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Senate Inquiry Recommendations Update

Minister for Agriculture Barnaby Joyce has finally responded to the Senate Reference Committee’s report into ‘industry structures and systems governing levies on grass fed cattle’.

When Minister Joyce agreed to ask the Senate to enquire into the many industry concerns, he made it very clear that he expected everybody to abide by the umpire’s decision.

At the meeting in Townsville in October 2013, he actually said “Yes, I will call for a Senate Inquiry, but you have to accept that you will not get everything you want”.  ABA replied, in front of the other attendees,   “We will take that risk Minister if, as you promised, you will implement every recommendation that is made”.  He agreed.

It seems that the Minister may not be listening correctly.

After six Australia-wide hearings with interested parties, the independent Senate Committee made seven recommendations – all of which showed that the Senate had listened well to the very real concerns of the grass fed cattle industry.

In reply to Senate Recommendation 1….’the government notes that the intent of this recommendation is to address very clear problems with the lack of effectiveness of grass fed producers say over their levies,  due in part to the absence of a truly representative grass fed cattle body. The government has facilitated industry discussions over a number of months cumulating in industry roundtable discussions in December 2014.

The reality is that the December 2014 meeting was attended by 22 persons, only 6 of which actually paid the grass fed levy.  All the others were members of the greater red meat industry who influenced or benefitted from those grass fed levies, and who spoke strongly for the grass fed cattle levies to be left in MLA, and not given to the producers themselves to manage.  

The Minister’s office was shocked to hear from the producers at that meeting that it was considered a dreadful, biased dialogue, and we were angered by it.  The Minister’s office is so disconnected from the producer and so influenced by those benefiting from the levy that this is the result producers have to try to run their industry under.     

Following that disaster, industry players ABA,  MPG, CCP and other individuals plus the CCA all met in Brisbane and nutted out a unified position on the structure for the New Grass Fed Levy Organisation.  That new structure, supported by all players, was presented to the Minister on February 17th

We note that the Minister has ignored this new unified structure.

Barnaby Joyce’s reply yesterday continues…’Finally the creation of a viable grass fed representative organisation will assist in ensuring the views of levy payers are reflected in the way levy funds are spent. The government’s preference is that industry representative bodies are funded from non-government sources”

Minister Joyce would be best to check all the facts on industry representation and funding. 

The live exporters and the processors pay a statutory levy like the producer.  However, they have their own service organisations which are funded from their own levies!!  

In the case of the processors, last year they paid $22 million in statutory levies, all of which is handed to their own representative board of AMPC.  The processors then passed $10 million to the MLA with strict conditions attached as to how MLA may use their money.  It is well known that the processors have use of producer levies to fund all research and development of their meat processing sector. 

The live exporters also pay a statutory levy, and it is also passed directly into their own organisation (ALEC). 

Published MLA finances suggest that the live exporters’ Peak Council ALEC made no financial contribution towards the upkeep of the MLA, but receive great support from the resources of the MLA. 

Over 50% of MLA’s funding comes from the pockets of the grass fed cattle producer alone. 

Last year grass fed cattle producers paid $62 million to MLA, and a further $20m to Animal Health Australia (again the biggest funders) and to the NRS. 

In contrast to other representative Boards, cattle producers receive not one cent of their own monies into their Board and have no say in how their levies will be spent.  The grass fed Peak Council, the Cattle Council of Australia, is funded by (less than enough) monies given to them by MLA on a contractual basis, and CCA has been running at a loss for years….despite being the biggest levy earner for the combined industries.

The highest contributor gets nothing for its money – no operating costs, no effective Peak Council, no control over spending, no say at all.  

The government also says ‘…there is range of options open to a new body representing producers to ensure its ongoing financial viability’. 

It seems that the grass fed producer is now required to once again put his hand in his pocket as the government looks at bringing in a new scheme or new tax to impose on producers to actually fund a ‘new’ Peak Council.

Recommendation 2 reads:  ‘The Senate Committee recommends the establishment of a cost-effective automated cattle transaction levy system. The system should identify levy payers against levies paid. This will allow producers to be given their voting entitlements and allow for regular independent auditing and verification’…..and

Recommendations 3 reads:  ‘The government notes the development of a register of levy payers will ensure that levies paid by processors are identified as slaughter levies and not as producer or cattle transaction levies”.  This action is central to the control of the votes of producers over their own industry, and to having the influence held by processors removed from the grass fed industry.  Why the delay??

It is well known NOW that there are over 100,000 grass fed cattle levy payers, but for some reason this still has not been utilized to give producers the vote on what they want, from and for their industry.  If Minister Joyce astoundingly wants the producers to also fund their own Peak Council while they fund MLA and are unable to fund their current Peak Council, we would need to know who the producers are of Australia.  We then need to them if they want to put their hands in their pockets yet again, and pay for a New Cattle Board.  Or do they expect to have their Board financed by the taxes they have already paid as levies?   

In Recommendation 4, the committee recommends that Australian National audit office conduct an audit of the cattle transaction levy system, tracing levy from inception and focusing on revenue from, and expenditure of respective components of the levy.

An independent performance review of MLA is due to commence in 2015 which will examine the levy revenue and expenditure, and make recommendations to improve transparency and accountability. How often have we seen so-called independent enquiries into things like the value or otherwise of the marketing transaction rise of $1.50 and of course the independent enquiry into MSA.  Look at the faces sitting round these independent committees and make up your own mind.

Recommendation 5 recommends that the Red Meat Advisory Council (RMAC) be wound up.

“The government sees merit in a forum for the whole of supply chain coordination and maximise the opportunities”. Again, have someone other than the Minister’s office take a look at how many people sitting around the table are representing processors who pay so little into the industry, and have so much to say.

The Senate’s Recommendation 7 was that the Department of Agriculture, with the cattle industry, conduct an analysis of the benefits, costs and consequences of introducing registration akin to the USA’s Packers and Stockyard Act of 1921. This would allow the tracing of all sectors of the red meat industry and who receives what part of the final retail dollar. 

The government did agree in principle with this recommendation.

One out of seven is not a bad score……it’s terrible!!

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