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MLA – Where to from here?

Norton

MLA (Meat and Livestock Australia) has been in overdrive with a new Managing Director leaving no stone unturned in an effort to convince levy payers that the MLA has listened to producers and is on their side.

Richard Norton, in his annual report at the MLA AGM two weeks ago, says the common theme that  runs through discussions with producers who are facing challenging times is the climate, the cost of production, and low cattle prices – all of which continue to take a heavy toll..

“It seems producers want a more transparent MLA and a greater say in how their levies are invested.”

“In the first quarter of 2014 MLA have restructured to become more transparent, more efficient, and better aligned with the needs of the industry.”   (interesting??)

It seems marketing remains a major focus. “With the majority of growth coming out of emerging markets, the distribution of marketing resources will be determined by a sophisticated evidence-based approach to marketing strategy.”

Words are very cheap.

When we look at beef exports, they are currently at the record value of $6.4 billion in 2013-14.  Exports bought in $5 billion in 2012-13. 

On the face of it, these figures would appear to speak volumes for the MLA’s marketing efforts.  However, who benefits from this massive windfall?

Certainly not the producers, who in recent times have received some of the lowest beef prices the industry has ever seen. (Remember in 1994 when we momentarily received $4.00?)   When you consider the increased cost of production and the stagnant prices for cattle over the last 15 years, we are left in no doubt as to why producers are now being sold up.

An important fact is: processors refuse to pay towards overseas marketing, however…..they receive all the income from those increased, high value exports: there’s been none of the famed ‘pull through effect”; and the final insult is that they have too much to say over our funding going into the MLA. 

So their logic is ‘Why should we when producers are silly enough to pay up without getting any benefit from their marketing dollars?”  

It’s because under the present structure of MLA, producers simply do not have the choice!

Even with the current changes in the MLA, (and ABA acknowledges the real efforts being put into making the place accountable and transparent) the delivery of our levies directly to MLA makes it unworkable.  While we are ‘represented’ by an unfinancial and ineffective CCA (who themselves acknowledged that they only represent about 7-10% of producers) and while our money is out of our control – what do we expect to happen?

Concerns by other sectors of the red meat industry about them losing momentum in R&D, extension services,  and other funded activities are false, and are a red herring to divert the correct facts about what will happen within the new improved MLA when grass levies are self-controlled.    

MLA says “they remain committed to becoming as efficient and effective as possible, constantly striving to maximise levy investment for the benefit of livestock producers.  It says it has contributed significantly to the success (whose success??) of the red meat industry over many years, and due to the nature of its work, much has gone unnoticed.”

At the Senate Inquiry there was much concern about the process of allocating voting entitlements of levy payers,  and MLA says they are committed to….” the development of full assessment of automation of levy payments across to voting entitlements,  which will allow industry (that’s us) to make an informed decision around costing and implementation challenges.” 

MLA says it is very hard for levy payers to understand what their money pays for. This is very true!  Producers have so far paid for schemes which have provided no tangible returns to them.

NVDs for example are interesting.  MLA has complete control of these declarations, and unless the declaration is used, producers cannot sell their stock.  At about $2 a sheet, MLA can charge what they like, and keep the proceeds.   Surely one could get them cheaper elsewhere, like the equitable Newbrain declaration.  MLA needs to ask itself if this form of control is fair, considering they are a service company.

Domestic and export beef prices are at record prices, while the cattle that the meat came from are receiving 1980 prices, and are half the price that producers in the US are receiving.  (Feeder steers in USA are currently $6/kg).  MLA always talks about the “pull through effect” where good meat prices will automatically flow back to the producer!!!   With the dominance of the supermarkets and large multinationals this simply doesn’t happen. MLA R&D has invested heavily in automation in the processing sector which has not helped producers yet, and probably will not in the future….although it should deliver a significant reduction in wages costs etc. for the Processors.  Processors, and other industry players down the line, will gain from these savings, which they will immediately pocket.

What is the answer?

Hopefully we are close to greater self-management of our own levies, and can then use MLA as a service provider for our specific sector, ensuring improvements for the producer.   

As stated many times, a producer body can only be elected after all levy payers are identified and are given their democratic vote, much the same as AWI does. The wool sector gets approximately 35% voter participation, while under the present structure the beef industry only gets 3% of producers participating.  Why would one bother even trying to vote when one’s vote means so little against multinational processors and large company votes?

For the first time we may have seen the stars align….. most groups in the beef industry agree something has to happen, and are on the same page about the main points.  Interestingly, CCA has recently been telling the media and the Minister that they are stepping up ‘to provide leadership’ now, when they have stonewalled every move for change or restructure from the beginning until this move three weeks ago.   

The main reality is that this ‘leadership’ has already been happening between groups, and it is definitely possible that several producer funded groups, private businesses, and some representative organisations could go to the Minister with a united voice in support of the Senate findings. ABA is pleased to say they have been talking with other supportive groups, and there is a really positive attitude everywhere.

Readers, we value your input and opinions, and we would like to hear from you.

Writtten by: David Byard

0409 426 710 … anytime

ausbeef@bigpond.com


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