FACED with the likelihood that it might have finally run out of time extensions and will have to deliver something to Agriculture Minister Barnaby Joyce this week, the Senate Rural and Regional Affairs and Transport References Committee vented its frustrations on witness Gabrielle Ford from the Australian Competition and Consumer Commission (ACCC) last Tuesday in what must surely be one of the final public hearings in the seemingly never-ending inquiry into the effect of market consolidation on the red-meat-marketing sector.
Born out of producer frustrations with poor returns in the drought years and the so-called Barnawartha saleyards boycott, the committee received instructions on March 18, 2015 to conduct the inquiry and report by August 12, 2015.
It was subsequently granted one extension of time for reporting in 2015 and two more extensions in 2016. Then the 2016 general election intervened and the inquiry lapsed only to be re-referred with a reporting date of March 30, 2017. A further extension to June 2107 was granted and yet another to August 17.
Convinced that “there is a culture of collusion which permeates the saleyards and must be addressed” the Committee lashed out at ACCC when its investigation into Barnawartha concluded in December 2015 with a finding of no evidence of hard-core collusion and no breach of the Act.
In part, Committee member Senator Barry O’Sullivan said, “The ACCC should be embarrassed that despite all the statutory powers at its disposal, it was still incapable of getting to the bottom of this issue.”
That desire to see the consumer watchdog take a bite out of processors was again evident at last week’s hearing with Victorian Senator Bridget McKenzie in her first question to Ms Ford asking “If the situation of the Barnawartha boycott occurred today, would we be able to prosecute anybody?” (quotes sourced from Hansard proof copy).
Senator McKenzie was referring to the additional powers the ACCC now possesses as a result of passage of ‘concerted practice’ legislation.
Ms Ford provided a detailed response but concluded that she did not know if the legislated changes were sufficient to bring a successful prosecution.
When asked specifically by Senator McKenzie if ACCC would take the issue to court if presented with a similar situation again, Ms Ford replied that she could not categorically say they would or would not.
To Senator McKenzie’s stated disappointment at this response Senator O’Sullivan added, “You’ve got all the powers in the world and I personally am going to express disappointment. It would seem that this matter is closed for you guys.”
With the processing sector clearly in his sights and convinced that self-regulation will not address what he sees as endemic errant behaviour, Senator O’Sullivan canvassed the idea of a mandatory code of conduct to give ACCC yet more power.
He said, “So, if there is no other magic pudding solution, then the only thing left for us is to recommend that we regulate them (processors) through a code of conduct, to give you the power so that, next time you go to Barnawartha, you can come home with your picnic basket with at least, hopefully, eight of the nine (buyers that boycotted Barnawartha) in it.”
Interestingly Ms Ford replied that such a code would be of little consequence.
She said, “The powers of investigation that the Commission has now are as strong as, if not stronger than, what we get with code enforcement.”
Slaughter holds against trend
AS July 31 rolled by, three months of relatively consistent throughput have now been recorded in the Australian national (eastern states) kill with weekly tallies holding at the mid 130,000 mark according to figures supplied by MLA’s market reporting service.
Similarly, beef export tonnage has remained relatively constant over those three months with May at 95,791t, June 94,422t and July slightly lower at 92,773t according to Department of Agriculture and Water Resources.
Even at that lower level July is the first time where export tonnage has exceeded last year’s result on a comparative month-by-month basis. The difference of course is season.
Last year’s very wet winter caused the national kill to stall in mid-July and ultimately bottom out at just 101,000 head in the first week of October. It was late October before paddocks and roads had dried out enough to get numbers rolling again.
In contrast, this year’s third-quarter seasonal decline looks as though it may be a very shallow dip in the trend line if at all with numbers already booked solidly in some instances through to end of August. Whether that momentum continues into the final quarter is another question.
Certainly the pent-up surge of grass cattle that had put on weight through last year’s warm winter and started to hit the market in late October would not be expected this year on the season that has been experienced so far.
A lot of number 5’s are already in feedlots so the production from those cattle can be expected before the end of this year.
There are also reports of cattle on oats but those stories are generally accompanied by a caveat that the oats is getting fairly desperate for a drink.
How many fat cows there may be to come forward when second round musters get underway is another moot point. Higher than usual pregnancy rates this year could limit the number of fats.
Depending on what the weather does, it may be that this year will not see much of a seasonal surge in kill numbers in the final quarter. That leaves me to think that slaughter and beef exports for the year will end up at around 3-4pc behind last year, somewhere around the 980,000 tonnes mark.
As at the end of July, progressive slaughter is 8.7pc lower than same period 2016 (calculated from MLA weekly kill figures) and beef exports at 566,000t are down 7.6pc.