HUNTBLOG NEWSLETTER
17 September 2014
SENATE COMMITTEE RECOMMENDS
A NEW LEVY-FUNDED PRODUCER CORPORATION
TO MEET THE COLLECTIVE NEEDS OF THE GRASS FED CATTLE INDUSTRY IN
THE 21ST CENTURY
Congratulations to Federal
Agriculture Minister Barnaby Joyce for having the perception to ask the Senate
RRAT Committee to inquire into Australia’s grass fed cattle levy structures and
system. I first met Barnaby Joyce at the Bindaree Beef/ABA beef producer forum
in Roma in 2004 where 1500 cattle producers aired their dissatisfaction
with the current red meat levy-funded organisational structure. I was
also present at the Armidale and Rockhampton Beef’s New Direction forums
in 2010 where Barnaby, other politicians, and industry leaders addressed a
total of 1700 disgruntled and disillusioned cattle producers concerned
about the future viability of their industry.
Barnaby appears to have picked up the
message and moved to do something about the plight of Australia's great beef
industry shortly after he assumed the Federal Agriculture Ministry.
Congratulations to the Senate RRAT
References Committee for agreeing to pick up on Barnaby Joyce's reference, and
for the diligent and extensive review that the Senate Committee carried out
into Australia's grass fed cattle levy structures and systems. All sectors of
the Australian grass fed cattle industry were given, and accepted, the
opportunity to put their views before the Senators.
The overwhelming majority of the
407 individual and electronic questionnaire submissions to the grass fed cattle
levy inquiry confirmed Barnaby’s perception that grass fed cattle
producers were dissatisfied with their current levy funded structures and
systems with almost all grassroots submissions calling for a major
reform. The submissions from organisational bodies such as Cattle Council
of Australia (CCA), AgForce, NTCA, NSW Farmers, WA Pastoralists and Grazier’s
Association, and the Australian Beef Association (ABA) also called for
significant changes to the current levy funded structures.
Following 7 separate public hearings
held across the nation involving over 70 witnesses, the Senate Committee report
released last week found by a majority of 7 to 1 that the current grass fed
cattle levy structures and systems needed to be reformed to make them
more efficient and accountable to levy payers. In order to achieve this
goal of reform, the Senate Committee recommended the establishment of a
separate producer-only levy-funded corporation whose board is
directly elected by grass fed cattle levy payers.
The ABA and all it members, past and
present, deserve a special mention for their fortitude and persistence
to stay the course and push for the major reform of the
current red meat organisational structures recommended by the Senate
Committee report.
I first became involved with the ABA
when I was asked to address one of the ABA’s inaugural meetings in Brisbane
back in the mid-90s, at the time that Meat and Livestock Australia (MLA) was
being incorporated, on the issues regarding MLA accountability and the
appointment and election of MLA board members in the context of the very
different board selection and election process enshrined in the Australian Meat
Processing Corporation (AMPC) constitution.
About 300 of the “who's who”
of the beef cattle producing industry attended that Brisbane ABA
meeting- the names and have faces blurred in my memory over
the years but I can recall Graeme Acton, John Ayres from Kidman's, Sandy
Munro, Roger Hann, Colin Hewitt, Ken Warrener, John Carter, Dr Rod Kater,
Charlie Mort, and Peter Hughes.
As I said in my HuntBlog tribute
to Graeme Acton earlier this year -I found it somewhat daunting to address
such a large congregation of prominent cattlemen and I can recall fielding
searching questions about the differences between the AMPC and MLA
constitutions and Beef Baron anger about the Federal government's presumption
that abattoir owners were responsible and sophisticated enough to be entrusted
with the grassroots election of the AMPC's directors whilst cattle producers
were apparently not regarded as being capable of directly electing the levy
funded producer corporations directors.
It has been 16 long years since that
ABA meeting in Brisbane but to their credit the grassroots core of the ABA have
stuck to their principles and beliefs and finally achieved a ringing
endorsement from the Senate Committee for the central plank that has
underpinned ABA’s platform since its inception--namely that the grass
fed cattle industry needs a producer only levy funded corporation
directly accountable to levy payers and that the board of any such corporation
must be elected by the producers that fund its operations.
As the Senate Committee found, there
have been significant changes in the environment in which the grass fed cattle industry
operates during those 16 years as a consequence of a host of factors
including vertical integration, extended feedlotting, rising competition
from other protein sources, concentration of supermarket power, consolidation
of abattoir power, fewer farmers, an even faster decline in SFO membership, a
decline in the Australian sheep population from 170 million head to 70 million
head, declining per capita Australian beef consumption, and, most
importantly, a decline of 40% in real cattle prices since 2001.
Consequently over the years, and
particularly during the last 4 or 5 years when the profitability of
the grass fed cattle industry has fallen to their current unsustainable levels,
grass fed cattle producers across the nation have come to realise that the
current grass fed cattle levy funded structures and systems are no longer
meeting the collective needs of the grass fed cattle industry.
The 269 Concerned
Cattle Producer (CCP) electronic questionnaire submissions to the grass
fed cattle levy Senate Committee inquiry ( 45% of which came from SFO members)
discloses that the 64% that disclosed their cattle
numbers owned a total of 626,000 head of cattle.
An analysis of the 269 electronic
submissions shows that over 96% of the 269 electronic questionnaire
submitters believed that MLA directors should be directly elected by levy
payers rather than being drafted by a selection committee. Nearly 98% believed
that they should have the right to vote on the amount of levies that they paid
in the same way that Australian Wool Innovations (AWI) levy payers do,
and 98.2% were not satisfied with the opportunities they have to influence the
quantum and investment of the grass fed levies that they pay. A staggering 99%
do not believe that they have received value for the levy money they have
invested in MLA.
Even though 45% of the grass fed cattle
producer electronic questionnaire submitters were SFO members, only 13.7% of
the 269 submitters thought that the CCA adequately represented their interests.
The calls for reform submitted to the
grass fed cattle levy Senate inquiry by the CCA, the ABA and the AMPG/CCP group
all involved using grass fed cattle transaction levies to fund cattle producer
advocacy, and CCA and the other red meat industry peak councils already receive
interest from levy moneys to finance their lobbying work.
Consequently the claim by the Land
Newspaper editor in last week's edition of the Land Newspaper that the receipt
by the CCA, or some other cattle producer levy funded Corporation, of levy
funds would be in conflict with their role as political lobbyists appears to be
misplaced and out of step with arrangements that have been in place since 1998.
The Senate inquiry into grass fed cattle
industry structures and systems governing levies and the Senate committee
report findings identified the following 5 key major flaws in the current grass
fed levy organisational structures:
1. the dysfunctional
divide between peak Council (CCA) policy setting and MLA service provider
delivery;
2. a dysfunctional complex red meat organisational
structure which requires MLA to be both fund holder and funding provider for
producers whilst also being required to provide services to live exporters and
meat processors;
3. an inadequately funded SFO peak Council CCA with
shrinking resources and falling membership coupled with its inability to obtain
adequate funding to carry out its mandate under the Memorandum of Understanding
(MoU) and effectively represent the grass fed cattle sector;
4. the strongly held view of many grass fed cattle
producer levy payers that they are disenfranchised under the current system;
5. widespread misunderstanding and lack of clarity
about the current organisational structures and their roles and
responsibilities and the dysfunctional interaction between CCA, MLA and the one
stop shop Red Meat Advisory Council (RMAC) that fails to provide a single grass
fed cattle producer voice to government.
In summary, the Senate inquiry into
grass fed cattle levy structures and systems received three main industry
structure reform proposals:
1. the CCA call to redirect $4 million from the
$5 million grass fed cattle transaction levy to strengthen its policy setting
and MLA oversight role under the MoU coupled with reform CCA board election
process which will allow a minority 2/10 CCA board members (and 4/12 CCA board
members over time) to be directly elected by grass roots SFO members and non
SFO -grass roots cattle producers;
2. the ABA proposal that the entire grass fed
cattle transaction levies be paid to a new grass fed cattle producer
Corporation whose board is directly elected by levy payers, and that the new
grass fed cattle producer Corporation would then apply the grass fed cattle
levy funds to MLA and other service providers to carry out the functions
necessary to deliver the policy outcomes determined by that new cattle producer
Corporation;
3. the AMPG/CCP restructure proposal based upon
the Australian pork industry model and successful overseas rural industry
advocacy bodies such as the American Farm Bureau which combined the
representative policy setting and policy delivery functions under one levy
funded roof with a board directly elected by the levy payers.
The AMPG/CCP submission to the grass
fed cattle levy Senate inquiry assessed the three main competing reform
proposals against the 5 identified key flaws with the current organisational
structures outlined above and reach the following conclusions:
CCA
Reform Proposal
The
proposed CCA reforms address the CCA funding problems.
The
proposed CCA reforms do not however adequately address:
· the
current dysfunctional divide between policy setting and policy delivery;
· the
separation of processor, producer and live export levy funded activities;
· the
perception of many grass fed cattle producers levy payers that they are
disenfranchised; or
· the
provision of a single voice for grass fed cattle producers to government.
ABA
Reform Proposal
The ABA
reform proposals address:
· the need for a
well-funded grass fed cattle representative body, and
· the need
for all grass fed cattle levy payers to feel that they have been enfranchised,
and
· a single
voice for grass fed cattle producers to government- because the ABA proposal
would give a directly elected board of a new levy funded cattle Corporation the
power of the cheque book (i.e. “he who pays the Piper calls the tune”)-which
should ensure that the government understands that the new grass fed levy
funded Corporation was the voice that spoke on behalf of the grass fed cattle
industry.
The ABA
reform proposals do not however adequately address
· the
current organisational structure dysfunctional policy setting and policy
delivery divide, or
· the
separation of processor producer and live export levy funded activities
AMPG/CCP
Reform Proposal
The
AMPG/CCP think tank reform proposal was the only proposal put to the Senate
Committee that addresses each of the 5 fundamental flaws in the current grass
fed levy funded organisational structures identified by the Senate committee.
The
AMPG/CCP think tank reform proposal specifically addresses:
· the
current dysfunctional divide between policy setting and policy delivery under
the MLA/peak Council structure;
· the
separation of processor, producer and live export levy funded activities;
· the need
for a well-funded representative body for the grass fed cattle industry;
· the need
for all grass fed cattle levy payers to feel that they are enfranchised; and
· the
provision of a single voice for grass fed producers to government.
The challenge for the Federal Minister
for Agriculture, Barnaby Joyce, and the Federal Government now is to bring
about the implementation of the Senate Committees recommendations in a constructive
and timely manner that ensures that grass fed cattle industry has the
appropriate representative, R&D, and marketing bodies that it needs to take
it forward in the 21st century.
The challenge for the grass fed cattle
producer industry, and the red meat industry as a whole, is for them to abide
by the umpires decision, and to cooperate with the implementation process in
order to ensure that the grass fed cattle industry, and the cattle industry as
a whole, receives the best possible representative and financial outcomes so
desperately needs.
Attached is a copy of the Senate
Committee’s Recommendations.
Further material on the RRAT Senate
References Committee into industry structures and systems governing levies on
grass fed cattle submissions hearings and report can be found at www.HuntBlog.com.au and on www.cattlelevysenateinquiryinformation.com.
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