IT is as certain as night follows day.
When there is trouble in paradise, politicians will inevitably want to initiate an inquiry or review of some sort to be seen to be doing something.
The latest iteration of this theme is last week's announcement by the Albanese government that it will direct the Australian Competition and Consumer Commission to investigate pricing and competition in the supermarket sector.
This development has its roots in the dramatic beef market slump late last year.
Coming on the heels of three years of high cattle prices, grumblings about poor returns were not likely to attract much sympathy but failure of retailers to pass on the lower prices to consumers was another matter altogether.
Considering how sensitive the cost-of-living issue has become for the government, it is surprising that it chose not to pull out the big stick sooner.
Instead, as complaints about retail meat prices not coming down grew louder, it responded in December by announcing a Senate Select Committee on Supermarket Prices would be established to inquire into and report on the price setting practices and market power of major supermarkets.
The problem for the government, however, was that this fell short of being seen as a sufficiently serious response to the issue. Terms of reference were wide and complex, yet the February 2 deadline for submissions was extremely short considering Christmas downtime. This left only March/April for analysis and conclusions, with the final report due on May 7.
Meanwhile, the scheduled review of the Food and Grocery Code of Conduct had been drifting along since October without much fanfare or recognition due to the code being scheduled to sunset (be automatically repealed) on April 1, 2025.
Suddenly this review was bolstered with some serious firepower.
In mid-January the government announced Dr Craig Emerson (Federal Minister for Small Business from 2007-2010 and Minister for Competition Policy and Consumer Affairs from 2009-2010) would lead the review.
Mr Albanese chimed in with some appropriate sentiment about supermarket responsibility, while Minister for Agriculture Murray Watt said "We've been making clear for many months now that retailers should start dropping their prices to reflect the reduction in prices farmers are getting for their produce". National Farmers' Federation president David Jochinke added his voice saying, "We need to get to the bottom of why there's a growing gap between what farmers get paid and what produce is being sold for on supermarket shelves."
But it seems no one was convinced that a relatively toothless and virtually obsolete code that dealt mainly with relations between supermarkets and suppliers was the answer.
The ACCC was finally called in.
Yet to receive its terms of reference, the ACCC said the inquiry would run for one year, with an interim report to the government in late 2024 and the final report in early 2025.
A price inquiry under the Competition and Consumer Act 2010 allows the ACCC to use its compulsory information-gathering powers to collect information from the relevant parties subject to the inquiry.
But this does not appear to be of the slightest concern to Woolworths CEO Brad Banducci.
In a television interview with the ABC's Laura Tingle, Mr Banducci provided insight into what Woolworths would tell the ACCC.
He claimed that red meat was one of Woolworths' lowest margin businesses.
Unlike fruit and vegetables, where shelf prices respond very quickly to market dynamics, red meat has a much longer lead and lag time between when an animal is bought and when meat appears on the shelves. This is because Woolworths does not buy from saleyards.
Mr Banducci explained that Woolworths gave its beef farmers certainty of price. He said that over time its meat prices correlated directly back to the price it paid the farmer but that needed to be seen over a 12 to 24-month period.
Thus, it would seem the respective positions are drawn - the government siding with consumers and producers who feel that lower supply costs are not being passed on at retail level, while supermarkets are saying their retail prices do reflect supply costs albeit over a wide time frame and that red meat margins are very modest.
With two inquiries and a review running concurrently on the same subject stemming from the same causative drop in cattle prices, it all sounds very similar to the Senate Rural and Regional Affairs Committee inquiry and ACCC investigations that ran concurrently in 2015-16 after disaffection emanating from the cattle price downturn of 2014.
In looking at the current round of inquiries, it is reasonable to ask what enduring benefit was achieved from the enormous amount of time and effort that went into submissions and public hearings last time around.
The ACCC investigation into the so-called Barnawartha saleyards boycott found no evidence of hard-core collusion by processors and no breach of the Act. Their subsequent Market Study expressed concern about certain issues and activities that had potential to affect competition but there was no adoption of recommendations.
The Senate Committee which was tasked to examine the impact of red meat processor consolidation on market competition finally concluded its report in September 2017 after multiple time extensions from its original reporting date of 12 August, 2015.
Nothing came of its seven recommendations which contained not a word about processor consolidation.
Rates continue to move up
RAIN continued to influence proceedings this week forcing livestock managers to play by the hour dealing with transport disruptions to hold scheduled kills together.
Some works look like getting through with perhaps short numbers in the final shifts while others have already lost time.
Tight supply is keeping upward pressure on rates with some adjustment occurring this week leaving others still to move. This has resulted in a spread of 560-585c/kg for YP ox in southern Qld with heavy cow at 490-520.
On the output side, the ongoing DP World dispute is starting to bite. Exporters are managing a work-around solution through other stevedores to keep product moving but it is far from ideal.
