Senators push for beef inquiry

12 Mar, 2015 02:00 AM
Producer returns are diminishing ... yet the retail price for beef has continued to rise

THE beef industry looks set to be the subject of another Senate inquiry, this time into the timely issue of meat processor power and practices.

Terms of reference for the inquiry are being drafted and will be presented in the Senate’s next sitting.

In their joint announcement of intention to seek the inquiry, Nationals senators Barry O’Sullivan, John Williams and Bridget McKenzie said they wanted to investigate “collusion of buyers, market powers, pre and post-sale weighing and other aspects”.

Senator O’Sullivan said concentration of foreign ownership in the processing sector and ongoing producer concerns about potential market imbalances in the beef supply chain justified the inquiry.

“There were a lot of questions raised about farmgate profitability and price transparency during the recent Senate Inquiry into grassfed beef levies,” Senator O’Sullivan said.

“We must ensure the underlying structures of our beef sector remain strong”

“I have also travelled extensively through Western Queensland since becoming a Senator last year and many producers have expressed ongoing concern over the market powers of the processing sector.

“These Senator inquiries are important to take a closer look at our beef industry and determine the steps we need to go forward.

“We must ensure the underlying structures of our beef sector remain strong.”

Senator McKenzie said beef producers have been challenged by drought, the high dollar, low commodity prices and the live exports ban. They 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.

Senator Williams expressed disappointment with the Australian Competition and Consumer Commission (ACCC) decision to allow JBS to buy Primo’s Hunter Valley meat processing business.

He believes that competition laws should be reviewed to prevent similar decisions occurring in the future.

“Producers and those in the livestock industry are adamant this will reduce competition,” Senator Williams said.

“I am extremely concerned at the buyers' boycott in Victoria and glad the ACCC is investigating if any laws were broken.

“An inquiry into the red meat processing industry will explore many issues because producers should not be battered from pillar to post.”

The senators hope that the inquiry will be given Senate approval within a fortnight.

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Sir Les P
12/03/2015 5:14:43 AM

Not before time/it's similar to petrol pricing.
Rob Moore
12/03/2015 5:28:29 AM

Thanks senators for banging the drum at least trying on our behalf. I got a #grid this morning $4.10-25 for best of best angus/msa. ABARES says get used to this or less for next 5 yrs. We have had a few much trumpeted store sales for little light stock( that would have had up to a 15% shrinkage from full weight)@ close to $3 lw. The grid price guarantees early $2 live for ever more and this is UNDER half what every producer worldwide is getting for qual livestock.It is the conc and lack of comp that allows this of course. My PPP plan is the only LINKAGE that will allow open/fair/orderly-secondaryCOM
12/03/2015 7:42:38 AM

It's not hard to explain, the processers who side on the bottle neck control the market in both directions. The low prices they pay for the over supply of raw material (live cattle) gives them the economic elbow room to restrict supply and push up prices on the finished product (meat). They have no incentive/need to control costs, so they are simply running 'cost plus' business.
12/03/2015 7:45:59 AM

Thankyou for stepping up to the mark. Processors are making record prices at ports. The producers have played their game for years & the MLA (that the producers also support) have invested heavily into improving the quality of Australian cattle. We're now the best in the world but only getting half the price. Even NZ cattle producers do better than us without an MLA equivalent. The cattle & producers are also the losers with pre weighing. Definitely time for an enquiry.
12/03/2015 8:09:15 AM

If Minister Joyce would introduce all seven Senate recommendations from the beef cattle transaction levy inquiry instead of doing nothing it would help! What is the point of Senate Inquiries in agriculture when Minister Joyce does nothing to adopt the excellent Senate recommendations?
Rob Moore
13/03/2015 10:54:01 AM

Bottomline is that processors make more $per head from our stock than what we do breeding them. They can never admit to this and while we have to funnel through their works they can control the game perfectly with a nod and a wink. Backgrounding, owning feedlots cushion any upstart pressure due to competition and live ex was their main threat. They dealt with that in 2011 and have a 3 and a half year dream run since. Without the PPP trade practice rule there can never be a 50-50 equal/open and respectful mode of commerce- ever again. JBS profit+340%last qtr because no new acquisitions!
qld mum
18/03/2015 12:10:46 AM

My hope is that all the talk, acknowledgement of where the problems lie etc amount to something real, soon, in terms of a fairer return to beef producers. We have our cattle where we want them, highly productive, our country well cared for and as best it can be resilient to seasons. Infrastructure pretty good, but until something GIVES in this industry 30 years of building a business will remain in a holding pattern. No employing extra people or services, no investment $'s spent into upgraded equipment. Govt open your eyes. Act now. Rural regional economies matter. The people matter.
angry australian
18/03/2015 6:41:30 AM

There are only 100 cents in a $.We need to cut those pre profit costs imposed by government.O'Sullivan,Williams and McKenzie your mob has done as much damage as Labor. Every fee,charge, increase in super,increase in freight ....I can't list them all I'd need a book is borne by the producer.Do exporters pay AQIS or ESCAS out of profits? No!. Having oligopolies in processing or retailing isn't ideal, but if the consumer isn't paying a fair retail price for meat then ONLY the farmer suffers.If the good Senators don't know what questions to ask of DAFF and ABARES perhaps they should resign.
angry australian
18/03/2015 7:50:16 AM

Further on Sen. McKenzie's comments which have particularly angered me, perhaps she would like to backtrack $16 kg to a whole weight price, remembering that everyone beyond the farmer works cost+. The retailer has to wages, rent and licences fees like Foodsafe, the boning room the same, the transporter from the boner to retailer the same all taking a profit as well. The abattoir as well, both the abattoir and boner are probably also paying the highest wages and conditions in the world. In the meantime mobs like the MLA, Foodsafe are continually clipping the ticket which leaves bugger all for the farmer.


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