Call to sort out combative beef supply chain relationships

Call to sort out combative beef supply chain relationships


Commercial
Red Meat Advisory Council chair Don Mackay in Alice Springs.

Red Meat Advisory Council chair Don Mackay in Alice Springs.

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Time to deal with stalled productivity and mistrust

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STALLED productivity improvement, inadequate on-farm investment and combative supply chain relationships have been put forward by red meat leader Don Mackay as key issues the industry needs to jump on.

That last one is something that has garnered enormous attention in recent times, not just within the beef and sheepmeat sectors but from senators, the competition authority and media.

Building genuine supply relationships and being part of a brand was the clear-cut solution, according to Mr Mackay, who heads up the overarching advocacy body, the Red Meat Advisory Council.

That involves a shift in mindset - namely seeing the person on the next step up or down the supply chain as a customer or supplier rather than an enemy to outnegotiate, according to other key sector leaders.

The conversation on beef supply chain relationships that played out at one of the industry’s major annual events, the forum associated with Meat and Livestock Australia’s annual general meeting in Alice Springs last week, was frank and constructive.

Mr Mackay kicked things off by pointing to the intense scrutiny red meat has been under in recent times with senate and ACCC inquiries and saying “as an industry we must recognise any shortcomings and look for improvements.”

He did say much of the commentary was disproportionate given the the industry was by-and-large functioning very well, a sentiment expressed time and again at smoko breaks by the 400-odd producers, agents and other beef business operators at the event.

Many expressed concern about the “negative and unjustified” image the beef business had been handed as a result of the senate proceedings, arguing the plethora of collaborative and progressive work going on in the industry had gone unrecognised.

“We do need to change, as fast as we can, the combative style of relationship between producers and other parts of the supply chain,” Mr Mackay said.

“If you talk to people who have long term relationships with the next point in the supply chain, they are getting strong feedback and making decisions based on that, not always getting the peak price but avoiding the lowest price bracket, and they have no concerns about mistrust,” he said.

“They are not complaining (about mistrust) but rather working feverishly on improving their business.

“We need to see the larger chunk of our industry operating this way.”

Processor leader Lachie Hart, chair of the Australian Meat Industry Council and managing director of respected Queensland operation Stockyard Beef, said the industry had learned a lot from the various inquiries and had moved forward.

“I was part of the infamous (Senator) Barry O’Sullivan tour of central Queensland and I expected to receive a lot of feedback from producers in regards to relationships with processors,” he said.

“But the feedback was more about representation, ensuring the voice of producers was getting carried through to decision makers.

“There needs to be more collaboration and consultation up and down the supply chain.”

Mr Hart said there was already evidence of processors going forward to develop a stronger level of trust, pointing to value based marketing pathways.

“From AMIC’s perspective, we understand we are part of a supply chain, one that requires agricultural inputs, and we need to collaborate to ensure we are sustainable,” he said.

“That will allow for these boom and bust cycles to be ironed out.”

Australian Lot Feeders’ Association president Tess Herbert said it was critical to both acknowledge market vagaries and recognise “you are talking to your customer, not your enemy.”

“It’s in no one’s best interests for any part of the supply chain to fall over,” she said.

Inadequate investment

The beef production sector relied heavily on debt for growth and clearly needed an increased injection of equity in businesses, according to RMAC boss Don Mackay.

Very few Australian farmers invested directly into agriculture, apart from the obvious examples such as Macquarie Bank, QIC and AMP, he said.

Long term funds in Australia simply did not recognise the safety in investment in agricultural land and businesses.

International investors, on the other hand, “get the story.”

“Overseas investment has been, and will continue to remain, a critical element in the development of our industry,” Mr Mackay said.

Major investors, particularly in the north, included the British, Japanese, Americans, Canadians, Chinese and more recently New Zealand pension funds.

The “political noise” about foreign investment was unfortunate, he said, because the simple fact was “this business would not survive if we did not have that capital.”

Productivity improvement

The “great work” done by beef and sheepmeat’s researchers and developers, and the excellent support from government, could not go to waste on account of poor extension and adoption, Mr Mackay said.

State governments have, for the most part, walked away from the extension job and industry had not yet picked up the ball, he said.

His message: Within minutes of something becoming available we have to run with it.

“This will be a significant focus for RMAC in the near future,” Mr Mackay said.

“We can’t stop improving.”

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