Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

On behalf of the Chair of the Rural and Regional Affairs and Transport References Committee, Senator Sterle, I present the report on the effects of market consolidation on the red meat processing sector, together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the report be printed.

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

I move:

That the Senate take note of the report.

I want to acknowledge my colleagues Senator Williams and Senator McKenzie, who jointly were involved in the development of the reference. Senator McKenzie drove this process. Senator Williams and I joined the reference almost as an afterthought, I suspect. This reference was, I think, stimulated by events that occurred in the Barnawartha saleyards in Victoria. Knowing that Senator McKenzie is going to speak, I probably will refrain from spending too much time on that aspect of the report and its recommendations. I want to acknowledge the support of Labor, through the chairmanship of Senator Glenn Sterle. This was a difficult inquiry and a very long one—in fact, it spanned two parliaments. It is fair to say, and I am sure Senator McKenzie will visit on this, too, that we didn't always receive the level of cooperation and assistance from the industry stakeholders that one may have expected. I can place on Hansard that Senator Sterle did an exceptional job in chairing the committee as we navigated through some of those challenges.

The early recommendations are to consider an inquiry into pre-sale and post-sale weighing in saleyards, to try to bring some consistency, particularly on the eastern seaboard, with respect to practices in saleyards. Again, I will yield that aspect of the report to Senator McKenzie, because I am sure she is going to touch on that, including the recommendations around what we have named 'the standards of practice in saleyards'. Again, I will yield to Senator McKenzie on that.

One of the recommendations is in relation to the operations and capability of AUS-MEAT, particularly in their role in oversighting objective carcass management in beef processing plants—a significant role, one that has been challenged by, I think, almost a majority of producers at one time or another. This is where the rubber meets the road—when it is determined what they will be paid for the carcasses of livestock they have sold to the works on what is called the grid. There are positives and negatives about the inspection of carcasses and I think it is fair to say that, in this particular case, over a long period of time there has been a collapse of trust and confidence between producers and processors that this process is as objective as they might like. It was often challenged. There were, and remain, reasonably inadequate options for producers to be able to themselves objectively assess and perhaps even challenge processors on some of the descriptions of their carcasses that resulted in payments that they thought were less than what they had wanted.

The advent of technology coming into the meat processing sector, particularly the technology known as DEXA, a dual X-ray system, will allow processors to more accurately—now in the 90 per cent—assess what the meat yield is of a carcass. It will separate meat, bone and other, and this is a positive step in the right direction, even though there has been, I suppose, caution around how this technology is to be introduced. Nonetheless, anything that increases the prospect of objective carcass management in our processing plants in this $11-plus billion industry is a step in the right direction.

We have made recommendations that the operations and capability of AUS-MEAT be looked at by the minister, through the agriculture department, to see that they have adequate powers and that they are adequately resourced and that we ourselves can have oversight over their operations to see that they are doing the job to the best of their ability.

There are two recommendations that I really want to focus on—and I'll leave the main interest to me until last. The final recommendation to government and to the minister was that they establish a joint government and industry task force to effectively review all aspects of the meat processing and the meat supply chain and production sector. I think this is very timely. The current structures that they operate in are complicated—relationships are complicated. There is disparity in power bases within the whole sector. Of course, they're working under operations that were put in place about 19 years ago in 1998 by the then Deputy Prime Minister and minister for agriculture, the Hon. John Anderson. It is almost overdue for that entire sector to be reviewed by this joint government and industry task force. It will be a skills-based task force if the recommendations are accepted. We anticipate it will take them some considerable period of time to do their work, as a comprehensive review in such a big industry and sector would be the case.

Let me use the final time I have to speak about what I think is the key recommendation—or, certainly, which is up there with the top recommendations made in the report. It is for government to do virtually whatever it takes to support the establishment of a new peak industry body for cattle producers. Various numbers have been given to us over time of between 30,000 and 60,000 different producers in this country in the beef sector, ranging from small operators who might only have half a dozen livestock through to big family corporations and, in fact, public companies who oversight an industry that has, or ought to have, about 29 million head of stock at any time. We believe those numbers are down quite considerably due to the advent of droughts all over the country. But what is, I think, agreed to by everyone in the industry is that we need to beef up—if I can use that term—the peak industry body that—

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

No bad puns!

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

I thought it was a good pun, and it actually came to me spontaneously, Senator, so I'm very proud of it. We need to beef up the peak industry body that represents these producers. The advent of new technologies and legislation passed here—I think we all were involved in supporting the legislation—allow the peak body to find out who those levy payers are that, collectively, pay about $50 million plus a year into the Meat & Livestock Australia for the support to the industry in research and development. This is about getting a peak industry body. I said at one of the inquiries: 'We'll know when we've arrived when members of the Meat & Livestock Australia, and senators and other politicians in this place, break into a sweat when they hear that this peak body has arrived in the building to come and see them.'

I want it to be a powerful body. I want it to get its way on behalf of producers around the country. It needs to be a very transparent body. It needs to have its strength and its power embedded in a grass-roots movement within the industry. It needs to have a skills-based board that I personally believe needs to be renumerated. I don't care how much they have to pay the members of the board and the chairperson to administer this very important industry in agriculture and, indeed, to our whole national economy. It needs to make sure that its structure allows it to represent and reflect the ideals and the ambitions of producers all around the nation.

I want to commend the report and, in the last moments, I want to pay great tribute to the secretariat under Dr Jane Thomson. This was a difficult report to structure. There was a lot of work and effort, and there were a lot of amendments and restructuring of the report as we got towards this tabling date. Their work, as is always the case, was first class.

Bridget McKenzie (Victoria, National Party) Share this | Link to this | Hansard source

It gives me great pleasure to be here at the tabling of a report that has taken a long time to complete but was born of producers in the north-east of my home state of Victoria. The report comes at the end of the eighth inquiry into the red meat industry in the last 17 years. I too would like to acknowledge the work and time that has been invested in the inquiry and this final report by all involved. When it comes to producers in the north-east of Victoria and to the peak bodies, they have inundated us with over 120 submissions to inquiries over this period of time, and this time we had to get it right. I think Senator O'Sullivan, who's come on board as the Deputy Chair of the Senate Rural and Regional Affairs and Transport References Committee, has been absolutely diligent, steadfast and determined in making sure the report we have handed down today provides a clear pathway forward for the red meat industry, to end the rumours and insinuations that led us to set up the inquiry in the first place.

Since the notorious incident known as the Barnawartha boycott on 17 February 2015, when nine processors were no-shows at the first prime sale of the Northern Victoria Livestock Exchange, at Barnawartha, it's become clear, through evidence to this committee, that industry practices require a root-and-branch overhaul to restore fairness, transparency and accountability to a sector marred for years by conflicts of interest, allegations of collusion, intimidation and bullying. Whether it was in the public submissions, at the public hearings or at hearings conducted in camera, that was the evidence we heard, and I will stand by those words, as will Senator O'Sullivan. A couple of weeks ago we had the red meat peak bodies before us so we could ask what they thought about the ACCC inquiry recommendations, and they attempted to crab walk away: 'Nothing to see here, Senators. Not a problem! It's all a storm in the teacup, dear Senator McKenzie!' Well, the evidence stands. I would ask all those peak bodies and, indeed, anyone listening tonight with a concern in this area to go to the evidence to this committee, to the Hansard and the submissions.

The committee reports key areas of concern as outlined by submissions from processors, producers, community members and councils. There are seven recommendations, including a recommendation that the Minister for Agriculture and Water Resources request Meat & Livestock Australia to conduct 'a study into pre- and post-sale weighing to provide the southern industry with an evidence base on which to consider selling methods at saleyards'. This was a key concern to producers in my home state of Victoria and a key driver of the reason those processors didn't turn up. When we came to prosecute the issue within the Senate inquiry we relied on a piece of research from the 1980s. That something was a policy of the Victorian Farmers Federation—and I recognise it's not a policy of other livestock producers in other states—and that peak bodies took the levy, took the money, without one study being conducted on the efficacy of pre-sale versus post-sale weighing over that period of time, goes to the fundamental issue we are outlining here.

Another key recommendation, which Senator O'Sullivan has spoken about, is to support the grass-fed cattle sector 'in its efforts to replace the Cattle Council of Australia with a transparent and accountable producer-owned body as the sector's peak industry council'. There is also a recommendation for revision of the MOU and the establishment of a government task force, which I encourage to consult widely. As we looked deeply into this area and this industry, we found one of the issues was that there were favourite people to talk to and favourite bodies to talk to. I would encourage this task force to be very robust and broad in its consultation processes over the coming two years.

I met with the Victorian Farmers Federation Livestock Group after the ACCC market report, which really was spurred by this Senate inquiry. Rod Sims, and the agricultural commissioner, Mick Keogh, when he came to our inquiry, said, 'Hang on; there's something wrong with that Barnawartha boycott.' They went and had a look and said: 'Yes, Senators, there is something wrong there. We need some concerted practices legislation in our competition law.' Well, this government's delivered that in the meantime so that the Barnawartha behaviour cannot occur again, or at least can be prosecuted in the current legislative environment.

But there was enough of an issue for Rod Sims to say: 'Do you know what your first market inquiry will be as Agricultural Commissioner? It's going to be into the red meat industry.' So Mick Keogh and his officers brought down an ACCC report with 15 recommendations that really went to the heart of what this inquiry was all about: what is the impact on producer return from the lack of competition within the red meat sector? That was the heart of that ACCC report. A couple of weeks ago those peak bodies tried to walk away from those 15 recommendations. I would encourage and say: 'You might not have liked who was tasked to do the job, but we can talk about that.' Issues that were traversed included the fact that we don't need transparency around pricing and livestock agents not needing education, training and registering. Those issues were traversed as were complaints processes for producers and processors. Those 15 recommendations from the ACCC are fundamental to returning confidence and competition to the red meat industry.

For now, the committee have declined to entertain the suggestion that a binding code of conduct should be imposed; however, our report rightly notes that a code, industry-led or legislated, cannot be an open-ended pipedream. In this sense, the ACCC's recommendations offered the industry a framework that you can adopt as your own. When Mick Keogh wrote to our committee after the evidence from the peak bodies, he said:

… RMAC is in a unique position in the industry. RMAC is the only organisation that regularly holds discussions with a wide range of industry participants and then advocates on behalf of members directly with the Minister for Agriculture and Water Resources.

The ACCC felt that RMAC was uniquely placed to facilitate discussions.

Price grids was another contentious issue identified by the committee, the ACCC and the Victorian Farmers Federation. Yet, despite all the evidence presented, certain sectors in the industry—namely, the processors—don't think that price transparency is an issue for the industry. I do; I absolutely do. I think it's important to have that information available to producers to make decisions in a clear and transparent way. The producers were concerned about its potential impact to the market price and that it could potentially have an adverse or potentially opposite impact compared to the intention of the ACCC in asking an industry for greater price transparency.

Compare that to evidence on transparency given to the committee—like the submission from the Shire of Campaspe, who submitted about the potential of misidentifying or distorting the value of a product during various stages of the supply chain. We had evidence from a producer who suggested that most producers wait for months for a kill date, and they only know the grid price days before the point of sale. He suggested that sometimes it was the case that, 'If you don't like the price, then you lose your booking,' and, 'If you don't like it, too bad.' That was a direct quote of his interaction with some of the processors.

I was particularly interested in the evidence from Australian Livestock & Property Agents Association CEO Andrew Madigan, who seemed a little confused on the question of collusion in the industry. There's been a bit public commentary on that of late. Responding to a question on notice on 28 August, Mr Madigan said:

At no stage did I say the following—that since the 1970s he had witnessed collusive behaviour at livestock sales, the committee might like to point out where this was said in evidence on 27th August 2015.

Well, I'm really pleased to accommodate Mr Madigan. I will directly quote from the Hansard of 27 August 2015. This is your quote, Mr Madigan:

In my experience I have seen buyers talk to one another—just have a little whisper. I have not heard what they have said. I have no proof of it, but I have seen it. They will go up and talk to one another. One will stop bidding and then walk away, and then they will buy the next pen. I have seen that, yes.

That's a direct quote. We've all seen that kind of behaviour and we've heard of that kind of behaviour. That is why I would encourage ALPA on an education training and registration program for the livestock agents to assist in that.

I'd also like to thank the hardworking secretariat, Dr Thompson and her team. I would particularly like to thank my colleagues in the Victorian Farmers Federation Livestock Group, Leonard Vallance and Dave Picker, for their continual advice and support. To those producers who bravely stood up after the Barnawartha boycott and said for the first time publicly what we've known for decades has been going on: thank you, because we would not have had that ACCC inquiry and we would not have had this Senate report without you actually saying, 'Enough is enough; we have to have some accountability and transparency.' This is a billion-dollar industry and hundreds of thousands of Australians are employed in the red meat industry. We back you. Let's just clean it up.

I seek leave to continue my remarks later.

Leave granted; debate adjourned.