Fees killing competition

Internal fees a hurdle to international trade competitiveness

Markets
AMIC says Australian processors and the wider red meat supply chain were battling unsustainable cost pressure to remain competitive internationally.

AMIC says Australian processors and the wider red meat supply chain were battling unsustainable cost pressure to remain competitive internationally.

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Brendan Wade updates news from around the saleyards.

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We pay significant attention at a national level to ensure that our primary industry exports compete on a level international playing field. The Australian government, along with most other trading nations, works diligently to eliminate tariffs, which are seen by many countries as a significant barrier to trade. We have had major success in negotiating free trade agreements for the benefit of all. An issue that does not receive the same attention, until recently, is internal fees and charges that can present a hurdle to international trade competitiveness.

The Australian Meat Industry Council (AMIC) has recently released a paper about costs to operate which details that federal and state government regulations were estimated to be 54 per cent of the total operating costs, excluding livestock purchases. If these percentages are correct they are significantly higher than beef exporting countries that Australia competes against on the world stage. These regulation costs are twice that of the US and Argentina, and more than three times what Brazilian meat companies are apparently paying their "fee to operate".

AMIC is calling for relief to the tune of $110 million. AMIC boss Patrick Hutchinson said Australian processors and the wider red meat supply chain were battling unsustainable cost pressure to remain competitive internationally. The major point of difference is the US and Brazilian governments offer support to their processing sector by covering around 95pc of these fees, while Australian processors fund the full amount.

"The red meat industry is dependent on global trade for its viability. Streamlining the major federal and state regulatory and red tape burden would be a good first step," Mr Hutchinson said.

These regulation costs are twice that of the US and Argentina, and more than three times what Brazilian meat companies are apparently paying.

AMIC also said the red meat supply chain was the country's largest agricultural exporter with more than 70pc of product produced sold overseas to 124 countries. The report is available to all political parties in the run up to the upcoming election with the industry hoping for a bipartisan solution. On top of this you have the associated industry cost, namely energy for one, which again in Australia is so much higher that what our major competitors pay.

"The unfortunate energy policy paralysis is resulting in increased cost flows across the full supply chain," Mr Hutchinson said.

Sheep and lamb markets have continued to grind higher over the past few weeks and not necessarily due only to moisture through some parts of NSW but also a fear that supplies will tighten before the spring supply comes into the system. Lamb finishers are competing strongly with processors for lighter types and heavy lambs are also witnessing renewed vigour as processors compete for suitable types.

The National Restocker Lamb indicator has improved more than 10pc in the two weeks to 706c/kg cwt. Last year the improvement in prices started during the winter months so one trusts the same pattern will emerge this year.

Helping lamb finishers will be the price of grain supplies easing a little recently and if more moisture eventuates in coming weeks, the winter planting window presents a better-feed supply for the balance of the year.

Mutton prices are also continuing to move higher. Lightweight mutton grids have risen to 483c/kg cwt, up 98c week on week. China currently has a shortage of pork, which is a large part of the Chinese diet, so if they want protein what better than to consume more Australian sheep products of which they are a major importer.

With the federal election upon us, I found a piece titled "When insults had class" from a time when cleverness with words was valued and not the nasty four-letter jibes around today. They are from the political class and others of a bygone era. Some may not be politically correct, but they are not mine, so don't ring me!

"He has all the virtues I dislike and none of the vices I admire" - Winston Churchill.

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