This article is actually the submission that ABA Director Andy Rea made for the current Senate Inquiry into the ‘Collection and Disbursement of the Grassfed Levy’. We have changed it very slightly to make it more readable to you on Tictaks.
This is a calm rational explanation of the present structure, and what a new grassfed representative structure should include. We encourage you to read this and pass it on.
THE PRESENT STRUCTURE REPRESENTING GRASSFED CATTLE PRODUCERS
The grass fed cattle industry is represented by Cattle Council of Australia (CCA). They are the ‘Peak Council’ for the grassfed industry. There are 5 other Peak Councils on the MLA Board, and the Red Meat Advisory Council (RMAC).
CCA’s Board comes from the State Farm Organisations (SFOs). Cattle Council’s main source of income comes from the financially struggling SFOs, who pay a membership fee to sit on the CCA Board. These SFOs make policy for the grassfed cattle industry – even those who have not paid their CCA membership.
It is generally understood that CCA is to make the policy for grassfed producers, and that Meat and Livestock Australia (MLA), who is a service providing company, is to implement those policies for the grassfed industry.
But how is this achievable when CCA membership only represents around 10% of all levy payers? Most producers do not believe CCA (or SFO) policies represents the mainstream producer.
But there is an even bigger problem. Every year, about $56m is raised from the compulsory $5 levy on every beast sold by grassfed cattle producers alone.
Unlike some of the Peak Councils (the Processors, and Live Exporters), the Cattle Council of Australia (CCA) does not directly receive their own grassfed producers’ levy money. That money is instead paid to MLA – a ‘service’ company!! MLA receives part of their levies from the other sectors of the red meat industry, and ALL the grassfed levy money.
It is about here that grassfed producers lose all control of their monies.
Also, despite the grassfed levy funds providing MLA with over 54% of their funding, for producers to have membership and voting rights, they must apply for their membership, and wait to be accepted. No union member would allow himself to be ‘represented’ by his organisation without his vote.
The grassfed industry is currently operating in a very challenging environment within Australia and overseas, it is not presently structured or resourced to be able to react to challenges quickly and efficiently.
CCA is currently broke, and is seriously underfunded most of the time. This makes it powerless!! Some SFOs cannot pay their membership, but still sit at, and control, the policy debate. Not all SFOs have ‘Cattle Boards’ who know and understand the industry, and many seats on this Board are from other unrelated industries represented by SFOs.
CCA have to rely on indirect access to the compulsory grassfed levies. This is our levy being doled out by MLA, reported to be about $800,000 with about $200,000 of that immediately being paid to NFF to keep NFF funded. So the underfunded CCA then does contractual work for MLA to increase their income. The master working for the servant!
The CCA office can afford only 4 people to oversee a $12billion industry. So we have a situation where our compulsorily acquired grassfed money is used to prop up a ‘just barely functioning’ voluntary organisation.
When retiring MLA Board Directors finish their terms, those levy payers who actually received their MLA membership and then collect their votes each year, may supposedly vote for 3 new Directors each year.
But we can only vote for three persons who have already been pre-selected by a ‘Selection Committee’ and MLA. Levy payers get no choice or decision.
If any of those new Directors do not get the 50% of votes needed to be elected, the MLA Board is still allowed to function for 12 months without this Director. But that does not happen, because the Peak Councils (your reps) can veto any vote you make, and just put the new Director in! THIS IS NOT DEMOCRACY.
Levy payers (those who have registered for MLA membership) have to apply for their voting entitlements based on the number of cattle sold. There are no checks and balances and these figures can be open to rorting. Large feedlotters, and processors who have feedlots, also claim their votes, and they are smaller numbers of persons who control larger numbers of votes.
About 160,000 grassfed producers in Australia sell cattle, and can therefore apply to vote. However, only 46,000 producers have ever applied for membership, or can vote.
Data from 2010 shows us that only 9,000-10,000 of those 46,000 producers had applied for their voting entitlements, as you do not receive them automatically. But only 3600 of those producers actually ticked the boxes on their voting forms!! Around 6000 did not bother!! Producers advise that they feel powerless in this organisation, feel they cannot control MLA or their funds, so feel disenfranchised and don’t bother to vote.
It is also important for producers to know: The top or first 41 voters control 50% of the vote. The top 5 control 30% of the vote. 4 of them are multi-national processors!!
When you take into account that 52% of MLA’s funding (before the government R&D contribution) comes from the grassfed cattle levies, producers are unequally represented.
PROBLEMS TO BE RECTIFIED
– Grassfed cattlemen have taxation without representation. This must change!
– Because of the compulsory levy, this should mean grassfed producer representation must be foremost in any new Board or restructure.
– Paying a compulsory levy must mean that grassfed producers have management of their own funds for their own industry.
– Democracy, and grassfed producers’ election of their own Board members must be implemented. This is non-negotiable.
– Our new Peak Council, (a restructured CCA?) and the MLA Board, must be answerable to the grassfed levy payers.
– It must be a transparent, accountable organisation, that grassfed producers select and elect (or sack) themselves.
– MLA was set up to be a service provider, and must return to that role! What we see now is MLA using producer funds for the benefit of the multi-national processors and the supermarkets.
SOLUTION FOR DEMOCRATIC RESTRUCTURE
Board members to be 1 per state except where states exceed 3 million cattle when there will be 1 board member per 3 million cattle. ie
TAS – 1; VIC – 1; SA – 1; WA – 1; NT – 1; NSW – 2 (6,000,000 cattle) and QLD – 4 (12,000,000 cattle)
There is also a thought that state boundaries should be ignored, (it is a national beef industry!) and producers establish regions based on numbers of cattle. The State Farm Organisations (SFOs) then remain in their role as State based representatives, and work closely with the new grassfed cattlemens’ Peak Council board.
All grassfed levy payers would automatically become members of the new restructured Cattle Council, and automatically receive their votes.
THE COLLECTION OF LEVIES
All grassfed levies to be paid into the new organisation, as is the case with the 5 other Peak Councils on MLA, or indeed other rural Boards such as the Aust Wool Industry (AWI) and Aust Pork Ltd (APL).
The grassfed levy is to be a percentage of the gross value of cattle sold, with a ceiling on the levy. This is to be investigated to replace the current flat rate system.
DISTRIBUTION OF LEVIES
The new restructured and democratic grassfed cattle representative Board is to decide where, when, and on what, the $50m+ grassfed levy income should be spent.
A two tiered voting system to be investigated instead of the present system which is based wholly on cattle sales. This will give fairness to the system between large and small producers. Votes are to be calculated by the new board and automatically sent to all grassfed levy payers.
The current structure within the Red Meat Industry is almost 17 years old. Every business should give itself an overhaul regularly, review its functionality, and its relevance. This is good governance.
This has not been done in the red meat industry, and is long overdue. In 2011, Cattle Council called for it themselves!!
ABA Director for ………….
ABA has entered into an arrangement with (brokers) Keystone Insurance, based in Rockhampton, but doing business for cattlemen and businesses all over Australia. We have been pleasantly surprised by the uptake of this offer by ABA members, so encourage you all to at least get a quote when your insurance is due.
For a quote on Keystone Insurance products, please contact Silvia, Jenna, Lyn or Anna on (07) 4922 6955.
Make sure you quote reference number ABA201314