Abattoir tactics under fire

Just weeks after the Australian Competition and Consumer Commission (ACCC) highlighted its awareness about meatworks potentially consolidating into the hands of several processing leaders, 10 cattle buyers failed to front or be active at the inaugural Northern Victorian Livestock Exchange (NVLX) sale.

The prime beef market slipped as much as 30 cents a kilogram on the previous Wodonga sale prices.

Victorian Farmers Federation (VFF) president Ian Feldtmann said talk suggesting buyers who abandoned last week's sale were part of a boycott was "very disturbing".

The significant drop in buyer activity is believed to have been primarily in response to NVLX not offering post-sale sale weighing facilities on February 17 at the new Barnawartha yards.

"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," Mr Feldtmann said.

An angry NSW Farmers cattle committee chairman Derek Schoen described the buyer stand-off as a "classic example" of the threat of processing sector consolidation.

"Processors wanted to go to post-sell weighing because they believe they get a better yield out of the carcass, but they're not willing to pay more for the post-sale weighing," he said.

"The week prior they were quite willing to purchase pre-sale weighed cattle.

"But when they went to the new yards they all of a sudden couldn't figure it in to their calculations.

"It really makes you scratch your head."

NVLX operator, Regional Infra- structure Pty Limited (RIPL) confirmed it was aware of the position of Teys Cargill and two other buyers representing processors before the so-called boycott occurred.

VFF and NSW Farmers have written to Minister for Agriculture Barnaby Joyce highlighting their concerns and requesting a Senate inquiry.

The farm bodies will also host a producer meeting for March 2 to discuss the boycott and its fallout.

"We forewarned the ACCC if it approved Primo's sale there could be further consolidation and that (increasing buying power) could be used as a leverage in the market place," Mr Schoen said.

"We're very disappointed it appears to have happened exactly as we predicted."

It was "unnerving" this occurred two weeks after the ACCC approved the sale of smallgoods company Primo to meat giant JBS.

NSW Farmers had earlier told the ACCC within five years a "duopoly" in the processing industry could arise with minor players on the edges.

Mr Schoen believed ACCC compliance unit staff attended this week' prime sale at the NVLX collecting evidence.

He said selling agents were reluctant to talk, but any future Senate inquiry would be able hear evidence in private.

"An agent doesn't want to come out on their own and then possibly be targeted by processors - that would be unfortunate for them and their clients," he said.

"After the Cargill Teys merger (in 2011) the ACC should have been investigating the impact on the marketplace and I don't believe they've done that."

Given saleyards were often the leading indicator for over the hooks prices paid for stock trucked direct from farm to meatworks, a general decline in saleyard bidding competition would be concerning, he said.

Mr Schoen felt producers should have been warned about the reduced buyer attendance so they had the opportunity to withdraw stock.

RIPL managing director Garry Edwards, said the saleyards advisory committee, which included agents, vendors, transporters and buyers, had settled on a three month transition period from pre-sale to post-sale weighing which is why the first Tuesday sale was conducted under the pre-weigh system.

"We were working under what was discussed; obviously individual buyers have made a choice that their company position was different to that," he said.

"The post-weigh situation is something export meat processors have sought for over 12 months."

"At all times we'd like to see full buyer competition in every market. I can't comment on why people did or didn't attend."

Wodonga Agents Association president, Trevor Parker said the "business with post-sale weighing" had happened, and he believed had been addressed "the best way it could have possibly been addressed".

"The overriding priority was to maximise competition on the vendors' cattle and that's why the decision was taken (to continue sales as a post-weigh arrangement)."

The NSW Farmers/VFF meeting is open to all producers at 12.30pm on March 2 at Barnawartha Soldiers Memorial Hall.