LAST week in this column I speculated that the seemingly never-ending Senate inquiry into the effect of market consolidation on the red-meat-marketing sector might finally be drawing to a close.
How wrong I was.
Starting in March 2015 with an original reporting date of August 12, 2015, the Senate Rural and Regional Affairs and Transport References Committee now appears no closer to delivering its report to Agriculture Minister Barnaby Joyce with yet another extension of time to November 29, 2017.
Six time extensions and a re-referral after lapsing in 2016 has brought a touch of Blue Hills (Neighbours for the younger generation) to this saga but at the same time moved it more into farce than function.
With only two Senators (O’Sullivan and McKenzie) bothering to attend the current round of public hearings chaired by Senator Sterle, it would seem the other committee members understandably lost interest long ago.
A fortnight ago Senators O’Sullivan and McKenzie harangued stand-in witness Gabrielle Ford from the Australian Competition and Consumer Commission over the ACCC’s seeming inability or indifference toward prosecuting processors for supposed collusive tendencies.
Since then MLA managing director Richard Norton has been called on to give an account of MLA’s response to the actions called for in the recommendations made by ACCC in their Cattle and Beef Market Study released in March 2017.
Specifically, two recommendations from that study were directed to MLA in regard to market reporting and saleyards.
Recommendation 4 suggested MLA should work to improve saleyard market reporting to improve comparability of prices across sales channels and reporting of wholesale, retail and export beef prices further down the supply chain.
In his comments it is evident that Mr Norton thought the latter part of this recommendation referred to the collection of over-the-hooks prices from export processors and the difficulties that presented for MLA.
This drew a biting retort from Senator McKenzie who chided “So did the ACCC get it wrong” (in expecting MLA to be able to do something that was not really doable).
Unfortunately Mr Norton was probably just a little too defensive to grab the opportunity and turn the argument back on the Senator by saying that ACCC definitely got the first part of Recommendation 4 wrong.
He should have gone on to say they got it wrong because they erred in their assumption that saleyards are the central focus in the matter of discovering and disseminating crucial information about pricing of slaughter cattle.
ACCC should have realised that saleyards play only a minor role in this matter because of the very small numbers of slaughter cattle saleyards transact and the pricing complications inherent in the way those cattle are sold.
Being essentially store markets with a small proportion of fats, that in itself is the reason why there is limited ability to improve the market reporting of ‘quality’ slaughter cattle. There is simply no longer enough of these represented in saleyard offerings to equate to the broad range of over-the-hooks categories with any degree of statistical significance.
And even if there are occasionally a few decent fats in the yarding, any capacity to identify quality differences in price reports is always going to be masked by dressing percentage variations.
The existing saleyard reports on slaughter cattle do at least identify trend and that in itself may be of interest to over-the-hook sellers. But that is about it.
ACCC should have tested producer assertions that there was a need for better cross-channel price comparison, firstly in terms of significance of the issue and secondly whether something could be done about it.
Had they done so in all likelihood they would have been more circumspect in their recommendation.
Recommendation 12 meanwhile suggested MLA should engage with buyers, auctioneers and agents to generate more information in the saleyards they report on to identify buyers and the proportion of stock they each purchase.
Regrettably Mr Norton appears to have interpreted the latter as a suggestion MLA should report on every single saleyard in the country.
His response to Senator McKenzie’s questioning on what MLA had achieved in this area was therefore couched in defensive terms about market reporting already costing MLA $4 million per annum to cover the top 25pc of saleyards and that a cost-benefit analysis would be necessary before reporting every single market.
Importantly Senator McKenzie did not correct Mr Norton on the fact that the ACCC recommendation had nothing to do with reporting every single saleyard in the country. In fact, she gave no indication that her interpretation was any different to Mr Norton’s.
And therein lies an indication of the extent of the farce that this whole matter is descending into.
A fortnight ago the committee thought it was a good idea to legislate a mandatory code of conduct to bring processors to heel. That is until the ACCC representative told them such a code would be of little consequence as it would not add to their powers of investigation.
Since then the hearing process has revealed that neither the committee nor MLA has a clear understanding of what ACCC was on about in Recommendation 12.
And then to top matters off, there was Senator O’Sullivan’s bewildering decision to ask Mr Norton what he thought was the answer to the vexed issue of producer representation.
In an attempt to justify raising this topic when the purpose of the committee was to inquire into the effect of market consolidation on the red meat processing sector, Senator O’Sullivan offered “If we’d had a powerful advocacy body around cattle producers we wouldn’t be in this room today.”
That seems an incredible leap of faith when it is considered that the best advocacy body ever to represent the cattle industry (Cattlemen’s Union) did not prevent the greatest consolidation in the red meat processing sector this country has ever experienced (formation of AMH).
