A DIRECTOR of the Australian Beef Association (ABA) agrees with inquiry submissions that claim MLA is controlled by multi-national corporations in the meat processing and retail sectors.
Brad Bellinger has devoted time into researching the pricing of beef, particularly the discrepancy between high supermarket prices for beef and low wholesale dollars for the producer.
Mr Bellinger said the Senate Inquiry into the collection and disbursement of levy monies is a chance for the livestock production sector to prove how little they have benefited from forced levies and how little control the grass fed cattle producer has in representative bodies.
He said three companies that run half the nation’s herd kill 70 percent of Queensland’s cattle while two supermarkets retail over 50pc of our state’s beef.
Such concentration of influence has infiltrated MLA, Mr Bellinger said, with the 30-day rule allowing meat processors the right to vote and the opportunity to control the producer-led body by paying the $5 levy.
“If a processor buys cattle, places them in a feedlot that they own, hold them for more than 30 days before, and then kill them in an abattoir they also own, this is then deemed by DAAF as a transaction,” he said.
“About 200,000 people sell cattle and pay a levy. Of those, only about 9,000-10,000 apply for and gain their full voting entitlement. Of those who claim their voting entitlements, only 3,600 actually use them. Of the 3,600 that use their votes, the top 41 voters control over 50pc of the vote.
“Of the top five voters that now control close to 30pc (of the vote), four of them are multinational processors and the one that isn’t, is soon to become one.”
Mr Bellinger said this analysis was four years old as MLA has now installed a security programme on the electronic copy of the register. He said this is to prevent ABA easily identifying the top voters, of whom Mr Bellinger is confident most of the top 16 are all processors who gain their votes through the feedlots they own.
“It is obvious who controls MLA and MLA itself judges its success on the value it adds to the industry; not the value of cattle, but the value of beef at retail and exported.
“They embrace an economic theory known as the pull through effect. They claim that if the price of beef goes up, then the price of cattle will also be pulled up with it.
Mr Bellinger said the pull through effect was a complete misnomer with “processors currently enjoying near record highs for their beef” while “the depressed prices we receive for our cattle are only too real.”
MLA Managing Director Scott Hansen said it was true vertically integrated processors (those who move their cattle from feedlot to processor) pay a transaction levy, but he said those funds were directed to the grain-fed levy income, and not the grass-fed producer’s.
“The idea that processors have some dominant say is not accurate and, in fact, the only increased influence they have is that there is a smaller number contributing a greater amount,” Mr Hansen said.
“As an investment-based organisation, those who invest more have more of a say where that investment should be made,” he said.
Mr Hansen said MLA had no legislative power to interfere with market powers or forces and that such power rests with the government and the representative bodies, such as the CCA and Australian Lot Feeder’s Association, which provide a voice to the government.
“What we can continue to do is expand the customer base to ensure concentration of power doesn’t fall into too fewer hands,” Mr Hansen said.
He said expanding the international market from “a few major players” – the US, Brazil and Japan – to incorporate South East Asia and the Middle East meant new customers and more competition for beef.
Mr Hansen said this would translate back to the producer once they received good rainfall.
“The pricing power is in the hands of the processor, but if the processor doesn’t have customers demanding its product, they don’t have much they can offer and ask cattle producers for.
“As such, increasing numbers of producers, particularly in Queensland, are taking their own product through the supply chain, and branding their own product to sell.”
In terms of participation in voting, Mr Hansen said MLA was on par with other publicly listed companies in Australia with an active participation rate of between 12-15pc.
A large Australian meat processor, who wished to remain anonymous, backed up Mr Hansen. He said the Australian Meat Processors Corporation (AMPC) collected processors’ slaughter levies. The meat processor said joint programs between MLA and AMPC demonstrated a collaborative approach, especially in terms of market access.
He said while there have been times when meat processors have been on the MLA board, it is not a regular occurrence and that under the corporate governance arrangements in place under MLA (an elected board), no one levy payer or group of levy payers can influence decisions.
“Both producers and processors are all in the same position; we are an export industry competing against the other animal protein exporting nations, especially the US and Brazil.
“Being more productive on the farm and through supply chain and taking costs out is beneficial for all. This is critical as costs, especially government charges, (for example, the carbon tax imposed on processors and the $81 million per annum of AQIS inspection charges) which are levelled at industry find their way back to the producer.”
The meat processor said processors are at the sharp end of market access facing challenges in terms of ongoing market access and Australia continuing to be an expensive place to process animals.
“The facts are it costs twice the price to process here than in the US and we compete with the US in all key markets. It is also cheaper to move a 40-footer ship from the US to Asia than it is from Australia to Asia,” he said.
“We need to continue to increase competitiveness, remove costs throughout the supply chain and open up trade and market access otherwise we will find it difficult to compete long-term in international markets.”
He said the pricing of cattle reflected the available supply and price signals received from the market.
“If you looked at the top sell price of bullocks over the last few years; that has held up pretty well. Year on year, it hasn’t moved much.
“Cow prices have suffered because of the number of cows on the market and drought conditions have exacerbated that.”
Mr Bellinger said the seasonal conditions were not the only excuse for low prices.
“Even before the drought, we were still getting the lowest cattle prices in the world,” Mr Bellinger said.
“It is crunch time for Australian producers. We must take control of the $54 million we give to MLA with a democratically elected board that look after our interests only – not processors, not supermarkets, and certainly not a multinational fast food outlet such as McDonald’s.”
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