NSW Cattle Producer John Carter (pictured left) summaries his Submission to ACCC Grocery Prices submission.
Armed with United States Department of Agriculture (USDA) statistics, UK and Irish figures Athol Economou and I gave evidence for over an hour to the ACCC Inquiry into Grocery Prices.
Our hearing was in Canberra and was chaired by the Australian Competition & Consumer Commission (ACCC) Chairman, Graeme Samuels (pictured left). There was a very large media presence and Athol and I did 14 interviews with TV, Radio and print media over the next 24 hours.
Our message was simple–
The US consumer is paying half what the Australian consumer pays and gets a far better (graded) product. The US producer is paid from 25% (Trade steer) to 35% (Feeder steer) more than his Australian counterpart. The Australian consumer and producer are being rorted.
Australia’s meat chain is very inefficient. The Australian consumer is annually paying $4 billion more, and the Australian producer is getting $2 billion less than they would under a similar meat chain to the US one.

Meat & Livestock Australia (MLA) claims each year that Australian consumers pay more money on beef as justification for our levy.
Producers pay a $5 per head levy to MLA plus huge costs in a quite useless National Livestock Identification System (NLIS). US producers pay a levy of $1 per head and have no NLIS. We are three time losers-our cattle prices have fallen heavily, they use our levy to help supermarkets and others promote beef and then we pay more each year for any beef that we buy at a supermarket!
Not good business.?The Australian beef producer is going out backwards. 30% of farm labour has left since 2002 (National Farmers Federation NFF survey). Average age of cattle producer is over 60. Cattle prices are now where they were 8 years ago and input prices for fuel, fertilizer and fencing costs have doubled and trebled. This is unsustainable.
MLA didn’t do a submission to the Inquiry. NFF did a real featherweight submission. Both are far too close to the supermarkets. MLA staff organize promotion monies, NFF leaders and Supermarket chiefs are very close. We are being sold out -in a huge way.
USDA has done a monthly consumer and producer price for ages. The US producer has received between 43 and 49% of the consumer dollar for the past 8 years. Neither Department of Agriculture Fisheries & Forestry (DAFF) nor MLA does such a figure but our arithmetic shows Australian producers are receiving between 20 and 28% of the consumer dollar.
Going through the meat chain we explained that the main problem lies with the retail ‘mark up’.

There is an agent- duopoly-Landmark and Elders. There are problems for producers with links with Japanese who incur losses in Australia and make huge profits in Japan.
Transporters have fierce competition and small margins. Contrary to what some said at the Inquiry we have smaller distances than the US-Australia’s beef cattle and its population are concentrated along the East Coast whilst the US has cattle all over its country.
There is competition in saleyards. (In US a survey showed 12 cent higher price through saleyard than direct). Australia has cartels- No Stockyard and Packers Act to oversee collusive bidding and also to ensure transparency in price reporting.
Feedlots are a recent and economically doubtful addition. Now operating at fewer than 50% capacity and in a good season with high world grain prices will be lower.

Japanese and their fronts and US companies control a majority of Australia’s feedlot capacity. This may be the reason that Australian feeder steer producers are currently paid LESS than the price of the finished steer whilst the US producer has traditionally been paid around 10% MORE?? A Judicial Inquiry is needed.
Abattoirs are mostly unprofitable. Very few new works have been built since the Public works of 1940-60 period-mostly upgrades. Only one export plant (very badly run) west of a line from Townsville to Adelaide (2/3 of Australia) -there were once 8.
Retail.

US has over 50 large supermarket chains, Australia has two. Massive change in 15 years as Coles / Woolworths duopoly’s move to dominate. The only profitable link in the chain. Huge profits. They control the young cattle market as they purchase over 50% and can keep prices down.
Conclusion.
The Supermarkets and the Japanese are taking a disproportionate share of the consumer dollar and putting at risk the sustainability of the industry. We called for a Royal Commission into the meat industry chain.
In March 1999 I attended a two-day Strategic Planning seminar in Canberra with all the Beef industry heavies. I succeeded (against a lot of opposition) in having an audit of the beef industry as the No 1 priority. Nothing has been done.
Now we see the result of Peak Councils and MLA not knowing what our industry is — The US consumer is paying half what the Australian consumer pays and gets a far better (graded) product. The US producer is paid from 25% (Trade steer) to 35% (Feeder steer) more than his Australian counterpart. The Australian consumer and producer are being rorted.
Thanks a lot.
With friends like our current leaders we don’t need any enemies.
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