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.
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).