Senate Inquiry Vital First Step For Producers To Regain Control Of Their Industry
As we are all well aware there are many stages in the supply chain of beef production from a calf dropped on the ground in your paddock to a meal on the table.While all sectors contribute there is a strong argument that if each sector was judged on their level of importance without producers there would be no beef and without consumers there would be no value in the beef.
Despite this the Australian cattle producer receives consistently the lowest or near lowest price for their cattle in the developed world .Periodically Argentina beets us to the wooden spoon,but remember at times their government bans exports of beef to keep the price lower to the public.
Australian consumers pay a price for their beef that is up there amongst the dearest in the world.The days of Australian tourist complaining of expensive beef in England and the Japanese tourist tucking into incredibly cheap steaks on the Gold Coast are long gone.
We estimate that there are about 200 000 beef producers in Australia they supply the beef for around 60 million people world wide.In the middle we have a concentration of processors and retailers .Three companies kill 70% of Queensland’s cattle that run half the nations herd and two supermarkets retail over 50% of our beef.
Processors often bemoan the fact of the high cost of processing cattle in Australia.Some sources claim $350 per head compare with the USA on $200 per head. However remember the biggest cost a processor has is the cost of cattle. American cattle prices are now about double what they are in Australia,so for an extra $150 in processing costs the Australian plants get their cattle for $400 less.Interestingly these very rough figures do correspond with the ABA calculation that processors are currently making about $260 profit per beast killed.
At the retail level the supermarkets pay around $4 for trim sold as mince for around $10-$12/kg, MSA rump bought for $6 kg is then sold for around $20/kg and porterhouse is $10 wholesale and sold for about $26/kg.
Supermarkets are telling parliament and ACCC inquiries that the producer is earning between half and two thirds of the retail dollar.???
The architects of Meat and Livestock Australia as the name suggests envisaged a company that would service all sectors of the red meat industry .At its most elementary level it is the aim of producers to get as much for their cattle and the aim of the processors to pay as little for the cattle.
Competing interests in the one tent should ensure a victory for at least one party and it has,via a rather curious clause in definition of a transaction known as the 30 day rule.If a processors buys cattle and places it in a feedlot that they own and hold it for more than 30 days and then kills it in a abattoir that they also own ,this is then deemed by DAAF as a transaction.With every $5 transaction levy comes about the same number of votes at the MLA AGM.I cannot tell who the top voters are as one of the provisos that we receive the MLA voting register is that names are confidential but I will attempt to give an overview of what a typical voting register at an MLA AGM looks like.
About 200 000 people sell cattle and pay a levy ,of those only about 9 000 to 10 000 apply for and gain their full voting entitlement.Of those who claim their voting entitlements only 3600 actually use them.Of the 3600 that use thier votes the top 41 voters control over 50% of the vote.Of the top 5 that now control close to 30% .Four of them are multinational processors and the one that isn’t is soon to become one.This analysis is a bit dated about 4 years old as the MLA now put a security programme on the electronic copy of the register when we ask for it to prevent the ABA easily identifying the top voters.Most of the top 16 voters are all processors that gain their votes through the feedlots that they own.
It is obvious who controls MLA and MLA itself judges it success on the value it adds to the industry.Not the value of cattle but the value of beef at retail and exported.They embrace an economic theory known as the pull through affect.They claim that if the price of beef goes up then the price of cattle will also be pulled up with it.A complete misnomer processors are currently enjoying near record highs for their beef and the depressed prices we receive for our cattle is only too real.
The senate inquiry is a chance for the production sector to prove to the Senators of how little we have benefited from forced levies and how little control the grassfed cattle producer has in our representative body.It is crunch time for Australian producers we must take control of the $54 million we give to the MLA with a democratically elected board that look after our interests only ,not processors,not supermarket’s and certainly not a multinational fast food outlet such as McDonalds.
The deadline for submissions to the Senate inquiry into the expenditure of levies has been extended to the end of February and the hearings start in Canberra on the 7th March.The Senators need the information from you in order to help them make the right recommendations to Barnaby Joyce.Below are the links to the Senate Inquiry.