Senate approves inquiry into red meat processing sector

Sheep Central, March 19, 2015

The Senate Rural and Regional Affairs and Transport References Committee will conduct an inquiry into the red meat processing industry, after the Senate approved the draft Terms of Reference for an inquiry on Wednesday afternoon.

The draft was put to the senate by Nationals Senators John Williams of NSW, Bridget McKenzie of Victoria, and Barry O’Sullivan and Matthew Canavan of Queensland.

The Terms of Reference cover “collusion of buyers, market powers, pre and post-sale weighing and other aspects”.

The inquiry has been given a deadline of August 12, 2015.

The draft terms of reference for the inquiry into the effect of market consolidation on the red meat processing sector include:

(a) the potential for misuse of market power through buyer collusion and the resultant impact on producer returns;

(b) the impact of the red-meat processor consolidation on market competition, creation of regional monopolies and returns to farm gate;

(c) the existing selling structures and processes at saleyards, particularly pre- and post-sale weighing, as well as direct sales and online auctions, and whether they remain relevant;

(d) the regulatory environment covering livestock, livestock agents, buyers and meat processors; and

(e) any related matter.

Senator John Williams released the following media release announcing the inquiry on Wednesday afternoon:

A Senate inquiry has been launched into practices in the red meat processing sector in the wake of controversy over recent weeks.

Nationals Senators John Williams of NSW, Bridget McKenzie of Victoria, and Barry O’Sullivan and Matthew Canavan of Queensland have initiated the inquiry which will be conducted by the Rural and Regional Affairs and Transport References Committee. Senator Williams led the ultimately unsuccessful fight against the JBS takeover of Primo but in doing so highlighted the likely impact of market dominance on producer prices.

At the same time up to 10 buyers boycotted the livestock sale at Barnawartha saleyards in Victoria, infuriating producers and resulting in the calling of a meeting where they vented their fury.

Senator Williams said the Nationals have heard the calls from farmers and their organisations to lay bare the meat processing sector to see whether there is a misuse of market power, whether the current selling system is still pertinent, and what role livestock agents, producers and meat processors are playing.

The discrepancy between what the farmer receives and the consumer pays will be scrutinised in the inquiry.

The committee is due to report by the 12th of August.

The New South Wales Farmers Association also released a statement welcoming the inquiry on Wednesday afternoon:

Australia’s largest state farmer organisations today congratulated the Senate for listening to the agricultural industry’s calls for an inquiry into the red meat processing sector.

The Victorian Farmers Federation and the NSW Farmers Association have been working in close partnership over the last two months to put a spotlight on the red meat processing sector and the detrimental effects it’s having on farm gate prices.

It follows both the Barnawartha Boycott meeting and growing market power including the takeover of Primo by Brazilian agri-giant JBS.

“This is a big win for the farmers’ voice across Australia and confirms an inquiry into the red meat sector is necessary to get to the bottom of sector issues,” VFF Livestock President Ian Feldtmann said.

“For too long now processors have been taking advantage of the farmer and we are sick of it.

“The past 15 years has seen consistent increases in the retail price of red meat while farm gate prices have remained stagnant. It’s time this changed,” Mr Feldtmann said.

NSW Farmers Livestock Chair Derek Schoen said: “We keep hearing that increased consolidation creates efficiencies through economies of scale; that mergers and acquisitions can provide additional dividends for the producer. But the only thing farmers have seen is higher inputs and diminishing returns.

“I’m not against anyone making a quid in this game but I am opposed to seeing farmers being ripped off,” he said.

“If agriculture is going to be one of the next economic engines for Australia then we need to ensure we get the economic settings right.

“This Inquiry is an opportunity to do that. The VFF and NSWFA congratulate Victorian Senator Bridget McKenzie and NSW Senator John Williams who’ve shown great leadership on this issue.

“With their support and passion for regional Australia and farmer livelihoods our industry has much greater chance of being sustainable,” Mr Feldtmann said.



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