Processing

Senate inquiry into processing consolidation likely: NSW Farmers

Terry Sim and James Nason, 05/03/2015
NSW Farmers says it believes there is Parliamentary support for an inquiry into market consolidation in the red meat processing sector.

NSW Farmers says it believes there is Parliamentary support for an inquiry into market consolidation in the red meat processing sector.

Farmers leading calls for a senate inquiry into market consolidation in the red meat processing sector say the move is gaining support from senators in major parties.

NSW Farmers Cattle Committee chair Derek Schoen said a Senate inquiry would continue to be sought “with great vigour”.

“We believe we have to get to the bottom of this processor power,” he said.

“We believe the boycott in Barnawatha was just the tip of the iceberg and it definitely has to be investigated.”

Mr Schoen said a lot of senators had been lobbied to support a Senate inquiry.

“We’ve had provisional say-sos from across the board – from Labor, Liberals, Nationals and the Greens,” he said.

“We anticipate that the Senate inquiry will get up.

“There is a general feeling out there that it is needed.”

Mr Schoen said NSW Farmers was very disappointed that Federal Treasurer Joe Hockey had approved the sale of smallgoods manufacturer Primo to Brazilian-owned company JBS before the proposed Senate inquiry.

Mr Schoen said NSW Farmers would be keeping a “very close eye” on the FIRB review and auditing process.

What is required for a Senate Inquiry to commence?

For a Senate Inquiry to proceed, it requires a Senator to draw up a draft terms of reference document for an inquiry to follow.

The draft terms of reference must then be agreed to by the Senator’s party, or by multiple parties (ie the Government and opposition) if the inquiry is to proceed on bipartisan grounds.

If that support is received, a resolution containing the terms of reference is then presented to the Senate, and, unless there is an objection, an official inquiry proceeds.

The timing would suggest it would be unlikely that an outcome would occur during the current Senate sitting period, but, if Senators are working on developing the necessary documents now, an outcome during the next sitting period from March 16 to 26 may be a possibility.

MLA quizzed at Senate Estimates

MLA managing director Richard Norton was asked about the issue of processing sector consolidation during a Senate Estimates hearing in Canberra last week.

He said the red meat processing sector had been subject to the same pressures as any manufacturing sector in Australia over the past decade.

“It has consolidated, and then there was an enormous drought in Queensland where for two years in a row we had record sales of beef, and that impacted on saleyard price,” Mr Norton said.

MLA was working to make the barriers to entry in processing in Australia less, and to make it a more attractive sector in which to invest.

Some of that work was around developing robotics which was already showing promise as a means of reducing processing costs, particularly in the lamb industry.

“I think all these things, although not directly paid for by the levy payer, are ways that will make it more attractive for more processing in this country so that perhaps when events like the last two years occur we have capacity to deal with it.”

Asked for his own position on pre- or post- sale weighing, Mr Norton answered from the perspective of his previous role as a livestock agent.

He said it was up to livestock agencies and processors and the whole saleyards system to get together and “sort it out”.

“It is not a complex issue, I would have thought, around pre or postsale weighing. There is enormous variance across Australia, and I think vendors choose saleyards accordingly.”

ALPA: ‘pre versus post weighing is a local issue’

The Australian Livestock and Property Agents Association made similar comments when asked by Beef Central this week about where it stands on the pre- versus post- sale weighing issue.

ALPA CEO Andy Madigan said ALPA’s national position was simply that it supports the auction system in whatever form that takes that suits each particular area, and the producers and the buyers in that area.

“As far as ALPA is concerned, we support the auction system and it is up to the agents to decide how they conduct the sale, and then it is up to the vendors as to whether they support that sale and it is up to the purchasers to decide whether they support that sale, whether it is pre, post or no-weigh.”

Heffernan targets variations in trim across plants

In last week’s Senate Estimates hearing, Liberal Senator Bill Heffernan said that where selling centres used post-sale weighing, it could take up to 24 hours after a sale for cattle to be weighed, if it was a big sale.

That was “a bloody big curfew”, he said, whereas “you could weigh them immediately before the sale, which seems to me to be a fair system. But the solution surely is not to withdraw buyers.”

Senator Heffernan, a cattle producer from NSW, also expressed concern about variations that occurred in the level of “trim” removed from cattle from one meatworks to the next.

“I sent two identical lots of livestock—I will not tell you which sort—to two separate abattoirs and there was over 10 per cent difference in the trim to the weight of the body. And that does not get wasted, as you know; it gets processed.”

Mr Norton said he was aware of variation in yields across plants.

He said MLA was co-funding a white paper exploring how the 35 year old system for measuring cattle, lamb and mutton sold over the hook could be improved.

“Ultimately, what we would like to see the industry move to—and we have dedicated resources to this—is take away the subjective measure and the variation at the point of slaughter through the whole industry so it is completely objective.

“We are putting a lot of work into it to make sure that, whether they are slaughtered from Tasmania or Townsville, they are the same measure. I agree with what you are saying, and the industry agrees with it, and we are providing the resources to address it.”

“…In the eight months I have been in the job I think it has been the No. 1 issue.”

 

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