Big beefs with Senate grassfed report

13 Sep, 2014 04:00 AM
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Not only is the industry itself complicated, it is interwoven with a snarl of legislation

THE report handed down on Monday by the Senate committee looking at “Industry structures and systems governing levies on grassfed cattle” reflects one outstanding feature of Australia’s beef cattle industry: it’s complicated.

Not only is the industry itself complicated, it is interwoven with a snarl of legislation that has tripped many wandering down the path of good intentions.

Those layers of complexity, which produce a myriad of views on how the interests of cattle producers might be advanced, are reflected in the report’s seven recommendations.

Some of the recommendations could lead to massive change in beef industry structures, but none will be easy to implement - particularly because the beef industry is a house of cards, and no card can be moved without a cascade of other effects.

It also remains to be seen whether the recommendations, individually or together, will resolve the two issues that drove the inquiry: dissatisfaction with flatlining cattle prices and a belief that beef cattle producers do not have adequate representation.

Industry crowded with acronyms

Take the Senate committee’s first recommendation, that a producer-owned body be established by legislation with the “authority to receive and disperse the research and development, as well as marketing component, of the cattle transaction levy funds”.

This introduces another organisation into an industry already crowded with acronyms, and another body that has to attract competent producers to take time away from their businesses (the committee “strongly supports” a directly-elected board model).

The recommendation suggests that reforming Cattle Council of Australia (CCA) might achieve the goal, but this possibility seems to be contradicted by an observation on statutory funding arrangments, which mean that “the new body should not be permitted to engage in agri-political activities”.

Levies and processor power

Recommendation 1 goes hand-in-hand with Recommendation 2: that the industry move to an automated cattle transaction levy system that speeds up the levy payments and automatically ties levy payments to voting rights.

Automation might not only vastly improve producer participation in industry decision making, but the committee suggests it may help move the levy system from the current $5 per head flat fee “to a more dynamic structure”.

Prompted by the inquiry, MLA has recently begun exploring the automation option.

Recommendation 3 reflects the distrust of processor power that ran through the inquiry. It proposes the Primary Industries (Excise) Levies Act be amended to ensure that processor levies are clearly identified as separate from cattle transaction levies.

Meat and Livestock Australia (MLA) representatives told the Senate committee that this split is already made when allocating R&D funds, but in Recommendation 4 the committee still advocates for independent auditing of levy funds by the Australian National Audit Office.

An audit, the committee believes, would be “an opportunity to clear the air about levy revenue and expenditure while also providing a necessary factual foundation from which to discuss and initiate reform”.

Keeping industry structures simple

Reccomendations 5 and 6 are notionally about simplifying beef industry structures.

Number 5 proposes that the Red Meat Advisory Council (RMAC) be dissolved because it “does not serve the purpose for which it was intended”, but that leads to necessary new arrangements to disburse funds from the Red Meat Industry Reserve Fund.

Number 6 proposes revoking the donor status of the MLA Donor Company, a structure used to package private investment in R&D in a way that attracts matching government funding. There are “alternative avenues for private entities within the red meat industry to make contributions to R&D” the report observes.

Elephant in the room: prices

The last recommendation endorses what began as a one-man campaign by Bollon, Queensland, producer Rob Moore for greater price transparency in the beef supply chain.

The committee proposes an investigation into the American model of price transparency embodied in the United States Packers and Stockyards Act 1921 and Livestock Mandatory Price Reporting Act 1999.

MLA boss Richard Norton has pre-empted the recommendation by launching a tender process for a consultancy that will consider this same question.

CCA response

Out of seven recommendations made by the Senate inquiry into grass-fed cattle levies, Cattle Council of Australia (CCA) approves of two.

CCA’s lukewarm reception to the report suggests a lot of meetings ahead for Agriculture Minister Barnaby Joyce, who now has to decide which recommendations, if any, he acts on.

CCA president Andrew Ogilvie said the Senate comittee’s recommendations appear not to answer the questions at the heart of the inquiry.

“If you read the submissions to the inquiry it’s all about the failure of representative bodies to increase the profitability of beef and increase beef consumption over the last 20 years,” Mr Ogilvie said.

“I’m not really sure any of these recommendations are going to address that issue.”

More particularly, the report does not reflect the submissions made by CCA to the inquiry about the allocation of funding to beef industry bodies.

“Although it’s talked about a lot, they really haven’t addressed the funding issue,” he said.

CCA fully endorses the recommendation that the levy payments system, and linkages to MLA voting rights, be automated. The Senate committee argued that a transparent, automated system is integral to trust and producer support of levy arrangments.

But CCA is not in favour of the proposal to form a new beef industry group through legislation, primarily to disburse levy funds.

“Any representative group must be completely autonomous,” Mr Ogilvie said.

“Industry must always be left to manage its own affairs.”

Nor does CCA think RMAC should be dissolved, as the Senate committee recommends, although the Council acknowledges questions around RMAC’s value to the red meat sectors.

The Council wants more detail on recommendations to comprehensively audit levy payments, especially around the question of cost and benefit, and also on the proposal to revoke the status of the MLA Donor Company.

The Company leveraged $13m of private investment last year, CCA noted, and losing that capacity would disadvantage producers.

But CCA welcomes the proposal to investigate whether beef selling systems can be reformed to deliver more price transparency to producers.

MLA has drawn up terms of reference for the investigation, and a producer panel is reviewing consultancies that have responded to a tender.

Mr Ogilvie acknowledged that working through the questions raised by the report is going to be a long process - one that will be confounded by the larger inquiry being called into the agricultural R&D levy system in general.

“Changes as significant as the ones proposed in this report will need to be discussed at length to ensure all of the ramifications are fully understood before being put to the vote of all levy payers,” he said.

FarmOnline
Matthew Cawood

Matthew Cawood

is the national science and environment writer for Fairfax Agricultural Media
Date: Newest first | Oldest first

READER COMMENTS

Rob Moore
13/09/2014 6:23:50 PM

Thanks for the acknowlegement- re the PPP and Rec #7 Matt. I despair at how the wheels of power and influence work in this country . Joyce is off today with 38 moguls of the AG Industry- either secondary Business owners or their reps or shopfront reps of CCA,NTCA,NFF,MLA etc - China bound for a week. I would love to be there networking at the bar with them and to be a fly on the wall. CCA&MLA have hijacked the PPP tender to one of their mates to be announced! Solely my idea and they have already cut me from the list?
Pghilip Downie
15/09/2014 9:24:18 AM

Mr Ogilvie one thing we are sure of is that the current system has failed to increase profitability so staying with it is not going to solve the issue. As for lengthy discussions, I am sure there will be plenty with your mates to come up with a scheme to try to maintain their status quo on the gravy train even though it has been an abject failure. As for point 7 well when you get kicked where it hurts it is easy to blame the messenger, typical inner circle reaction he's the problem, not us so what if we didn't listen we are at the top of the tree, how dare they.

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Well why are they paying MLA levies. ?
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Where have I been for a week, don't tell me the PC has been reading all the hints I leave on
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Pete you also missed 15,527 votes for Marty Corboy in Indi because Sophie made it a 3 corner by