AMPG: Grassfed plan does not ‘throw baby out with the bathwater’

Joanne Rea, Australian Meat Producers Group, 06/03/2015


I write on behalf of the Australian Meat Producers Group (AMPG) to correct a number of misconceptions expressed in the opinion piece by Mick Keogh of the Australian Farm Institute published by Beef Central on 18 February 2018.

The AMPG  is seeking to achieve the implementation of all seven recommendations of the Senate Inquiry into grassfed Levies. The Senate RRAT Committee handed down it report in September last year after holding an exhaustive inquiry into grassfed cattle levy structures and systems.

Almost all of the submissions to that inquiry, whether they were from producers or representative bodies, called for varying degrees of change to the current grassfed cattle organisational structures. The September 2014 Senate Inquiry Report outlines a number of structural flaws that the Senators obviously observed.

Final recommendations on the details of the voting system and whether the new grassfed cattle corporation will receive all or just some of the grassfed cattle transaction levy are still to be made by the joint industry working group in consultation with the broader industry, the Department of Agriculture and Minister Joyce.

There will however be no throwing the baby out with the bathwater as Mick Keogh suggests in Beef Central. There is also no claim on “control” for control’s sake. The Inquiry identified a series of structural failures which were inhibiting some sectors of the supply chain from reaching their full potential. A timid risk averse approach will not remedy that problem.

There are more strings to the profitability bow than just increased productivity and like it or not many of them are political.

As the Beef Central 17 February article by James Nason on the restructure plan that was presented to Minister Joyce states, it is common ground that if Newco is to receive all the cattle transaction levy in the future as many think it should, then the MOU between the MLA and the new body will be amended to ensure that MLA has sufficient funds to continue with its core projects.

Alternatively, if the majority of the grassfed transaction levy continues to flow to MLA, the MOU would be amended to ensure that those funds could only be spent with the authority of the new company.

MLA will still have a Board of its own which can continue to include all the R&D, marketing and financial expertise that it currently has. Grassfed cattle producers are however determined that in future their representative body with a board directly elected by levy payers will determine how grass fed levies are spent rather than having such decisions forced upon them without recourse.

Hopefully in future the R&D will be applied more directly to improving the bottom line of cattle producers than previously.

One of the key performance criteria that was central to the establishment of MLA in 1998 was to reverse the decline in real cattle prices that had occurred in the previous decade. Unfortunately real cattle prices continued to decline at the same or greater rate for the next 16 years after MLA incorporation.

ABA’s submission to the Senate inquiry pointed out that 25pc of all MLA R&D levy expenditure went to companies associated with the Board.

ABA has also pointed out that of 4000 projects funded by MLA since its inception, final reports exist for about 260 of those projects.

There is much R&D material that is treated as commercial in confidence by MLA and not available to levy payers. That information is however available to all Board members including those who are in charge of multinational companies.

In his speech to Parliament when legislation was passed to form a “producer organisation”, MLA, then Agriculture Minister John Anderson included that they should “represent producers” and be able to respond to a crisis.

We are all aware of how our current industry structures responded to the live export crisis in 2011.

There are many who think that the MLA marketing expenditure has been misdirected with processors and supermarkets receiving the real benefit from that marketing rather than producers.

Consequently, while world demand for our beef is strong and Australian processors have been receiving record prices we have a production sector with rapidly escalating debt and an unwillingness and inability to reinvest.

Young people have shown what they think of the industry by leaving it in droves and the only honest way to attract them back is secure long term profitability.

The quality and form of market intelligence available to producers has not changed in more than a decade and a half. Many of the routine reports that our competitors rely on do not exist here. Indeed, even the saleyard EYCI has become an increasingly inadequate source of market information with most premium lines sold direct to works.

Consolidation of both the processing and supermarket sectors has continued apace over the last 16 years with the ACCC not recognising the ever increasing market power of these sectors. The grassfed cattle organisations appear to have been equally ineffective in making the ACCC aware of the increasing vulnerability of the cattle production sector as a consequence of approval of recent sales.

It is obvious with a mere scratch of the surface that there are major, structural, ingrained problems within the Australian cattle production industry which will not be easily or quickly fixed.

Spending money on R&D that is never likely to lead to increased profitability for producers has proved to be unwise.

If MLA have R&D research that will return a payout to the grass fed cattle industry as a whole over the next 15 to 30 years, as Mick Keogh suggests, the board of the new grassfed cattle producer corporation will presumably agree to continue to fund that research in the interests of its levy paying members.

Our Federal Agriculture Minister Barnaby Joyce has welcomed and congratulated the grassfed cattle producers on reaching their historic united position on the form of the new levy funded grass fed cattle producer corporation and has promised to consider implementation of all seven recommendations of the Senate committee report.



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  1. Edgar Burnett, 10/03/2015

    And congratulations to the Australian Beef Association as well for their efforts in endeavoring to right the wrongs that are occurring to the Grass fed Cattle producers of Australia.Please keep it up.

  2. Loretta Carroll, 10/03/2015

    Congratulations to the Australian Meat Producers Group, you have nailed it! Keep up the good work and looking forward to the establishment of Newco.

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