Beef Levy Inquiry Op-Ed – “Inquiring minds call for change”

27 June 2014

In the coming weeks, the Federal Senate’s Rural and Regional Affairs and Transport References Committee will deliver its interim report on the status of the grass-fed beef levies structure.

This follows months of listening to the concerns of producers and other industry stakeholders across all corners of the nation.

As the Australian agriculture sector locks its sight towards capitalising on the increasing numbers of middle class across China and the rising fortunes of Asia more generally, both government and industry are paying closer attention to the health and vitality of the structures that underpin our farming economy.

There perhaps has never been a greater time, at least in recent history, where agriculture has been so central to the focus of the law and policy making agenda.

Both State and Federal Governments have identified agriculture as one of the economic pillars that will deliver wealth and prosperity for the coming generations, with a number of White Papers and other long term planning strategies in development.

As such, the grass-fed beef levies inquiry has been a very worthy and timely focus for the Federal Senate to commit to undertaking.

This is an inquiry that really should be carried out every decade or so to monitor how effective government and industry funds have been in delivering real outcomes and increased profitability for the red meat sector.

The sheer volume of submissions and stakeholders participating in this Senate Inquiry indicates both the concerns inherent in the existing levy structures as well as the desire of all elements of the sector to respond to and repair these issues.

For any Senator attempting to deliver potential solutions through an inquiry, high levels of participation from relevant stakeholders eases the burden of determining those keys concerns, and increases the likelihood of a committee providing relevant and workable recommendations.

Due to my role as a Senator participating in the formulation of the upcoming interim report, I am legally forbidden from publically discussing or speculating on the final outcomes of the Federal Government report.

Despite this, there are a number of observations that have trended strongly throughout the course of the public hearings process and the almost 200 written submissions.

It is worthy to consider some of these factors that each participating Senator is currently grappling with:

• Peak Industry Body Participation:

It is glaringly obvious that participation in peak industry bodies is declining and there is strong cynicism among stakeholders about their ability to deliver relevant outcomes.

It is clear that some peak industry bodies are not meeting public expectations and there needs to be more reporting of their activities and further engagement to discover what lay at the heart of these issues.

However, rather than simply walking away, the onus is equally on individual producers to take more responsibility to engage with these peak bodies to facilitate change.

• Funding of Peak Industry Bodies:

Several of the peak industry bodies have argued their apparent funding shortfalls hinder their ability to provide the desired level of representation and thus, struggle with wider industry relevancy.

Central to this problem is the capacity of Cattle Council of Australia to adequately oversee and direct Meat and Livestock Australia (MLA) using its limited resources.

There have also been accusations that the independence and oversight capacity of Cattle Council is jeopardised by its cross-funding arrangement with MLA.

Furthermore, Cattle Council’s capacity to lead and instigate national beef sector policies is extremely limited with inadequate resources.

Frankly, this current scenario can only serve to hinder farm gate profitability.

It is clear producers want MLA to be more transparent in its research and development processes and projects, as well as its decision-making when awarding tenders.

Again, the weakened and limited resources of Cattle Council, with its oversight capacity, compounds this problem.

And, as such, producers have limited opportunity to influence the decisions and direction of levy expenditure.

• Red Meat Advisory Council (RMAC) structure:

The ongoing accusations of bias towards processors, both in the RMAC board make-up as well as in the decisions made by RMAC, continue to divide the sector.

For example, it is clear that RMAC was divided on how to tackle the live export suspension in June 2011.

AMIC was clearly at odds with the production-based members of the RMAC board who represent those who profit from the live trade. 3

This rift among industry was exposed at a critical juncture, resulting in inadequate advice being provided to the minister, which, it could be argued, prevented swift and decisive action from the beef sector – leading to a time lapse that animal activists clearly benefitted from.

The beef industry does not benefit from such self-defeating and blatant politically motivated actions.

• Processors and Producers

Finally, perhaps the greatest challenge facing our beef sector is the ongoing conflicts between grass-fed beef producers and the processors, especially in how it relates to profitability at the farm gate.

Federal Agriculture Minister Barnaby Joyce has repeatedly shared his driving commitment to deliver public policy that leads to a better return at the farm gate.

As total farm debt continues to outstrip total value of farm production, industry stakeholders are right to question if their levy dollars are being wisely spent.

Both processors and producers contribute to, and share any benefits from, marketing and research and development programs.

However, processors are at odds with producers even though both are in the same game.

Processors and exporters are margin operators.

Their incentive is to reduce the livestock cost rather than focus on ways to value add and increase their margins and sale price.

As this senate inquiry has clearly established, without a willingness for all sides to better coordinate with, and compliment, other elements of the supply chain, the underlying problems inherent in the system will only serve to prevent the beef industry from reaching its true potential in this ‘Asian Century’.