News

Is it time to re-examine red meat industry’s MoU?

Jon Condon, July 31, 2015

IN the washout of Agriculture Minister Barnaby Joyce’s decisions announced a fortnight ago following the grassfed industry senate inquiry, momentum appears to be growing in support of a review of the red meat industry’s Memorandum of Understanding.

Such a move was supported in Minister Joyce’s response to the inquiry’s recommendations earlier this month, when he said he would seek to ensure that any new organisation had greater oversight over how the grassfed levy is invested by seeking to update the industry MoU to strengthen the rights and responsibilities of the peak industry council.

What is the MoU? In broad terms, it’s a ‘rules of engagement’ agreement that sets out the principles, structures and funding relationships under which the red meat industry operates – particularly in regard to the peak councils, and the roles and obligations of the RDCs including MLA, AMPC and Livecorp.

The MoU also sets out the operational boundaries and functions of bodies like Safemeat and AusMeat. A copy of the full MoU document can be viewed here.

Unlike the industry’s Statutory Funding Agreements, which are quite specific about obligations and requirements, the MoU is more of a ‘best endeavours’ document, somewhat aspirational in its approach.

The signatories are all of the red meat peak councils including AMPC, ALEC, ALFA and CCA, together with service companies MLA and Livecorp, and the Federal Government.

The key area of interest in any future scrutiny of the MoU appears likely to be in building the strength and efficacy of the relationships between peak councils and service companies.

Any examination will also have to take a whole-of industry approach, rather than representing the interests of any particular sector or industry segment.

It’s going to be a complex area to navigate, however. Each company has separate statutory requirements under their contracts with DAFF; each has a separate board; and they each have separate obligations to ASIC. Particularly in a legal sense, it presents as a potential minefield.

That suggests any review of the MoU will be a slow, laborious process. Nobody across industry at this point is saying it can’t be done, but the complexity of the process should not be underestimated.

Aside from the legal technicalities, the process is also likely to be burdened by the need to bring all of the document signatories along the journey. That in itself may not be easy.

 

MISP document could be starting point

One of the precursors to a formal launch of any review of the MoU is likely to be the release in coming weeks of the Meat Industry Strategic Plan (MISP) – the industry’s strategic roadmap for priorities during the period 2016-2020.

MISP has been formulated over the past 18 months after lengthy ndustry stakeholder consultation.

The release of the MISP document has apparently been delayed a little in order to make sure it aligns with the signals put out by Minister Joyce in his recent response to the senate inquiry findings.

Beef Central understands MISP will be formally launched some time before the end of August. It’s likely that peak council attention will start to focus on a MoU review project soon after that.

The MISP document, in defining in great detail the industry’s strategic priorities, then paves the way, through revisions in the MoU, to deliver the industry ‘mechanics’ to better execute that plan.

But given that the MoU is essentially a ‘process-based’ document, it might be unrealistic to think that reforming the MoU, in itself, would meaningfully address the financial issues which are impacting some peak industry councils (discussed in greater detail in this Beef Central article yesterday).

While it is yet to be determined who conducts any review of the MOU, it would appear likely that the Red Meat Advisory Council, given its umbrella role, will get the job.

 

Stakeholder view:

One of the early stakeholders to flag his support for a review the industry’s Memorandum of Understanding is NH Foods Australia director Stephen Kelly.

Stephen Kelly

Stephen Kelly

“I agree that it’s an opportune time to re-examine the document – particularly given some of the dissent that was voiced during the senate inquiry,” he said.

The MoU was in fact written 17 years ago, at the time of the transition from the old AMLC/MRC era to the model still in use today.

While there had been some cosmetic changes to the document since then, (such as when AMPC went from a voluntary to a statutory levy – a move that required a change to the MOU), the general principles that were struck at the time had not changed at all, Mr Kelly said.

“The government has put it on the record that the MOU should be looked at, and I tend to agree with them,” he said.

“With the Meat Industry Strategic Plan about to be put in place for the next five years, my view is that we now have an opportunity to perhaps re-visit the process, and whether there are any changes that could be made to improve the representation of all sectors.”

“One of the messages from the Senate grassfed review was that there was a lack of representative voice on behalf of the peak councils. Obviously it is hard, not only for CCA but also AMIC and probably ALFA, to generate levies from members to justify the work that they do.”

“I totally agree with CCA when they say it is difficult to get funding, but at the end of the day, you have to be relevant and worthwhile for members to want to contribute.”

“ Rightly or wrongly, one of the criticisms that came out of the Senate Inquiry centred on the lack of voice that the grassfed levy payer has, under the current structure contained within the MoU,” Mr Kelly said. “So any review of the MOU would, of course, have to take that into consideration.”

He said in his opinion input into any MoU review should be extended beyond the signatories (peak industry councils and service providers), because there were other organisations with an interest in the outcome.

“You only have to look at who made submissions to the grassfed senate inquiry and the pending inquiry into the processing sector. There are obviously other interested parties in this outcome, and I believe everyone should be given the opportunity to voice their opinions,” he said.

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