Stopgap report due on Senate red meat inquiry

02 May, 2016 06:37 AM
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Queensland LNP Senator Barry O'Sullivan is wishing beef processors would acknowledge problems exist and resolve competition concerns, to avoid regulatory intervention.
Queensland LNP Senator Barry O'Sullivan is wishing beef processors would acknowledge problems exist and resolve competition concerns, to avoid regulatory intervention.

AN interim report on the Senate’s inquiry into beef supply chain competition concerns is set to be tabled this week outlining potential reforms to counteract market power abuse.

The Senate Rural and Regional Affairs and Transport References Committee’s inquiry was instigated in March last year in response to allegations of collusion over a boycott at the Barnawartha cattle saleyards in regional Victoria, by nine buyers.

Another motivating factor was the approval of the JBS Australia takeover of the Primo Group about the same time; despite concerns raised about impacts on cattle producers due to diminished competition.

The inquiry held three public hearings in Canberra, one at Roma in Queensland and another at Albury-Wodonga in NSW, while publishing about 100 public submissions.

At the most recent forum in Canberra, the Australian Competition and Consumer Commission (ACCC) revealed it would conduct a market study on the red meat sector through its new Agriculture Enforcement and Engagement Unit

The ACCC has said it will accept anonymous and confidential submissions on the market study and use compulsory evidence gathering powers which could extend the final deadline.

With the market study due for release in late November, the Senate Committee will produce a stopgap report this week – with a federal election looming on July 2 – allowing the ACCC’s report and findings to help sharpen any final recommendations.

The ACCC formally investigated the Barnawartha saleyard boycott and found competition concerns existed but - on the available evidence - could not prove any collusion occurred between the cattle buyers, to gain a conviction.

ACCC Chair Rod Sims told last month’s Committee hearing the competition watch dog’s investigation needed to establish whether “some form of meeting of the minds” had occurred between the cattle buyers.

But he said if the government adopted a Harper competition review recommendation on concerted or facilitating practices, the ACCC would have had greater powers to assess the matter, under the Competition and Consumer Act.

“I can only urge again, that we’re hopeful the parliament will endorse the government’s recommendation to bring that particular law in,” he said.

ACCC Enforcement and Compliance Executive General Manager Marcus Bezzi said a “concerted practice” was essentially where competitors shared confidential information with each other, without any expectation the other party would do anything reciprocal.

Queensland LNP Senator Barry O’Sullivan has asked inquiry witnesses whether a regulatory code of conduct could be implemented, to address saleyard competition concerns like restricting cattle buying agents from representing multiple clients.

Senator O’Sullivan also warned representatives from the Australian Meat Processor Corporation last month that he preferred the industry came forward with their own resolutions to address various issues examined by the Committee.

“Here you have a dirty old burnt-out truck driver, a retired detective and a schoolteacher,” he said, with WA Labor Senator Joe Bullock adding “And a union thug”.

“We are not best served to resolve some of these big issues that impact on your people, and these other people.

“Oftentimes our solutions are not very elegant; they are a bit brutal and a bit blunt.

“That is why I think we all share the same view that you people will play a big part in the solution of this for your people.

“We would like to see some indicators - no white flags - just a little wink and a touch of the nose.”

In supporting the same view, Victorian Nationals Senator Bridget McKenzie said, “Just a half-step in the right direction”.

Senator O'Sullivan also expressed concerns that multiple and experienced witnesses from the meat processing sector had denied saleyard collusion or acknowledged any problem existed, to then take proactive steps and resolve those issues.

“I cannot speak for any of my colleagues, but that makes me extremely suspicious and it will cause me to do what Margaret Thatcher did with climate change,” he said.

“I will default to putting in place or recommending or arguing to recommend provisions that will protect the small producers and should not affect the big (processors), if there is no collusion.

“This very same committee had to wade its way through the sugar marketing industry over two years and I am telling you: Wilmar are very unhappy people now, because they should have said, very early, 'Righto; we've got a problem. Let's now work together to get a resolution’.”

The inquiry has taken confidential evidence from producers to avoid backlash and also investigated concerns about the use of pre-sale weighing at saleyards and any impact on producer returns.

Semi-retired beef producer Adrian Harris submitted to the inquiry in a private capacity as a “68 year old, warn out stressed farmer” and was also quizzed during the April public hearing.

Asked if he’d witnessed any specific examples of anti-competitive behaviour occurring at saleyards, Mr Harris said, “I can definitely say that there can be bullying tactics used when a private person bids”.

“Some of these people are very shy and some of the buyers are very experienced, are quite aggressive and can be very abrupt and quite brutal with their language and can have a bit to say,” he said.

“You could say it is a little bit of bullying tactics, and the farmers - some of the smaller people - are a little bit intimidated by this.”

AMPC executive chair Peter Noble told the hearing the red meat processing sector was Australia’s largest trade-exposed manufacturing sector, with total revenues of $15.7 billion in 2014 or 65 per cent of total meat product manufacturing.

Mr Noble said red meat comprised 31pc of total food product manufacturing in Australia in contributing $3.6b to national GDP or 19pc of total food product manufacturing, industry value add.

He said the about 200,000 people were also employed in the red meat processing industry throughout Australia while ranking number two for food production.

“The most significant contribution to gross State product and full-time equivalent employment derived from the red meat processing industry is in Queensland and South Australia,” he said.

“In Queensland, the value added is $4.872b, the household income-dependent is $2.1b and the employment full-time equivalent is 46,000.”

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Colin Bettles

Colin Bettles

is the national political writer for Fairfax Agricultural Media
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READER COMMENTS

Archibald
2/05/2016 1:23:42 PM

What is the point of these Senate inquiries, just look at the actual adoption rates of recommendations for the grass fed cattle transaction levies Inquiry. Joyce has done nothing and does not deserve re election.
John Carpenter
3/05/2016 4:33:15 PM

Sounds like trying to unravel all this beef industry stuff has got the senators all tied up in a knot.They shouldn't expect any insights from the keystone cops at the ACCC who based on past experience will believe anything the supermarkets tell them.Our new minted agricultural commissioner, an intern from the SFO fronted AFI and his new consultative committee which has more members than the house of lords are guaranteed to drop the ball and issue a mealy mouthed report confirming that all is well in the industry.In the meantime beef consumption per capita continues to sink like a stone.

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