The Senate Rural and Regional Affairs and Transport References Committee will conduct an inquiry into the red meat processing industry, after the Senate approved the draft Terms of Reference for an inquiry on Wednesday afternoon.
The draft was put to the senate by Nationals Senators John Williams of NSW, Bridget McKenzie of Victoria, and Barry O’Sullivan and Matthew Canavan of Queensland.
The Terms of Reference for the inquiry into the effect of market consolidation on the red meat processing sector include:
(a) the potential for misuse of market power through buyer collusion and the resultant impact on producer returns;
(b) the impact of the red-meat processor consolidation on market competition, creation of regional monopolies and returns to farm gate;
(c) the existing selling structures and processes at saleyards, particularly pre- and post-sale weighing, as well as direct sales and online auctions, and whether they remain relevant;
(d) the regulatory environment covering livestock, livestock agents, buyers and meat processors; and
(e) any related matter.
The process for lodging submissions is now open and will close on May 15.
The inquiry has been given a reporting deadline of August 12, but with the Senate RRAT Committee already working on eight concurrent inquiries, it would be no surprise to see that deadline extended until later in the year before a final report is handed down.
More information on the inquiry can be found at the Senate RRAT home page here.
Queensland LNP Senator Barry O’Sullivan said the inquiry presented an opportunity to review transparency and accountability through Australia’s beef supply chain.
Senator O’Sullivan said the Senate inquiry would enable stakeholders to share their concerns about price transparency and processor market powers, which have often been cited as points of frustration for producers.
He said with more than two-thirds of the national herd in Queensland, Senator O’Sullivan said the inquiry could have a wide ranging impact on the state.
“I have travelled extensively through Western Queensland since becoming a Senator last year and have heard repeatedly from producers that they are concerned about the market influence and lack of transparency across the processing sector,” he said.
“The Nationals have listened to these concerns and have successfully pushed for a Senate inquiry.
“I encourage as many producers as possible to participate in this process. We will only have a strong beef sector if the right information is getting in front of the key decision-makers.”
Senator John Williams released the following media release announcing the inquiry on Wednesday afternoon:
A Senate inquiry has been launched into practices in the red meat processing sector in the wake of controversy over recent weeks.
Nationals Senators John Williams of NSW, Bridget McKenzie of Victoria, and Barry O’Sullivan and Matthew Canavan of Queensland have initiated the inquiry which will be conducted by the Rural and Regional Affairs and Transport References Committee. Senator Williams led the ultimately unsuccessful fight against the JBS takeover of Primo but in doing so highlighted the likely impact of market dominance on producer prices.
At the same time up to 10 buyers boycotted the livestock sale at Barnawartha saleyards in Victoria, infuriating producers and resulting in the calling of a meeting where they vented their fury.
Senator Williams said the Nationals have heard the calls from farmers and their organisations to lay bare the meat processing sector to see whether there is a misuse of market power, whether the current selling system is still pertinent, and what role livestock agents, producers and meat processors are playing.
The discrepancy between what the farmer receives and the consumer pays will be scrutinised in the inquiry.
The committee is due to report by the 12th of August.
The New South Wales Farmers Association also released a statement welcoming the inquiry on Wednesday afternoon:
Australia’s largest state farmer organisations today congratulated the Senate for listening to the agricultural industry’s calls for an inquiry into the red meat processing sector.
The Victorian Farmers Federation and the NSW Farmers Association have been working in close partnership over the last two months to put a spotlight on the red meat processing sector and the detrimental effects it’s having on farm gate prices.
It follows both the Barnawartha Boycott meeting and growing market power including the takeover of Primo by Brazilian agri-giant JBS.
“This is a big win for the farmers’ voice across Australia and confirms an inquiry into the red meat sector is necessary to get to the bottom of sector issues,” VFF Livestock President Ian Feldtmann said.
“For too long now processors have been taking advantage of the farmer and we are sick of it.
“The past 15 years has seen consistent increases in the retail price of red meat while farm gate prices have remained stagnant. It’s time this changed,” Mr Feldtmann said.
NSW Farmers Livestock Chair Derek Schoen said: “We keep hearing that increased consolidation creates efficiencies through economies of scale; that mergers and acquisitions can provide additional dividends for the producer. But the only thing farmers have seen is higher inputs and diminishing returns.
“I’m not against anyone making a quid in this game but I am opposed to seeing farmers being ripped off,” he said.
“If agriculture is going to be one of the next economic engines for Australia then we need to ensure we get the economic settings right.
“This Inquiry is an opportunity to do that. The VFF and NSWFA congratulate Victorian Senator Bridget McKenzie and NSW Senator John Williams who’ve shown great leadership on this issue.
“With their support and passion for regional Australia and farmer livelihoods our industry has much greater chance of being sustainable,” Mr Feldtmann said.
The Cattle Council of Australia has also said it welcomes the inquiry. It issued the following media release on Thursday morning:
Cattle Council welcomes yesterday’s decision by the Senate to refer to the Rural and Regional Affairs and Transport (RAT) References Committee an inquiry into the effect of market consolidation on the red meat processing sector.
Evening Stuart – the Castricum family is a well known name to Rod Moore , being at Brooklyn 1966 with Andy Brown, Vern Bernajim, Stan Pearce and some other 24 buyers in Victoria under the direction of Mr Colin Stedman,[ and I trust I have identified you correctly, if not my mere apologies ]- what a wonderful training ground from ‘ the professionals in the industry’ for the next generation of BUYERS for Uncle Tom – we were without the doubt the benchmark – John Mc Donald – Bindaree has many times made comment to Rod Moore – you blokes under Uncle Tom were trained to perfection – Rod Moore acknowlegdes same – however Tom Borthwick insisted we must be Honest to ourselves,honest to Uncle Tom and most IMPORTANTLY always be welcomed back by the Agent, Producer, transport Company, or whoever was involved, that we did business with. Unfortunately this dissapeared during the late 1980’s early 1990’s when Berarley, Elliott, John Karl- Betster and others attempted to dominate the SCENE – to the demise of every Producer, and re Plate to the World – NCMCo have you ever had an Operator number allocated?. Melva and Rod Moore did # 34 Aussie Farmers Wholesale Meats – what a trickey experience we experienced for a number of years, We were not alone in this experience from 1992 onwards for many years – if you consider The Avocardo Tree section of Plate to the World was REALATITY you should have had a Kill/ Chill/ Bone / Load out at 239 – what an experiecnce after many years of Uncle Tom doing it correctly to the benefit of all concerned – the Management/ Directors of that Co op has a lot to answer for – and Challange Rod Moore for scribing this – they would NOT be Game to EXPOSE what expired during that period. Rod Moore could not and would not recommend any producer being satified / involved with a situation as Neil Bassingwaighte thought could be the answer to the issues that ‘ hound’ this industry at present and into the future, until such time as new players enter the procurement/ sluaghter/ fabrication/ export side of this industry. As Geoff Tancred said to all present at the Clomsie Hotel meeting in 1987 ‘ we processors are all idiots should we listen to the Whims of the producers’ and Rod Moore was present and Horrified – where is this Supposed Industry Spokeperson or Ross Tancred in 2015 Rod Moore IS STILL ABOUT AND HOPEFULLY for many years to come
FREE to Roam Agriculture P/L
0467 0467 54
Cheers Rod , not sure you caught onto my gist . The call for this inquiry is a waste of tax payers money. Even though many rue the alleged duopoly in the export market, I would suggest that competition is there as you suggest. China, USA, Brazil, Japan, Singapore, Australian, live export, direct sell, vertical integration, live markets and online direct are all options for sellers. Now that’s competition. Pre-scale or post scale is a choice that is left to buyers (customers) to vote with their feet to decide what suits them. Sellers choose to follow the buyers preference or they don’t. A free market decides that. Your point about Steve Martyn’s book is great , highly recommend it to all. Note the history on meat co-ops in particular, for whatever reason only one lives and full credit to them. The rest along with many other models including private ones are relegated to history for a range of cyclical or other reasons. Farmers who do their own branded beef are brave and have varied success. They have insights into the margins to be won and lost first hand. Owning the meat plant doesn’t guarantee rewards for anyone as history shows. The evidence of industry competition is there to ensure there are no bargains or easy wins for new players. Inquiries on this are and will be a waste of time and money, the current cycle will reveal this. If you have the livestock, feed and water now you will reap well in the foreseeable future. Will the inquiry review the last 2 years, 5 years, 10 years or the current time and the next 2- 5 years.. Pointless really.
Neil, Rod Moore here, I have been waiting for someone like yourself to come forward, contact 0467 0467 54 Neil, and we will have good debate with good outcomes
Rod Moore 0467 0467 54
Stuart – you have part of the solution on paper in front of you — the answer is Auction Plus or Go Bid- if every processor made the decision NO More Direct Purchasesr from Any supplier – Small – Medium – Large and Corporate with the Only outlet being the Pyhsical Auction System – the Returns to producers would COLLAPSE. Queensland processors concistently during 2014 killed 68,000 to 72,000 head per week. Could you imagine the Physical Auction system coping with that throughput? put in a submission to the Senate that; ” sale of All Livestock can only be transacted via the Physical Auction System” . Secondly during 1978, a very senior producer member of Cattlemans Union of Australia put forward the Motion ‘ A single selling desk be the only means of trading the Chilled or Frozen product to World Markets from Australia’ this was seconded and opened for debate. Rod Moore was attending, had no objections to that motion being passed, provided A SINGLE BUYING desk also operated — UP ROAR from those present ” We want COMPETITION – more Competition and More Competition and more and more. Can’t have it both ways Stuart — what really does a Producer want – obtain 92% agreement on what producers want and this industry will flourish – leave the % where it is currently is and your grandchildren will read in history books, some 50 years from now what interesting formulas for success and disappointments were. Get hold of Steve Martyn’s book “World on a Plate”, a chronicle from 1876 to 2014 [ 138 years or 4 generations of producers] of the Red Meat industry in OZ — it tells it all – warts and all
Rod Moore 0467 0467 54
If there’s that much money to be made in processing and exporting beef, the obvious solution is for producers to get together and collectively do it themselves.
If the intent of those advocating the inquiry is A) to have more transparency into private businesses (processors), b) have more buyers attend my local livestock markets (to prevent collusion), c) choose the buyers I like and exclude those I don’t, and d) get paid for what my product is really worth (excluding the middle man who invests tens of millions and takes on the risk once the animal becomes food), the sensible conclusion to achieve this is legislate or make the system more socialist – co-operative for the little guy. I don’t think that’s what is a good thing but if you adopt my suggestion this will answer everyone’s issues. To expedite and save money, resist the inquiry and just pay me $1mil or a senators life time super. Happy days!
Robbie, Possibly you are correct – the difficulty you and most other producers / suppliers to any Physical Auction system is ” No person can prove any claim that is made regarding collusion – after all please explain – Collusion – A Very Junior alan felds and others from the Pricers Justification Tribunal in 1977 / 78 followed us [ the buyers ] around for about 5 weeks, off and on, attempting to prove the impossible – did Rod Moore ever get involved in such practise – NEVER – was I offered folding stuff to ‘ split pens, and do other things’ – Yes – did Rod Moore accept same – NEVER – was Rod Moore above the benchmark – No – not within the Processor salary paid buyers I competed against – the ‘ Spin’ blokes buying on a Commission for many different orders were and remain a different group of people ‘ wired differently’ to salary buyers, and ‘Never the twain shall meet’ the biggest probelm producers / sellers have is simply this ” the Physical Auction system – live weight or open auction ” is flawed , expensive and open to abuse from those involved – [that is why direct to works accounts for at least 72% of throughput on Eastern Seaboard for Pigs/ Mutton/ Lamb and Cattle ] and that is not critising the Dinky Dye family owned, family dependant Agent. They also are UNLIKE most producers – they are not asset rich and liquidity poor – they are holding in there by their finger nails and require a connection within the processor world that is willing to ‘ play the game’ for the producer and all others concerned. As for NCMCO at Casino you made mention of– Shareholders have access to elected board members and there is a Annual General meeting each year – should they have a quorum – be there if you you be a shareholder, if not a shareholder in NCMCo I rest my case
FREE to ROAM Agriculture P/L
This inquiry is many years past due as it is continually seen processors marking their pen and then purchasing that pen without full competition. Currently at Casino the two mayjor players are within a co-op member owned abbitor and competition is not being played out.Costs are increasing to the producer on all fronts but not being rewarded for our 12 hour days 7days a week.Currently our buisness is in arrears 10 thousand dollars annually and this cannot continue for good business.