, processing efficiency, meat quality and consumer demand.

“If that were the case then how is mutton the best performing agriculture product in the last 20 years and had no levy funds spent on it?”.

The Fletchers International submission suggests the following replacement red meat structure:

• All producer bodies be merged under one RDC to focus completely on farm gate issues and opportunities;
• All processor bodies be merge under one RDC to focus completely on post farm gate issues;
• A joint board or panel be established for the two RDCs to work closely on common supply chain areas of need (i.e. sustainability, environment, animal welfare, social licence, Brand Australia, future food security risk)
• All sheep, lamb and wool industry bodies merge into one

At the more disruptive end of the scale OBE Beef advocates employing the “theory of disruptive innovation” to create a radically different organisational landscape, involving the creation of three new companies:

• ‘Brand Australia’ to represent and advocate on behalf of the Australian red meat industry’s assets;
• ‘The Innovation Co’, to transform assets and create supply chains of the future, and
• ‘Change for Good’, to oversee change behaviour.

One submission lodged by “multiple NSW producers” said grassfed produces pay most levies but have the least say, industry bodies lack accountability and producers are only able to vote on preselected candidates which was not a democratic process.

The submission recommended the whole peak industry structure be simplified and replaced with a single organisation with greater producer input, better industry representation, and democratically elected by a two tier voting system that represents both large and small operations.

MISP should be finalised before MoU review: CCA

The current Meat Industry Strategic Plan (MISP) ends next year.

The fifth MISP which will cover from 2020-2030 is under development.

The MoU review process has been timed to run concurrently so the results of the review can be incorporated into the MISP 2030-2030 process.

However, CCA, SPA and AgForce have stated that the MISP process should be given priority and completed first.

“Industry needs to clearly define what it wants to achieve through its strategy (MISP) before it can identify the best structural mechanisms (through the MoU) to achieve the vision articulated in the MISP),” the CCA submission stated.

Defending right to farm features prominently

The need for greater investment in social license advocacy for the industry to develop a strong and uniform voice to defend its right to operate, and a perceived lack of progress on, or acceptance of, recommendations of senate inquiries and the ACCC study by industry bodies were common themes of several recommendations.

The above is a sample of the 31 submissions published, to read all submissions visit the RMAC web page here.