LAST Friday, ACCC (Australian Competition and Consumer Commission) released an Update Report on progress of its Cattle and Beef Markets Study recommendations.
The markets study itself was conducted in 2016-17 following ACCC’s review of JBS Australia’s acquisition of Primo Foods in 2014-15 and ACCC’s own investigation into an alleged collective boycott by cattle buyers at Barnawartha saleyards.
ACCC found there was no issue or case to answer in both instances but nevertheless went on to conduct the markets study because of supposed industry participant concern over anti-competitive conduct and service delivery shortcomings.
The markets study Final Report was released in March 2017 and contained 15 recommendations to address what ACCC saw as substantial failings within the cattle and beef markets sphere of operations.
ACCC identified RMAC (Red Meat Advisory Council) as the body best placed to drive implementation of its recommendations and to monitor compliance.
In Friday’s update report, ACCC was highly critical of RMAC for what it considers to be lack of progress and consequently abandoned RMAC in favour of AGMIN (Agricultural Ministers Forum) to take on responsibility for implementing the recommendations.
Independent Chair of RMAC, Don Mackay, immediately hit back at ACCC over the robustness of the markets study.
In particular Mr Mackay rejected the Agricultural Commissioner’s conclusion that industry either lacks understanding of transparency or that transparency does not suit the interests of industry.
He went on to say that RMAC had repeatedly offered to fix problems with the industry where ACCC could provide evidence that a problem existed but no such evidence was forthcoming.
Mr Mackay said, “The ACCC has had 12 months to validate some of the assumptions in their Market Study and do a basic fact checking exercise with their own Agriculture Consultative Committee.”
“The ACCC even established a hotline late last year for farmers but can’t provide details about the number of complaints from this leading to serious concerns or prosecutions for anti-competitive behaviour.”
Caught up in what RMAC evidently felt were unwarranted recommendations stemming in part from unsubstantiated claims and submissions, the passing of the baton to AGMIN appears to have been met with a mixture of relief and cautionary advice.
“We thank ACCC for rightly handing government led work over to government,” Mr Mackay said.
However, “Changing responsibility for the ownership of the Market Study does not address the fact that the recommendations are simply not fit-for-purpose.”
The move to AGMIN now introduces the prospect of some regulatory clout being brought to bear on the implementation of ACCC’s recommendations where previously this had remained more of a veiled threat.
Looking through the list of 14 (the 15th was originally that RMAC be responsible for implementation) there are only two which seem to be at the heart of ACCC’s claim of wide benefit to industry through greater transparency. These are the recommendations that price grids should be made publically available and that actual OTH (over-the-hooks) prices paid after grading should also be in the public domain.
The other recommendations largely fall into categories of ‘already tried and failed’ (uniform licencing of agents across all states), ‘already happening’ (objective carcass measurement/grading and related issues) and ‘extension/training issues’ (price grid interpretation, carcass feedback and producer education).
Because of their nature/history/current status it is difficult to see how these latter categories could attract interest from federal/state regulators but the issue of public availability of price grids and actual OTH prices might just conceivably be another matter.
The reason for this possibility is precedence in a major overseas beef-producing country.
But circumstances in the US where a form of mandatory price reporting occurs are very different to those in Australia and it would seem far from certain that the US is relevant in terms of advocacy for a similar reporting framework in Australia.
In its detailed response to these particular ACCC recommendations, RMAC has pointed out that price grids are already widely available to sellers and potential sellers of cattle and that there has not been an influx of concern through the RMAC partner network on the need for widespread publication of grids.
Why such a broad inconsistency exists with the Market Study findings is unclear and RMAC has sought from ACCC further detail on the evidence base behind their recommendations.
No doubt AGMIN should in turn ask the same questions if and when the issue finds its way onto their agenda.
Southern states continue to offload cows
LACK of feed and water in southern states is continuing to drive heavy numbers of cows and young calves into saleyards.
At Dubbo last Thursday cows dominated the 6400 head yarding.
At the heavy end, good killable types were well represented and as a consequence rates came off by 17-18 cents to average just 185c/kg, equivalent to 360-365c/kg DW.
Presence of restockers/fatteners however steadied the price slide in the lighter and plainer descriptions but the overall result was nevertheless an average of just 118c/kg, an ominous sign that averages of less than 100 cents may not be far away.
At these rates southern Queensland processors are able to pull some numbers out of the southern markets to help maintain kill schedules as forward bookings are generally only about two weeks in front.
One major processor I spoke to earlier in the week adjusted rates back by 5 cents bringing indicator 4-tooth ox to 470 and heavy cow to 410.
But while numbers are holding for the present, the situation in June may be another matter.
The same contact was inclined to think that numbers wise, the run home to the end of the financial year will be hard enough with southern supply tapering off (or halting altogether if it rains) and the perennial issue of sales being deferred to July for tax reasons.
MLA reported the eastern states kill at 145,038 head for last week with Queensland at its highest point for the year thus far at 77,581.