Tuesday, April 19, 2016

Conclusions and Solutions Synopsis

The Need to Strengthen Australian Grass Fed Cattle Industry Representation

Part 2 Synopsis

Introduction

Part 1 of HuntBlog’s newsletter on the need for cattle producers to have a strong representative body to counteract supermarket and processor power which was published on 20 April 2016 (a copy of which can be accessed in the "Featured Posts" section to the right or by clicking here) explored:

·         recent parliamentary inquiries into the grass fed cattle organisational structures and concentration of processor power

·         recent government attempts to curb the deleterious effects of increasing supermarket and processor power on the rural sector by strengthening the power of the ACCC

·         reports by the Australian Farm Institute and the National farmers Federation about the ineffectiveness of Australian rural advocacy groups in comparison to successful overseas models,

·         the unsustainable plight of the cash-strapped State Farmer Organisation (SFO) based grass fed cattle Peak Council, Cattle Council of Australia (CCA)

·         the relative financial and representative weakness of CCA in comparison to overseas service fee and levy funded rural advocacy bodies and other Australian levy funded rural advocacy and policy development organisations

·         the different outcomes achieved by American and Australian representative bodies with respect to the quantum of industry taxes and producers share of the retail dollar

Part 2 of that two-part HuntBlog newsletter regarding the need to strengthen Australian grass fed cattle industry representation will be published on 26 April 2016.
                                                                                                                                                          
Conclusions and Solution Synopsis

Next week’s Part 2 of HuntBlog’s newsletter on the need to strengthen Australian grass fed cattle industry representation in order to combat increasing supermarket and processor power will

·         explore examples of successful Australian and overseas rural representative body models that utilise a mix of service fee income and levies to fund their operations; and

·         examine some key recommendations from the recent Senate inquiry into Grass Fed Cattle Levy Funded Structures and Systems that could help strengthen Australian grass fed cattle representation if they were implemented in full or in part.

Part 2 of HuntBlog’s newsletter will also

·         examine possible sources of seed funding for the establishment of the proposed new grass fed cattle representative body proposed by the Grass Fed Cattle Levy Funded Structures and Systems Senate Inquiry report; and

·         suggest a number of levy payer plebiscites that should be conducted, in accordance with the provisions of the government’s Levy Principles and Guidelines, once that new grass fed cattle representative body is established.

Part 2 will also explore the importance of market information for cattle producers operating in a free market economy as well as the methods by which this could be achieved, such as the introduction of a mandatory price reporting system in Australia.

Part 2 will set out safeguard mechanisms that could be implemented through a Statutory Funding Agreement and an amended Memorandum of Understanding to

·         establish a concrete Chinese Wall to ensure that Meat and Livestock Australia (MLA) receives sufficient funding to retain its key personnel and carry out its core activities; and

·         to ensure that any levy funds that all advocacy carried out by the new grass fed cattle representative body is funded from interest earned from the RMAC reserve funds and income from services provided to members and not from levies

Part 2 will also examine the proposition that all of MLA's non-core activities should be fully contestable and suggest that the proposed new grass fed cattle representative body model could be adopted by other sectors of the red meat industry.

3 comments:

  1. Comparisons between the US and Australian farm representation can only go so far and are of limited utility.First,US farmers are still highly regarded and valued by the public at large.They still occupy what is regarded as the American "heartland".This is not the case in Australia where farmers are increasingly viewed as environmental vandals bulldozing trees and killing kangaroos.Second,the state based US electoral college system confers significant political power on "farming states" like Iowa.Even the 2 largest states,California and Texas still have significant farming sectors.Australian lower house electoral boundaries are based on population density ensuring increasing irrelevance for the farm vote.Three, US farm incomes are safety netted by a truly gigantic system of farmer protection which neither political party will reduce or even criticise notwithstanding the dire fiscal/debt position of the US government.Australian farmers receive very little if any taxpayer support indeed many need an off farm income to survive.Fourth,US farmers and processors have access to low cost undocumented Mexican labour.An American friend working in horticulture once told me that without Mexican labour there would not be a fresh picked lettuce in the US.Fifth, US farmers receive a substantially bigger share of the retail dollar across almost all farm produce than Australian farmers.The quality of US farm produce is truly outstanding. Finally farming is still viewed as an honourable and viable undertaking in the US.The children of farmers want to become farmers themselves and have every prospect of an exciting and decent life.The number of farms in Australia continues it's relentless decline.Farming towns are being turned into ghost towns.

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  2. Great comment John. The six points that you make are spot on. The Hunt Blog comparison of the relative strengths of Australian and overseas rural representative bodies in New Zealand, Canada, France and the United States conclude that well-funded organisations that are truly representative and commercially connected to the sector that they represent are able to:

    1. assist in maintaining the public images of their farmers so that they continue to be highly regarded and valued by the public at large;
    2. help retain farmer political power in regional and rural Electorates;
    3. help farmers to retain and obtain trade protection for their products;
    4. in the case of the US at least, influence government to turn a blind eye to the use of Mexican illegal migrant labour;
    5. help their farmers to receive a substantially bigger share of the retail dollar than Australian farmers receive; and
    6. have helped maintain regional populations and retain farming enterprises as sustainable highly regarded industries within their respective countries.

    There are undoubtedly many factors that have contributed to the strength and prosperity of farming enterprises in overseas countries and whilst it is possible to engage in a chicken and egg argument as to whether that strength and prosperity was significantly contributed to by the strength of those countries’ rural advocacy groups, or whether the strength of the rural advocacy groups is a by-product of the fundamental strength of the rural sector in those countries – it is clear the rural advocacy groups such as the NBCA and the American Farm Bureau (AFB) in the US, the French Agricultural Chambers, and the New Zealand levy funded rural organisations such as Beef + Lamb, DairyNZ and Horticulture NZ are highly regarded and strongly supported by farmers in those overseas countries.

    NBCA membership in the U.S., for example, remains steady with 60% of American cattle producers signed up as members of the organisation and even though America only has about 2 million farmers , AFB nevertheless has about 5 million members because of the discounted membership services supplied by FBA. Both the AFB and NBCA have a flock of well paid lobbyists pushing for the adoption of their policies to government - so presumably US farmers think that they are receiving some benefit from their representative organisations.

    A big contrast to the situation in Australia with the cash strapped SFO based Cattle Council who represents less than 20% of Australian cattle producers with a pinch hitting CEO who is valiantly trying to juggle his administrative and representative functions so that he can find time to lobby government on behalf of grass fed cattle producers. A single part time lobbyist who is often pitted against full time professional lobbyists employed by processors and well-funded lobbyists from other sectors of the red meat industry.

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    Replies
    1. Thank you Norman.One really interesting point you make is that 60% of US ranchers "signed up" for membership to the NBCA.However they signed up and paid up voluntarily and of their own free will as free people living in a pluralistic democracy.This is the kind of organisation we might want to learn from as long as it is independent of the government and completely voluntary in constitution.In stark contrast the CCA was imposed on Australian cattle producers without even a vote by the coercive power of government.This was done as an expediency in order to fill in a box on the organisation chart of the beef industry structure set up in 1997 and has been a disaster for cattle producers.
      The SFOs and by extension the CCA are in terminal and irreversible decline because they have nothing to offer their members.The decades long mega trend of farm consolidation is firmly intact and in fact accelerating.Farm numbers will fall at least another 30% in the next decade.The people doing the consolidating are the smart operators,family farms,buying out neighbours increasing output,reducing overheads and selling direct.The other key consolidators are capital city investors looking for asset diversification and attracted by cheap farmland valuations.These are not the type of people that will join a SFO or a new cattle council.

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