THE Australian Competition and Consumer Commission (ACCC) has been branded as out of touch and badly in need of a skilled agribusiness unit after contentiously approving the $1.45 billion takeover of smallgoods processor Primo by meat giant JBS.
Late last week the authority cleared one of the two main approval hurdles to Brazilian-owned JBS's takeover of the big smallgoods company, despite receiving farm sector criticism of the deal's potential to reduce meat sector competition.
However, in a warning shot fired across JBS's bows, the competition watchdog conceded it was wary about a consolidating abattoir industry trend in Australia.
JBS has acquired 11 meatworks in five States since 2007.
ACCC chairman Rod Sims drew immediate fire from Nationals MPs, including Senator John Williams who said he was confused to find the commission approving the sale, "yet in the next breath says it is wary of the potential impact of the further consolidation of abattoirs".
"If that is true, why didn't it act in this instance?" he asked.
"This decision has been met with dismay by farmers and the livestock industry.
"I've got a lot of respect for Rod Sims - he's a smart bloke - but his outfit has totally missed the mark on this one.
"They don't understand how the livestock auction system works - fewer buyers means lower prices and those saleyard prices also set the value of stock sold on consignment from the paddock to the meatworks."
He said the "disgraceful" ACCC decision sparked a groundswell of anxious activity within Coalition government ranks, with MPs hoping the Foreign Investment Review Board would better understand the situation.
“We really need an expert rural unit working within the ACCC, staffed with people experienced in rural issues”
NSW Farmers cattle committee chairman Derek Schoen said his dealings with the ACCC confirmed its staff "had a very poor understanding of agricultural markets and related activities".
He had personally assisted commission staff examining the Primo sale and while disappointed with its verdict, he was not surprised.
"It was very clear they don't have any real expertise in agricultural matters - they had no idea of how livestock saleyards operated," he said after taking ACCC staff to a Wagga Wagga cattle sale.
"We really need an expert rural unit working within the ACCC, staffed with people experienced in rural issues.
"Agribusiness is a complex, multi-faceted industry, but the ACCC seems to think it must treat every takeover case in isolation without thinking of the cumulative impact on producers or other competitors in the supply chain.
"Producers are very worried they'll wake up in 10 years to find we have a meat processing industry controlled by just two or three giant players."
His assessments of the ACCC's rural market competency echo concerns expressed during the blocked 2013 GrainCorp takeover bid by global grain processing force Archer Daniels Midland (ADM).
ACCC representatives facing a Senate inquiry on grain handling were grilled for approving the sale while admitting limited understanding of the grain trade or processes involved.
Last week Mr Sims accepted there was unease in the meat industry, saying the ACCC would monitor the processing sector "and any future acquisitions will face additional scrutiny".
He argued the competitive impact on meat customers, smallgoods customers or the provision of prime cattle service kills was studied but no significant competition concerns arose.
“I really don't think the ACCC has been looking at the bigger picture”
NSW Central West selling agent Ross Plasto said he has "nothing against JBS, but they're taking another bidder out of our market".
Mr Plasto from Plasto and Company at Wellington said NSW, in particular, had felt the pinch caused by a steady decline in abattoirs operators, especially in the beef sector.
"I really don't think the ACCC has been looking at the bigger picture," he said.
"Primo has been a major supporter of Dubbo sales, but increasingly it seems like our (eastern Australian) marketplace is becoming a JBS versus Teys-Cargill situation.
"It's a lot like the Coles and Woolworths story all over again."
Although market demand for red meat, particularly from exporters was strengthening and offering opportunities for new processors, Mr Plasto said new meatworks were expensive to build and operate, which limited the attraction to potential new industry players.
Adding to the problem, according to NSW Farmers cattle committee chairman Derek Shoen, "Killeneen", Corowa, was a tendency for existing meatworks to be locked into only handling stock for specific exporters or big supermarkets.
This left even even fewer options for farmers or local marketers wanting stock processed as contract kills.
But north eastern Victorian agent, Michael Curtis said despite the frustrating consolidation trend led by JBS, quite a few smaller meatworks continued to service southern Australia, and some had invested big sums in expanding operations.
"We've had a few cases where clients have been caught out as abattoirs have changed ownership or closed, but there's been quite a bit of extra export processing activity in the beef market of late, and that means they need more cattle," he said.
"Thomas Foods International at Murray Bridge (South Australia) has gone from handling 5000 cattle a week to 7000.
"Once these abattoirs are geared up their operators need to keep them working at maximum capacity, so they'll look for stock across a wider area."