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MLA – Show Us the Value!!!

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Perhaps the time has come when the beef industry should be looking at its priorities.

To me there are two major factors in play in the beef industry.

  1. R&D and marketing run by the MLA and costing producers in excess of $67 million a year.
  2. Advocacy is run by Cattle Council of Australia which is hopelessly underfunded; this is in stark contrast to processors and other sections of the industry. I feel very strongly that we should be looking at where producer resources are placed and have oversight of those funds.

Through statutory levies, cattle producers pay $67 million a year towards MLA’s marketing and R&D. $31 million of this goes into marketing, I would argue the results are shown in the following graph.

AMPG_conference

To me there is no argument that butchers, supermarkets and processors reap the bulk of whatever gains that come out of MLA’s marketing and they contribute very little or nothing towards MLA’s marketing activities.

Senate hearing April 2016 Sen. O’Sullivan says “If you had a marketplace, where the  average value of a live animal in the saleyards essentially flat lined potentially up to 30 years when the retail value of that commodity have gone up exponentially to 1000%”. Would this mean market failure there?

Mr Sims from the ACCC was cautious saying “potentially that could represent market failure”. It is interesting to note that Coles told the ACCC in 2007 that the producer got 54% of the end retail price and later at a parliamentary enquiry Coles stated the producer got between half and two thirds the retail dollar.

Neither the MLA nor any of the peak councils questioned the reliability of this information. It was simply accepted; surely peak councils should have these sorts of facts at their fingertips.

In 2009 the MLA conducted an ‘independent’ REVIEW into the decision to increase the levy from $3.50 to $5 dollars per transaction.

At stake amongst other things, was beefs share of the domestic meat protein market as we were losing share to white meat (pork and chicken), seafood and vegetarian foods.

The simple fact is that we are still LOSING market share despite all the hype over MSA and MLA marketing prowess. An independent review found that for every dollar spent there was a five dollar return; I really wish these people could run my financial affairs.

The pork industry with an annual marketing budget of less than $5mil seems to have managed to overtake beef consumption in the Australian market. 

This has meant that when the price of beef went through the roof in 2013-14 and the cattle price fell through the floor because of drought and interruption to live shipping. Processors and retailers showed absolutely no mercy and pushed the prices of live cattle to some of the lowest levels seen in the beef industry.

Regarding advocacy, despite the best efforts of Cattle Council, they find that the pittance they run on doesn’t allow them to be a force that can truly take care of producers.

Processors are interesting to watch when they present to hearings on saleyards or range of other matters. The simple fact is they are well represented by highly trained and paid professional staff. In contrast, producers are represented by dedicated amateurs, who normally don’t get paid and may have a business to run thousands of kilometres away.

To me this is very complicated, however if we could get a board of producers that is paid well and has the appropriate number of highly skilled, highly trained staff and support, then producers may have a chance of getting appropriate representation.

If we were going to elect a board we would have had to be able to identify all producers.

Producers have no choice but to pay up whilst processors have their own service organisation, which then cherry picks what services they require from the MLA.

If we had a well-resourced and workable producer advocacy board that board could ensure the producers’ funds were spent to benefit producers.

We are told that the statutory cattle levy cannot be used for advocacy, however I watch with interest as MLA fund the present CCA.

With the $1.50 levy increase producers were given a vote to put the levy up. why couldn’t levy payers vote to put some of their own levies into advocacy? Surely we could look at having another vote in order to get funds for a new independent well-resourced Cattle Corporation, to oversight the allocation of levy funds to MLA and other relevant organisations.

 


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