Wednesday, February 19, 2014

Hunt Blog Newsletter 17 February 2014

The Dysfunctional Divide
Between
MLA Policy Setting and Policy Delivery
Since the Concerned Cattle Producers (CCP) electronic questionnaire submission was published on the CCP website http://www.cattlelevysenateinquiryinformation.com/ last week, HuntBlog has received a plethora of queries seeking more information about the structural divide between MLA policy setting and policy delivery referred to in paragraph 6 of that electronic questionnaire.

Hopefully the following comments will provide some clarification:

  • under the terms of the Memorandum of Understanding (MOU) between the red meat industry organisational structures and the Commonwealth government, Cattle Council of Australia (CCA), Australian Lot Feeders Association (ALFA) and the Sheepmeat Council of Australia (SCA) are each charged with the responsibility of setting levy expenditure policy for MLA for their sector of the red meat industry, whilst
  • MLA’s role is to be the marketing and R&D service provider for CCA, ALFA and SCA and carry out so-called ‘willing partnership’ Joint and Core service functions and R&D forthe Australian Meat Processing Corporation (AMPC) and the live export levy funded corporation, LiveCorp.

So in theory MLA have three masters, CCA, ALFA and SCA and MLAis also meant to act co-operatively with the abattoir owners and live exporters to provide ‘willing partnership’ services to those sectors of the industry.

There are a number of fundamental functional problems with this structure:

  • firstly, the directors of MLA have paramount corporation legal obligations to their levy paying members which can often conflict with their obligations to CCA, ALFA and SCA under the terms of the MOU
  • secondly, the CCA, which is the Peak Council representing grass fed cattle levy payers, in particular is strapped for cash and only have a budget of about $1.3 million a year and a staff of three or four. In contrast, MLA have an annual budget of over $170 million a year and a staff of almost 250, most of whom have degrees in economics and marketing, science and agriculture etc
  • thirdly, and consequently to the second point above,  CCA, ALFA and SCA have to rely on the expertise of MLA staff to provide the data to allow CCA, ALFA and SCA to make informed decisions about policy setting
  • fourthly, as former Minister for Agriculture Sen Ludwig advised the Australian Meat Processors Group (AMPG) in the context of a discussion on the functionality of the current red meat industry structures back in 2011“show me the money and I’ll show you the power” or as the old proverb says “he who pays thepiper calls the tune.’’This suggests that in practice the MLA service delivery tail may in fact be wagging the Peak Council policy setting dog and in this regard:
-HuntBlog understands that when the live cattle export ban debacle unfolded in 2011 the then CEO of the Cattle Council of Australia (CCA) was left cooling  his heels in the then Minister for Agriculture Senator Ludwig’s waiting-room for a couple of hours while Minister Ludwig discussed the Indonesian live export issue with Don Heatley (the then chair of MLA), and
-it is a matter of public record, that as an apparent consequence of the Indonesian live cattle export debacle experience, when Scott Hansen subsequently assumed the position of MLA CEO he announced that in the future MLA would stick to its knitting and simply act as a service provider to the levy paying cattle industry and subsequently leave policy setting and advocacy to the Peak Councils in the future.
  • fifthly, anecdotally at least, the Australian Lot Feeders Association (ALFA) and Sheepmeat Council of Australia (SCA), who contribute far less in levies to MLA than grass fed cattle levy payers, nevertheless in many instances have as much say and influence over MLA policy direction as the grass fed cattle levy payer Peak Council, CCA,
  • sixthly, at least in terms of perception if not in practice, under the current tri-partite policy setting structure there is always the danger that MLA may be able to do “a deal” with ALFA and  SCA for their agreement to a particular course of action which may not be supported by CCA by promising to deliver other projects favoured by ALFA and SCA
  • seventhly, the so-called ’willing partnerships’ between meat processors and live exporters and MLA are often in practice not so willing and there is deep concern amongst many producers that  meat processors have too much influence over the producer corporation MLA’s activities as a consequence of
-meat processor levy contributions paid to MLA through the AMPC and
- through transaction levies paid directly by processors to the MLA under the 30 day ownership rule, which requires processors to pay a $5 per head transaction levy to MLA  when they slaughter their feedlot cattle.

In sharp contrast to the MLA Peak Council policy setting and MLA policy delivery structure, the levy funded processor corporation, AMPC, the levy funded live export corporation, LiveCorp, the levy funded wool industry corporation, Australian Wool Innovations, the levy funded pork industry corporation, Australian Pork Limited and a host of other levy funded corporations, have no such policy setting and policy delivery divisions.

Nor are there any such divisions between policy setting and policy delivery in the corporate world, the family farm or in HuntBlog’s law practice. We all set our own strategy and accept responsibility for its delivery and hire the expertise necessary to deliver the desired outcome.This allows us to amend and reappraise our original strategy if costs start to blow out, circumstances change or it appears that we may not achieve the outcome that we had originally planned.

Further, and to some more importantly, the convoluted MLA structure, with its separate tripartite Peak Councilscharged with the responsibility of setting policy and directing a separately governed MLA to deliver the policy outcomes has in practice led to levy payers feeling disenfranchised because there is no easy way for direct levy payer election of a workable board of a corporation that represents three disparate and competing sectors of the red meat industry, namely, grass fed cattle producers, sheep meat producers and lot feeders.

Conversely, once again, there are no such impediments in the structures of the levy funded processor corporation, AMPC, the levy funded live export corporation, LiveCorp, the levy funded wool industry corporation, Australian Wool Innovations, the levy funded pork industry corporation Australian Pork Limited and a host of other rural industry levy funded corporations who have no division between policy setting and delivery and whose boards are all wholly or partially elected by their levy payers.

Submissions to the grass fed cattle levy Senate inquiry have to be lodged prior to 1 March 2014, so if you have not already done so please lodge your submission as soon as you can. Information on the background to the calling of the grass fed cattle levy Senate inquiry, the process on how to lodge a submission and a pro forma electronic questionnaire submission can be found at http://www.cattlelevysenateinquiryinformation.com/ and further information on issues pertinent to the grass fed cattle levy Senate enquiry can be found at www.huntblog.com.au


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