FEDERAL politicians have been waiting on the EY report into the $150 million proposal to install Dual Energy X-Ray Absorptiometry (DEXA) to be released, before finalising a long-running inquiry into competition issues in the red meat supply chain.
Underpinning concerns is a fear DEXA’s installation - which has the capacity to improve objective carcase measurement (OCM) of lean meat yield from 20 per cent to over 90pc, as it has done for the sheepmeat industry - could produce a two-speed beef manufacturing economy.
But the cattle sector’s representative structure also remains problematic amid moves to enhance grass roots producer representation, as the Senate Rural and Regional Affairs and Transport References Committee aims to complete and release its report shortly after a final hearing, in Canberra next month.
EY’s report from an independent review into the Meat and Livestock Australia (MLA) $150 million proposal to install DEXA in 90 AUS-MEAT registered facilities was released yesterday.
It was co-commission in February by the Australian Meat Processor Corporation (AMPC) and the Australian Meat Industry Council (AMIC) and said DEXA had strong promise but more proof was needed to show the technology could work, for the red meat sector, to convince producers and processors.
In the background, the Senate inquiry into the effect of market consolidation on the red meat processing sector - that was initiated in March 2015 - has also been considering the merits of DEXA and other methods of enhancing trust between producers and meat processors by applying new technologies to commercial operations.
After lapsing due to last year’s federal election – where an interim report was released – the red meat inquiry was re-engaged in the new parliament and has also been granted several reporting extensions.
Currently, the inquiry’s official status is to release a report on June 15 – but it is now due to be moved back again, with the Committee set to meet next week and discuss options.
Queensland Nationals Senator and Committee deputy chair Barry O’Sullivan said a public hearing was scheduled for August 1 and reporting had been delayed, while the EY review into DEXA and report was being finalised.
Senator O’Sullivan said after the August 1 hearing public - where the main players from the red meat sector are set to be called before the Committee to give final evidence and views - the final report would be completed, as soon as “reasonably possible” afterwards.
“One of the questions before us is about the introduction of new technologies into the supply chain that have implications,” he said.
“We could end up with a two-speed manufacturing economy in that there will be slaughter houses and processors who have the (DEXA) technology, that are choosing to adopt it, and those that choose not to.
“That’s going to have an impact in the market place.
“Additionally we remain confronted with the prospect that socialised funds are going to be used for the introduction of this technology – around $150m is the figure and it’s just significantly important that we get this right.”
Cattle producer representation also concerning Senate inquiry
Senator O’Sullivan said the Senate inquiry had also considered allegations around collusion of selling in cattle saleyards, and issues with pre and post-sale selling weights.
In addition, he said the Cattle Council of Australia had been in a “state of transition progressing towards a new cattle house as a peak industry body” while the Senate inquiry had been ongoing but that process was now getting close to resolution.
“I’ve spoken about the fact that AMIC don’t necessarily represent by volume, all of the players in the market,” he said.
“We needed to be convinced that (some industry participants) who are not members of AMIC, their ambitions and ideals for the industry, remain consistent with those that are being espoused by AMIC, but I think we’ve settled that issue.
“AMPC have also been very vocal in relation to some of the implications of this DEXA technology, so we’ve given them a more than fair and reasonable time chance to put together a position and put it to the Committee for their consideration.
“So the important thing was to make sure that at the end of the day the Committee had been given representative views by all the stakeholders before it and I think we’re reasonably satisfied that we’re very close to achieving that.”
Senator O’Sullivan said Cattle Council had headed up a national effort to bring, under the one roof, a number of cattle representative bodies and restructure itself so it was “much more of a grass roots member driven organisation”.
“That’s been difficult because they were unable to get access to the identity of levy-payers (but) the government introduced legislation late last year that’s allowed them to set up a register now,” he said.
“This cattle body will identify every cattle owner in the country who has transacted in the preceding year and it will allow them to reach out and form a much more representative body through a grass roots model.
“Now I understand they’re very, very close to completing that.
“They were waiting to try and access some federal government funding – that has been specifically provided to in last year’s budget and re-affirmed in this year’s budget - that will assist with the cost of restructuring.
“Troy Setter from the Consolidated Pastoral Company has been charged by the minister with facilitating this.
“He’s done a great job with willing parties and I think they’re pretty close to introducing a restructured model for peak representation, in cattle.
“This newly formed multi-dimensional body will represent the red meat industry in beef.”
ACCC also judging DEXA and beef market
A report from an inquiry into the cattle and beef market by the Australian Competition and Consumer Commission released in March also made 15 recommendations.
The ACCC cited a lack of trust in the carcase grading system, and concerns about anti-competitive conduct affecting competition in cattle and beef sales, while recommending the introduction of (OCM) should be prioritised by the industry and adopted by all processors “in a consistent manner as soon as possible”.
“Objective carcase measurement technology will increase accuracy and transparency of
value assessments - appropriate auditing and verification systems will be needed to support the technology,” the ACCC report said.
“The ACCC welcomes the moves made by MLA to introduce objective carcase measurement technology throughout the industry, as recommended in the Interim Report.”
The ACCC also recommended that data produced from OCM grading should be shared for industry’s benefit.
“The data produced as a result of objective carcase grading will be of wider benefit to the industry if aggregated and shared,” it said.
“For example, producers would be able to measure their own performance against the rest of the industry and make any production adjustments necessary to achieve higher cattle grades and prices.”
The ACCC report said the use of more objective carcase appraisal systems should be a high priority for the industry and supported by industry leaders and relevant policy makers.
“The introduction of such technology, and the sharing of resulting objective data with livestock producers creates very important opportunities to capture accelerated productivity gains in the livestock production and processing sectors,” it said.
“The development of common data standards across the sector, and industry-wide agreements covering data access rights will be important steps in building the confidence of all industry participants in such systems, and may also facilitate better risk management options through the development of tradeable derivatives that have an objective quality standard underpinning them.
“However, the ACCC notes that technology is not a panacea.
“During the market study, producers raised concerns with the ACCC about the calibration of the grading technology and who would oversee this.
“The ACCC considers that technology should be implemented in conjunction with suitable auditing systems and an independent dispute resolution system, to maximise integrity in the trusted system.”