A SENATE inquiry into market imbalance in the red meat processing sector should hold hearings in Australia’s beef capital, Rockhampton, say Queensland representatives.
In their joint announcement of intention to seek the inquiry, Nationals senators Barry O’Sullivan (Queensland), John Williams (NSW), Matt Canavan (Queensland) and Bridget McKenzie (Victoria) said they wanted to investigate “collusion of buyers, market powers, pre and post-sale weighing and other aspects”.
Senator McKenzie moved the successful motion for the inquiry on Wednesday, which will be conducted by the Rural and Regional Affairs and Transport References Committee. The committee is due to report by August 12. Senator O’Sullivan said concentration of foreign ownership in the processing sector and ongoing producer concerns about the beef supply chain justified the inquiry.
Rockhampton-based Senator Canavan and Member for Capricornia Michelle Landry said it made sense to host discussions in the town widely regarded as the beef industry’s epicentre.
“This is the beef capital of Australia and any Senate inquiry examining red meat processing and profitability should certainly convene a hearing in Rocky,” Senator Canavan said.
Ms Landry said the beef sector was one of the most important agricultural industries in Central Queensland.
“Beef producers have been struggling in recent years to achieve good prices, so the beef sector will most likely welcome this inquiry with open arms,” Ms Landry said.
“The inquiry must certainly hold sittings in Rockhampton, the nation’s beef capital, which is home to major international meat exporters and livestock trading.”
Ms Landry said it was also important to hear from all sides of the industry, including the perspective of the meat processing companies, which are big employers in the CQ region.
Senator Williams said the Nationals had "heard the calls from farmers" to lay bare the meat processing sector. It was time, he said, to see whether there is a misuse of market power, whether the current selling system is still pertinent, and what role livestock agents, producers and meat processors are playing.
He expressed disappointment with the controversial approval of the JBS bid for Primo by the Australian Competition and Consumer Commission (ACCC) and believes competition laws should be reviewed to prevent similar decisions in the future.
“I am (also) extremely concerned at the buyers' boycott in Victoria and glad the ACCC is investigating if any laws were broken,” he said.
“An inquiry into the red meat processing industry will explore many issues because producers should not be battered from pillar to post.”
VFF Livestock president Ian Feldtmann said the JBS takeover bid was not an isolated problem, but "a symptom of the structural inequity that exists in the cattle market".
"Market consolidation in the meat processing sector is causing lower returns to farmers and it is time this trend is stopped," he said.
“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."
Senator McKenzie said beef producers have been challenged by drought, the high dollar, low commodity prices and the live exports ban and “need certainty” that they aren’t also dealing with an uneven post-farmgate playing field.
“No-one can explain to a cattle producer why his returns are diminishing yet in the supermarket the retail price for beef has continued to rise upwards of $16 a kilo,” Senator McKenzie said.
Ms Landry agreed that while Australia was said to be one of the world’s most efficient producers of cattle, this did not necessarily equate with a fair price for farmers at the farmgate.
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/kg over the same period.
Senator McKenzie said the inquiry would give producers an opportunity to vent some serious concerns.
“Many local producers have been too afraid to speak out about what is happening in their sector through fear of reprisals from processors,” she said.
“This inquiry will provide an open forum where we can have the discussion, where all the issues can be thoroughly investigated and both producers and processors can have their say.”
Senator Canavan said profitability for producers was determined by the price they received and – despite strong international demand and good prices for Australian red meat – producer returns depended on healthy competition amongst domestic buyers.
The lack of diversity in the processor market was brought into sharp focus earlier this month with Rockhampton plants owned by JBS Swift and Teys Australia closed temporarily following cyclone damage to the buildings.
While other plants planned extra shifts to cope with local supply, the added freight costs would take a toll on producers, Cattle Council of Australia president Howard Smith said.