Producers call for processing inquiry

25 Feb, 2015 06:45 AM
It will be incredibly difficult for any new entrants to enter the market

AFTER a dramatic saleyard boycott last week, farmers are calling for a Senate inquiry into red meat processing sector, citing negative impacts from shrinking market competition.

Farmers said reduction in competition for their product had reduced cattle producers’ ability to “get a fair price”.

NSW Farmers Cattle Committee chair Derek Schoen said producers relied on a diverse market and pointed to the Australian Competition and Consumer Commission’s (ACCC) approval of JBS’ acquisition of processor Primo as a particular point of concern.

“The acquisition of Primo by JBS will diminish competition and it will be incredibly difficult for any new entrants to enter the market.

“The best way to move forward is for the government to hold a Senate inquiry into the whole issue of consolidation in the red meat processing sector to enable the issue of competition in the market to be explored properly,” Mr Schoen said.

In a joint statement, NSW Farmers and Victorian Farmers Federation (VFF) said they were prompted by recent developments to take action.

Last week up to 10 buyers failed to appear or buy cattle at the first prime cattle sale at the new Barnawartha saleyards, near Wodonga, Victoria, with pre-weigh and post-weigh selling methods at issue.

“Both organisations and their members are extremely concerned following actions taken by processors to boycott the Barnawartha saleyards last week, which highlighted the increasing market power of red meat processors,” the statement said.

VFF livestock president Ian Feldtmann said farmers he represented had expressed “enormous concern” about industry consolidation.

“The reality is the boycott is just a symptom of processors gaining too much market muscle and the issue of processors’ market power needs to be taken further,” Mr Feldtmann said.

NSW Farmers said the retail price for beef had risen from $10 a kilogram in 2000 to $16 a kilogram in 2012, while saleyard prices had remained at around $3 a kilo over the same period.

A meeting will be held at Barnawartha Hall on Monday March 2 to discuss the issue.

ACCC chairman Rod Sims drew immediate fire from Nationals MPs upon approving the Primo acquisition, including from 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."

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25/02/2015 7:49:42 PM

Not a whisper in the "media" up this way... The most under-reported boycott that I've ever, not heard of! We need more of this sentiment.
Farmer Brown
26/02/2015 5:49:03 AM

This obviously wasn't sensational enough for local media. It only affected farmers. Yet they will report a murder in America which has no impact on Australia at all. The media needs to get their priorities right
26/02/2015 7:07:10 AM

If the SFOs would come out from behind their mothers' aprons and support the last Senate Inquiry recommendation to fold RMAC, then we would see a levelling of the market to some extent. Instead they grizzle and groan and seem not to want any change in the structure. While they do this then they will also continue going down the gurgler with the livestock producer.
the advocate
26/02/2015 7:54:24 PM

it may have gone past an inquiry but that may be a good start - the processors will not behave like good corporate citizens until the agriculture minister starts talking of making them divest plants - the accc may have to be involved to force this, but clearly something drastic needs to be done - nationalisation is probably a bit too radical!!
26/02/2015 9:04:23 PM

This is why processors should be service providers only... and not be a clearing house for cattle sales. The senate enquiry should be towards the establishment of an open and transparent cattle market. Once they have enough ownership of the vertical supply line all those direct sales to processor producers will be screwed like all those using the commission agent auction systems. Like the singer croons " It's now or never".


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