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TFI moves to make slaughter grids public

by Terry Sim, 06 July 2018
8

A SECOND large meat processor  has moved to increase its beef, lamb, sheep and goat price transparency by listing its slaughter grids on the company’s website.

The move by Thomas Foods International follows a presentation by Australian Competition and Consumer Commission commissioner Mick Keogh to company executives and buyers late last year.

The TFI decision is in line with a recommendations by the ACCC Cattle and Beef Market Study that to improve transparency and industry efficiency, cattle buyers using price grids should make them publicly available to producers in a timely manner. The study’s final report recommended that grids should be published in a prominent position on a processor’s website and also be made available through an unconditional phone request as soon as practicable after prices are updated.

Paul Leonard

TFI’s national small stock livestock manager Paul Leonard said Mr Keogh addressed the company’s annual livestock buyers’ conference in December. He said in embracing the findings of the ACCC study, the company had also created an in-house buyers’ professional conduct policy.

“We’ve listened to the outcomes of the cattle and beef market study and we’ve acted on it. Our guys were very privileged that Mick himself took the time to address us.”

Sheep, lamb and goat grids are already on the TFI website and revised beef grids will go up next week.

Mr Keogh said this week it was heartening to see such a positive initiative being taken, and he hoped that other major processors take heed and follow suit.

“I think this is an excellent initiative by TFI which will help sheep meat and beef producers obtain improved market information which will aid their production and marketing decisions.”

Mr Keogh said Bindaree Beef had made grids available on the company website for some time, and it was “good to see TFI adding some positive momentum on this issue.”

“I think these actions by both organisations put to rest the concerns that some companies and representative bodies had about whether such disclosure would create a competitive disadvantage for those involved.

“I urge groups representing cattle and sheep producers to express their support for these initiatives, and to encourage other processors and buyers to take similar action,” he said.

Mr Keogh said TFI and Bindaree had demonstrated leadership in taking positive action to enhance the standard of competition in livestock markets, especially in relation to sales direct to processors.

“It is now time for others in the sector to follow this lead, which will benefit all in the respective supply chains.”

The ACCC published an update report in May, noting the lack of industry progress towards voluntarily adopting the ACCC’s 15 recommendations.

“The ACCC will continue to discuss our beef cattle market study recommendations with relevant ministers and departments,” Mr Keogh said.

“We would like to see uniform national licencing of livestock agents, buyer registers at livestock sales, and enhanced reporting of over-the-hooks cattle sales.”

Timely price information lessens  co-ordination risk, ACCC argues

The ACCC’s beef and cattle market study said where price grids are not publicly available on a company website, a buyer maintains discretion over whom it releases price grids to. This may limit the bargaining power of cattle producers if they cannot easily access price grids from alternative buyers and dampen competition in cattle acquisition markets, the study’s report said.

Some small-scale producers told the ACCC inquiry that their requests for grids were often ignored, because the consignments they proposed to send were too small. Although buyers are not obliged to purchase cattle from any supplier, information on expected future prices would influence the production and investment decisions of producers. The ability of producers to make appropriate production and investment decisions was significantly affected by the availability of accurate and timely pricing information, the report said. As a result, limited access to price grids reduced the ability of producers to respond to market signals efficiently. In addition, a lack of transparency in prices offered by processors may lead to less competitive outcomes in cattle acquisition markets, the report said.

The ACCC heard concerns that publishing price grids may reduce price competition. Some parties were concerned that greater price transparency would increase the risk of co-ordinated conduct among processors. However, the ACCC said the publication of price grids of itself would not increase the risk of co-ordinated conduct. Publishing price offers would only raise competition concerns if processors coordinated the timing of the publication of grids and/or then used this information to co-ordinate their pricing conduct.

Further, the ACCC considers that many processors already have a reasonable understanding of their rivals’ prices and so any additional risk of co-ordination would be low. The benefits to producers of more timely and transparent price information would also counter any increased risk of co-ordination, the ACCC report said.

Other processors respond in a separate article coming later today.

  • Click here to see TFI’s livestock over the hook grids (beef added from next week).



Reader's Comments


Comment
  • Kevin Markey July 6, 2018

    Good to see, but processor grids have been widely available to a distribution list for ever and a day – just not published on a web site. If your weren’t on the distribution all you had to do was ask somebody who was. Not a lot of difference. I think part of the problem is what happens off grid with incentives not offered to everybody. The pricing criteria in the grid are in some cases questionable. Its up to the market to correct these by demanding changes and offer them more widely. Competition for livestock like right now should look after this.

  • Rod Barrett July 6, 2018

    For many years accurate and instant price information has been available on a confidential basis. Its called “Cattlefacts” and is a technological system developed by producers that gathers all the grid information out there and makes it available 24/7 to producer members who pay a small annual membership to access the service.

    The advantage to producer members is that they can maintain an important working business relationship with processors and buyers based on equal information.
    Information is power and Cattlefacts gives market power to sellers. A fully informed producer can negotiate more effectively and confidently.

    Google “Cattlefacts” and join up. Join producers who make money each year by being fully informed and aware. It works!

  • Paul Wright July 7, 2018

    Cattle Producers Australia congratulates Thomas Foods International for their support and action on delivering on the recommendations of the ACCC cattle and beef market study. Cattle Producers Australia recognises the need for reform in our industry and fully supports Commissioner Keogh in his efforts to increase transparency and industry efficiency by providing over the hook grid prices for producers. We also thank Bindaree Beef for having provided grid prices for some time. CPA thanks Mr Paul Leonard for embracing these changes and leading the way for reform.

  • James Dobson July 7, 2018

    A good move forward for the beef industry. Such a simple easy step for processors, but one that will make a big difference for producers, relieving us of the headache of tracking down live up-to-date grids. Hope all the other processors follow suit.

  • Ron Shaw July 7, 2018

    A step forward for transparency in the meat processing sector. A positive result from ACCC actions.
    As cattle producers, we need to at least ask our local meat processors to do the same.
    Will we ever see Townsville step up?!!

  • Rob Moore July 11, 2018

    Take this great initiative a couple of steps further & you have what I was calling for- 4 years ago. A facimile of the US Packer act (1915) that had as it’s motivation to -“Ensure no one producer can have an unfair advantage over another -to supply a same product -to market”. I called it a “Primary Production Pricing ” plan that would legislate that ALL un auctioned sales MUST post their “grids”( same as airlines post their routes & prices). The like securing the air ticket with our mastercard- we could secure a portion of the grid – locked in with our PIC number and quantity.Completely anonymous, fair & open for all to see progress of the offers & total control by both- grid issuers & grid takers on a first in basis!

    imo -this is a good start but only half the story.ALL secondary points should be made to publish -IF they don’t got to auction( where there are current records generated). This would give a “realtime” barometer of any industry- any day any year under any circumstance. No more spin & bs -talking market up or down!

  • John(Jack) Randles July 12, 2018

    My advice to producers selling on the various grids is to attend the abattoir processing your stock & actually watch your stock being processed observing the measurements the result of which you are paid.

  • Ray Green July 16, 2018

    T.F.I and Bindaree real market leaders in encouraging transparency in their grid systems
    Real opportunities..

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