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Senate Inquiry – Canberra

Recently at the Senate Inquiry, the AusMeat grading performance in beef plants came under the spotlight. However according to AusMeat most claims made were due to people’s inability to understand the grading system.

When the Senate questioned Ian King, AusMeat CEO, of whether he appreciated and accepted severe lack of confidence from across the supply chain in Aus Meat, he stated that he certainly had the message. He went on to say in terms of credibility of those messages that we have not got concrete evidence, and for my position as an industry regulator, on behalf of the government, I do need evidence to act. Whenever we have followed up on claims we tended to find that it is mostly based on hearsay as opposed to reality. He has every confidence that the grading system is performing well. Could it be possible that claims will always be hard to prove? As by the time the producer gets feedback the cattle have been boned and boxed.

Mr King went on to say that quite often complaints were nothing to do with grading performance and suggested that misunderstanding about how a processor’s price grid is operated is often the problem. “This is a challenge for the industry” he said.

To me one of the biggest problems facing the domestic beef industry is that cattle can be discounted and downgraded for any purpose.  And then if the meat was tracked I would be very certain that a lot of product discounted at the processing works still ends up as a premium product at the retail level.

Much is made of the review presently under taken into the AusMeat language. The most interesting fact is that the people on the language and standards committee is dominated by the processing sector which have five members with one supermarket rep and one lonely beef producer. The problem starts when you realise that the language and standards committee have the power and the will to veto any recommendations made in the White Paper. Discounts justified or not, are worth countless dollars to processors. Example: A ‘D’ shaped butt will incur penalties however the meat sold will not be sold at a discounted price. Butt shape has no relevance to yield; this is just one of many examples of unjustifiable penalties to the producer that are not passed on to the end consumer allowing the processor to unfairly profit.

The fact is though Mr King called himself a regulator I along with many others believe that AusMeat is dominated by processors and until we can get independent graders to control things like whizzer knives prior to scales and other antisocial acts that flourish in the meat industry, producers will be at a huge disadvantage. The only way I can see producers to get a fair go is for the Minister to pull the horns of his regulator?? Why does USDA employ their own independent graders and AusMeat work with company graders? Why do US producers get a dressing percentage of 62% while under AusMeat Australian producers only get about 52%.

JBS Swift CEO Eastwood told the senate inquiry that 85% of cattle are purchased over the scales. He went on to say that “we have to give farmers credit as they are very intelligent and smart.  They have been selling livestock for a long time. They sell to the companies they choose to sell to, whether be under a weight and grade system, at saleyards , live export or on-farm on what they believe will give them the best returns for their stock”. Senate chair said “I know farmers are very smart too, but I picked up over the last couple of years that they are getting the living daylights squeezed out of them”.

JBS’s statement seems to me to be in direct contrast to Mr King’s who seems to think that producers lack the intellect to understand company grids, although they may have worked with them for many years. 

Sen. Williams said “producers are spooked”. They are saying that if I’ve got cattle booked in for a date to some months ahead I will be given a price two days before delivery. But if I am not happy with that price and do not want to send them I am too scared to pull out because I may not get another slot in that works. Mr Eastwood stated, “I refute this quite categorically”. We do not ban someone from processing out of our facility if they have pulled cattle out. Chairman says “if the producer says I don’t want to supply you, and I have got a better deal, then there is no penalty”. JBS agrees with this statement. Senate asks “if the producer felt that it was not in their economic interest to send cattle to you at a given date then there are no financial penalties?” Mr Eastwood agrees that there are no financial penalties.

My understanding is that at least two producers in Tasmania have been banned from dealing with a major processor. One example is a producer contacting a cattle buyer who was told by the buyer that he would try to book his cattle in and return his call the next day.  The call did not come, so the producer contacted the buyer to be told yet again that he would get back to him, meanwhile the producer found another processor that would buy his cattle. He was then told by the first buyer that he was black banned for life and they were making an example of him.  This seems to be in complete contrast to the evidence given at the Senate Inquiry???  It was interesting to learn that JBS encouraged producers to go along and watch their cattle being processed.  Perhaps producers should take up this invitation to learn more about the process.

David Byard

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