Farming organisations in Victoria and New South Wales have called for a Senate inquiry into increasing market consolidation by the red meat processing sector. Both organisations and their members are extremely concerned at the action taken by processors to boycott the Barnawartha saleyards last week which they believe highlighted the increasing market power of the processors. Additionally, to me this latest action by processors highlights the apathy that has been so apparent in the red meat industry from representative bodies purporting to look after producers interests.
In 2007, Minister McGauran asked the ACCC to find out why producers were getting record low prices for our stock, whilst retail price of meat was at record highs. The information provided to the enquiry by the people paid to look after producers’ interests were short on substance and support for their members.
In its submission to the ACCC, Coles made the following summation: the end retail price of beef in their shop breaks down to-14%, relates to cost of processing activity e.g. killing, boning, packaging and chilling and a further 30% relates to Coles for shrinkage, promotion, store costs and a retail margin and in their claim they say producers share of the retail dollar is 53%. For anybody to say the producer was getting 53% of the end retail dollar is simply untrue, this would mean that if all beef sold by Coles averaged $16 a kilogram the producer would be getting just over eight dollars a kilogram for their product at point of sale. When I complained about this misleading information being presented to the enquiry to the to the cattle Council of Australia I was told that they didn’t have the resources to make a submission and therefore such misnomers were not challenged. Another great opportunity to address inequities within the red meat industry went begging due to the continued failure of the Premier Representative bodies.
For their part the ACCC simply said the enquiry was only a desktop study and therefore witnesses were not under oath and therefore anybody telling lies could not be charged. Some 12 months later the ACCC conducted an enquiry into the grocery industry which witnesses were obliged to take an oath that what they said was accurate. The interesting part to me was the ACCC quoted in its findings of this enquiry which included the red meat industry the 2007 desktop enquiry. I attended this enquiry and made my displeasure at some of the facts of the 2007 enquiry. The ABA also went to a lot of trouble to prepare a submission also which was completely ignored.
Since supermarket duopoly started to take over the domestic retail meat chain and multinational processors have also moved with frightening speed to buy up and monopolise the Australian red meat industry, there has been many changes, many have not been advantageous to the producer.
In Tasmania 40 years ago we had vibrant saleyards which had retail butchers, supermarkets and processors bidding strongly against one another for the prime stock: at that stage buying over the hooks was not an option. The major supermarkets were the first to leave the saleyards behind as they commenced buying exclusively from producers under contract. With a multinational company buying into Tasmania processing, buying over the hooks became an art form through manipulative practices such as pre-trimming prior to weighing of the carcass, seemingly ably abetted by the supposedly impartial people in charge of policing, all of which ultimately takes money out of the producers’ pockets. The latest scheme by processor is to adopt the program called GAT. This program forbids any cattle passing through saleyards at any stage of their lives being slaughtered under that program.
In all states if cattle are sold on consignment the processor is in complete control. If they assert that a slight bruising or the weight specifications miss the grid heavy penalties apply. MSA cattle being marked as MSA can be knocked back on company specifications and will be downgraded accordingly and the producer penalised. The meat of carcasses that have passed muster under MSA and have failed company specs can still be sold as premium MSA product??. The whole chain is conducted under self-regulation with the occasional arranged audit. Anybody will tell you self-regulation never works where money is involved, the meat industry is no exception to the rule.
One Queensland producer suggested the entire processing chain should be filmed to show what trim was taken off any carcass as well as other areas where penalties are imposed or redeemed appropriate so the entire reading for pricing applied is transparent. Imagine the outcry from the processors if this actually got up.
To me the multi-nationals and supermarkets duopoly have got too much power. However, if producers and their organisations make a stand through a well-resourced peak organisation, producers may be able to gain some of the losses that we see now.
Producers are currently being forced into QA systems compliance requirements, complex pricing penalties that can penalise their business. If representative bodies sit back and remain passive and disengage there won’t be a diversified and vibrant marketplace or a viable cattle industry in years to come.