Friday, 3 April 2015

Grassfed Cattle Levies Inquiry-Where to Now

"Should the following recommendations be rejected or even watered down, the committee fears that this existing goodwill, and with it efforts to provide a viable structure for producers, will rapidly diminish." 1 ( my emphasis-Report of Senate Inquiry into grassfed levies)

Joanne Rea

Grassfed Cattle Levies Inquiry-Where to Now
by Joanne Rea
The Senate Inquiry into grassfed levies was completed and reported on by early September 2014. So far only two of seven recommendations have been discussed and an outcome presented to the Minister. All seven recommendations can be found here.

Australian Meat Producers Group and Concerned Cattle Producers (AMPG/CCP) and Australian Beef Association (ABA) have publicly thrown their support behind all seven recommendations. Our lead cattle production policy body, CCA, have not made any public commitments either in favour of or rejecting recommendations three to seven
There are claims that proponents of change who are in favour of the seven Senate recommendations are just the “rant” of a vocal minority.

The Senate submissions and hearings themselves give the lie to these claims. The list of genuine deficiencies in our current red meat industry structures, as made by practising grassfed cattle producers was eerily similar across the country. This was backed up by public hearings in all states.
Almost 200 people or organisations made submissions with most pointing out intransigent problems with the current system. Many who were and still are in deep drought or debt were under too much pressure to submit and were relying on others to make a reasonable case.
I really don't know what “majority” the detractors think they are speaking on behalf of but to me it is clear that the “majority” that I see has made their wish for change loud and clear. The Senators thought so too.

7.33 The committee notes that the current levy system was put in place at a time when the extent of vertical integration could not have been foreseen. The prevailing perception is that the current structure has enabled processors to gain disproportionate influence over the producer levy system, at the expense of grass-fed producers who pay the greatest proportion of the levy. Indeed, this matter, along with concerns regarding the 'undemocratic' nature of the MLA voting system, has contributed to the loss of trust in MLA expressed by many submitters. 2

Recommendation number seven states that,
The committee recommends that the Department of Agriculture, in consultation with the cattle industry, conduct an analysis of the benefits, costs and consequences of introducing legislation akin to the Packers and Stockyards Act 1921 and Livestock Mandatory Price Reporting Act 1999.

Already there have been some rumblings that the US Acts are huge and expensive and cost the processing industry billions of dollars to comply with. It would be a great shame if the process were dismissed as a result without proper discussion of the likely benefits.

The fact is that there are many elements to the US system and its administration that we will not need to start from scratch with but will be able to be accommodated in existing structures.
Modern computer technology also means that data can be collected, transmitted and analysed relatively easily.

Peter Weeks in the MLA submission claims that they achieve the aims of required transparency by just ringing the processors and asking about their sales information, which they give voluntarily, and it only costs about $2,000,000. (emphasis added).

GIPSA, the body in the US which oversees the Stockyards and Packers Act spends considerable time prosecuting, settling and fining companies who do not pay for livestock within the prescribed period of three days. Payment protection is a very large part of their mandate. Although there are always a few people who want payment within a short period to be prescribed in Australia, many of us realise that this would put undue financial pressure on some small processors and we roll with the punches as long as we are ultimately paid.

As well as payment protection the agency is there  ''to assure fair competition and fair trade practices, to safeguard farmers and protect consumers...and to protect members of the livestock, meat, and poultry industries from unfair, deceptive, unjustly discriminatory and monopolistic practices...'' 3

We already have a body in the ACCC which is supposed to oversee these sorts of problems. They are not very active in rural industry until recently and they do not appear to have a great deal of expertise in or understanding of rural industry or a price taking market. A dedicated rural desk backed by industry specific legislation should see a more knowledgeable approach.

GIPSA also monitors the accuracy of scales and weighing of livestock. We already have such a body in Ausmeat. The only question is whether we want to give it more enforcement power and how much.
GIPSA also reviews stockyard services, handling practices and facilities. In Australia we have a plethora of codes and regulation which covers all of that.
Once the meat is stripped from the bone it may transpire that all we need is a bit of tightening of existing laws and very few new ones but they need an Act of there own to be coherent and have the appropriate monitoring in place..
We need to start informing the Minister for Agriculture what we require from an Australian version of the Stockyards and Packers Act which should be unique and called something else, bearing in mind that we do not want or need a clone of the US Act but a clean sheet of paper where we list the similar functions that we require and how we want them implemented.

GIPSA's Mission is unequivocally "To protect fair trade Practices, financial integrity, and competitive markets for livestock, meat, and poultry."

It is charged with:-

  • Conducting major investigations involving fraud, unfair competition, and deceptive practices.
  • Ensuring accurate scales and accurate weighing of livestock, meat, and poultry.
  • Monitoring market performance.
  • Carrying out the payment and statutory trust provisions of the Poultry Producers Financial Protection Act of 1987. Continuing certification of the "clear title" systems
  • Reviewing stockyard services, handling practices, and facilities.
We have no such body in Australia which is dedicated to producers with MLA's Meat industry Strategic Plan, where it stops being a social document, and occasionally poses as a business document, talking about “supply chain profitability” rather than producer profitability.

The Mandatory Price Reporting Act requires:-
 that the information, including price and volume information, be provided in a format that can be readily understood by producers; improves the price and supply reporting services of the Department of Agriculture; and encourages competition in the marketplace for livestock and livestock products.

In the latest round of amendments congress ordered the USDA to set up an interactive website which covered prices and numbers for every category of cattle, boxed beef and by-products as well as other livestock. A sample of the website can be accessed here and here. A great deal of very up to date information can be sourced from these reports. Processors are required to submit sales once or twice a day. Do we want this in an Australian version of the Packers and Stockyards Act.

One of the problems with the present market intelligence system as administered by MLA is that the information available and its methods of presentation have barely changed in a decade and a half. As time has moved on and the industry has become more vertically integrated those left in the dark have been the specialist cattle producers.

Do we need to do better than this? The Senators have offered the opportunity. Are we going to throw it away?

2 .Ibid. ch.7 p84

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