Producers call for a 'fair go'

02 Mar, 2015 12:00 PM
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Farmers just want a fair go; a fair price for their produce

CONCERNS over processing market competition are gaining national traction with a farmers' rally in Victoria and meatworks closures in central Queensland.

Farmers from NSW and Victoria are gathering at Barnawartha near the Victorian border today to protest against the growing market power of meat processors, while temporary plant closures in Queensland have forced attention on the lack of local market alternatives.

The Barnawartha rally follows a dramatic February 17 saleyard boycott, at which processors refused to bid on the first prime sale of cattle at the new Wodonga saleyards in an attempt to force the operators to change the long-standing tradition of pre-weighing cattle for sale.

While buyers denied they were involved in an organised boycott, the lack of competition triggered a price reduction of 20 to 30 cents a kilogram across the board at the 2200-head sale.

“If we get this decision wrong, farmers will lose”

The lack of diversity in the processor market has become an urgent issue for CQ cattle producers, with Rockhampton plants owned by JBS Swift and Teys Australia closed for at least a month and another week respectively, following cyclone damage to the buildings.

Cattle Council of Australia president Howard Smith was concerned about the situation, saying while other plants planned extra shifts to cope with local supply, the added freight costs would take a toll on producers.

Mr Smith said the earliest he could book livestock into the meat works at Biloela was in April, and the lead up to seasonal turn-off was an added complication.

“We then have a run of short weeks with Easter - and it has always been a difficult time (to book processing) with cattle without this happening.”

“Market consolidation in the meat processing sector is causing lower returns to farmers”

Farm lobby groups are now calling for a Senate inquiry into the red meat processing sector to investigate shrinking market competition.

In a joint statement, NSW Farmers and Victorian Farmers Federation (VFF) said reduction in meatworks competition had hampered cattle producers’ ability to “get a fair price”.

NSW Farmers Cattle Committee chair Derek Schoen said producers relied on a diverse market, and pointed to the Australian Competition and Consumer Commission’s (ACCC) approval of JBS’ acquisition of processor Primo as a particular point of concern. Primo and JBS compete directly, he said, and the takeover would "cruel cattle prices for farmers".

“The acquisition of Primo by JBS will (make it) incredibly difficult for any new entrants to enter the market," Mr Schoen said.

"I am making a direct plea to the Treasurer - put this decision on hold until all the facts are tabled. If we get this decision wrong, farmers will lose."

“This is an issue which demands a serious examination of the national interest”

VFF Livestock president Ian Feldtmann said the JBS takeover bid was not an isolated problem, but "a symptom of the structural inequity that exists in the cattle market".

"Market consolidation in the meat processing sector is causing lower returns to farmers and it is time this trend is stopped," he said.

“The reality is the boycott is just a symptom of processors gaining too much market muscle and the issue of processors’ market power needs to be taken further."

While the Australian Competition and Consumer Commission (ACCC) controversially approved the JBS bid, the consumer watchdog also flagged concerns about a consolidating abattoir industry trend.

“The ACCC will continue to monitor this industry and any future acquisitions will face additional scrutiny,” ACCC chair Rod Sims said.

Nationals Senator John Williams was furious at the decision, labelling the ACCC "out of touch with reality".

“I find it confusing that on one hand the ACCC will not oppose this acquisition, yet in the next breath says it is wary of the potential impact of the further consolidation of abattoirs," Senator Williams said.

“If that is true, why didn’t it act in this instance?"

NSW Farmers said the retail price for beef had risen from $10 a kilogram in 2000 to $16 a kilogram in 2012, while saleyard prices had remained at around $3/kg over the same period.

The organisation also questioned the usefulness of focusing on foreign investment in Australian agriculture when domestic issues were undermining producers' profitability.

"What is the point of protecting our agricultural land from too much foreign acquisition when all of our produce will be processed and controlled by a select few?" Mr Schoen said.

"This is an issue which demands a serious examination of the national interest.

"Farmers just want a fair go; a fair price for their produce. If the Treasurer approves this decision it will have long term ramifications for cattle farming in Australia."

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FarmOnline

Katie McRobert

is the national editor of FarmOnline
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READER COMMENTS

Archibald
2/03/2015 1:09:44 PM

A giant step in the right direction would be for Minister Joyce to implement all 7 of the Seven Senate recommendations into grass fed cattle transaction levies and associated structures. Instead we have big fat zero from Minister Joyce and the outcome will not be good for the Nationals if this kind of disregard for the grass roots of Agriculture in Australia continues!!
Rob Moore
2/03/2015 3:05:19 PM

Of course -if we had the AUDA "Offer Board" operating- it would take all these games of conditioning and brinksmanship out of this silly way to market cattle or all livestock. Each company would put a balance of forward quantity offers with pricing grids, specs, del point and expiry date up. First in will get booking till quant filled. All kill,feeder,liveEX will HAVE to list if they want supply. Otherwise the trad-A+,saleyards will have to suffice.This will provide an open and orderly stream of commerce without the panick and totally run by the buyers and sellers on AUDA=COMPETITION for 1st!
harold
2/03/2015 4:24:05 PM

Investigations into processing, fertiliser, supermarkets,etc etc. Nothing ever gets found demonstrably wrong, even though as producers we know it is. How long will the govt and its vices keep this charade up?
John Carpenter
2/03/2015 5:49:34 PM

This is complex but cattle producers are in this horrible situation because of the industry structure that was forcibly imposed on them in1997.The SFO,s and the NP are responsible for this structure and have supported it notwithstanding the poverty and hardship it has inflicted on us.The only answer is for cattle producers to vote down the CTL,lobby for the immediate termination of the diabolical AMLI Act and support my plan for leveling the playing field.On current trends cattle production is non viable in Australia and only radical change will save it.
Percy
2/03/2015 8:08:18 PM

Collusion between buyers was outlawed but recently sales were boycotted by buyers to blackmail saleyard operators to change when a beast is weighed. This is not proof of collusion???
John Michelmore
3/03/2015 3:53:18 PM

I agree with John Carpenter. change for the better could occur, but producers need to vote on whether transaction levies are of any benefit and also Minister Joyce must adopt the grass fed levy Senate Inquiry recommendations in full if livestock production is to remain viable in Australia.
John Carpenter
3/03/2015 4:55:43 PM

The industry structure basically provides a legalised platform for collusion.
The Serf
3/03/2015 6:11:30 PM

JC above is totally correct; we need the CTL voted down and the AMLI Act repealed; the prices we are receiving are 3rd world prices that are coming out of Asia and they are 30%+ better than the domestic prices and even they Asian prices are only 50% of comparable cattle of the United States in our terms they are $4- $5 per kilo live. we seem to be in a time warp, a form of slavery to the processors and the urban population and its time we removed the shackles. Only radical change will address our non-profitable status; CCA have had their run its all over mate!!!
pepper
3/03/2015 8:58:22 PM

Processors should not have any primary cattle market power....they should be competitive as service providers in the meat processing business. The buyers of primary stock though an open and transparent cattle market should contract/engage their competitive processor to cut to buyer specification. Processors should not be controlling demand for market stock. If the processors are too expensive or there is not enough capacity to ensure 'degrees of freedom' for processor competition to operate then open up the alternative opportunities until it works.

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COMMENTS

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This would have to represent the greatest over reaction by a community ill equipped to register
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What isn't mentioned is that our biggest live export market Indonesia capped live cattle imports
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Yep cap the numbers and also cap the hourly rate as well!!