Recently at Senate hearings senators and others have tried hard to get proof of collusion.
Having watched with interest and being a witness at the Canberra hearing it occurred to me to wonder what the definition of collusion really is.
Dictionary definition, collusion: agreement when two or more parties, sometimes illegal and therefore secretive, to limit open competition, misleading, or defrauding others of their legal rights, or to obtain objective forbidden by law typically by defrauding or gaining an unfair market advantage.
It was interesting to watch processor bosses stating emphatically that they had never heard of any collusion in saleyards or anywhere else. To me this was completely ridiculous as collusion is alive and well. If producers are honest they would admit that if somebody came along and said they were interested in a pen of store cattle and the neighbour said he was also going to bid, arrangements would be made not to bid against one another by bidding on different pens.
One of my first memories of saleyards was attending a saleyard where 2 butchers came to arrangement where as one would buy the first pen of a line of cattle and the other butcher would buy the second pen. The problem started when the butcher who bought the first pen decided to bid on the second pen. The first butcher realising that his co-conspirator was also bidding was so annoyed that he actually punched the other butcher breaking his nose.
Collusion in the saleyards is simply a diversion. The simple fact is that saleyards are becoming a thing of the past and processors buy 90% of their stock from over the hooks trading and supermarkets are probably near 100%. The fact is that if you send your cattle along for slaughter for payment in carcass form you are completely at the mercy of the processor and if you are not satisfied with the result you can’t simply back the truck up and tell the processor that you do not accept the price or penalties that may be imposed, there is simply no argument.
Some 40 years ago in Launceston, Tasmania we had thriving saleyards with thousands of cattle going through on a weekly basis. With 120 butchers bidding and squabbling over stock in one saleyard it was a true indicator of what stock was worth. About this time the supermarket duopoly moved into meat in a big way now we see only six butchers remaining, and one buyer buying for all small butchers. This has done more damage to the producer’s bottom-line than any collusion between buyers.
One of the answers may develop a system that ensures that everybody in the industry knows how much value the end product is bringing and we could develop laws that make sure producers are not used as cannon fodder for multinationals and the supermarket duopoly. We could even explore anti-trust laws and the USDA grading system.
When there is even a sniff of any sort of hearing by Parliament or ACCC the processors and supermarkets are quick to send their lobbyists to ensure that their side of the story is put forward. Whether it is correct or incorrect seems of little consequence to them. Processors continually point out the fact that it cost $300 to process a beast in Australia and in the US it is only $150. What they failed to mention was the fact that US producers get a far better price for their carcass beef plus the fact they get better dressing percentage from a live animal to dressed animal. Take a live beast weighing 600kg, at 52% dressing the carcass equals 312 kg in Australia the same animal in the US the producer could expect to get 63% dressing or 378kg from the same animal. At six dollars a kilogram the difference in dollar terms to the producer would be $396.
The progression of over the hooks buying has been a processor/supermarkets dream. Processors can discount at will for whatever reason he can dream up. AusMeat is supposedly the ‘independent’ umpire and are the people who write the rules and are judge, jury and executioner in all this though they are jointly owned by the processors and MLA.
Some people say they are aligned too much with the processors; I for one support this theory. A great example is the language standard committee as the name suggests are in charge of writing up the rules governing language and other rules pertaining to the processing of beef.
People on the committee which I consider to be one of the most powerful committees in the beef industry are: processors 4, feed lotter 1 (employee of a processor), supermarkets 1, lamb producer 1, pork and beef producer 1 each. How much do supermarkets and pig producers pay towards the upkeep of MLA? At least six of these people are looking to get carcass cattle as cheaply as possible. One way is to trim more and more. How much is this cosy arrangement worth to the processors and supermarkets?
The fact is until producers unite and get a strong well-resourced producer group that is solely focused on producers’ interests we can expect more of the same treatment as we see now.