The ACCC's Cattle and Beef Market Study
2.1
As indicated in its interim report, the committee has major concerns
about the culture of collusion which exists in cattle saleyards. The committee shares
the concerns of stakeholders – particularly producers – in relation to a number
of saleyard practices – including the behaviour of commission buyers. The
committee has also placed on record its concerns in relation to competition
between cattle buyers and the need for transparency in pricing and grading
methods. The committee has argued consistently for these issues to be
addressed.
Matters specific to the Victorian saleyards
2.2
This inquiry was triggered by events at the Barnawartha saleyards when,
on 17 February 2015, agents agreed to a post-weigh system of selling without
"consultation with producers who pay all the sale yard fees".[1]
The committee's interim report detailed the impact of this event together with
the non-attendance of up to ten commission buyers at the sale, on the price
that producers received for their cattle.[2]
2.3
Saleyards remain the main method of sale in southern Australia and are
most commonly utilised by producers who have small herds and sell in small lot
sizes. In some regions, such as Victoria, many farmers are reliant on saleyards
as they don't produce livestock in volumes that would provide them bargaining
power with meat buyers. At the same time, it should be noted that sale by
auction establishes the value of other forms of sale. Therefore, the saleyard
sets the benchmark on cattle prices.
2.4
The ACCC's investigation into the events at Barnawartha revealed that
certain processors strongly opposed the pre-sale weighing method at saleyards.[3]
This was confirmed in evidence to the committee. When asked about the
preference for post-sale weighing, Mr Bradley Teys of Teys Australia argued the
point that post-sale weighing in combination with a curfew gave all involved
the "best and most consistent results" when purchasing cattle.
2.5
However, the only evidence provided to support the claim that post-sale
weighing was the better method of purchasing cattle, was that of a scientific
study conducted by Dr Jennifer Wise in the 1980s. According to Mr Teys, the
study indicated that scientifically, post-sale weighing provides for the most
consistent result. He informed the committee that the paper's findings had been
verified by anecdotal experience.[4]
At the same time, numerous other bodies including the Victorian Farmers
Federation (VFF) have made clear their view that pre-sale weighing provides
maximum information to all buyers and is a far more transparent method of
selling.[5]
2.6
As a means of restoring confidence to southern producers, consideration
should be given to undertaking contemporary scientific research into pre- and
post-sale weighing. Such research would provide an evidence base for the
industry.
Recommendation 1
2.7
The committee recommends that the Minister for Agriculture and Water
Resources consider requesting Meat and 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.
Saleyard selling practices
2.8
The issue of selling practices at saleyards is one that was raised
consistently by stakeholders throughout the inquiry. The events which took
place at Barnawartha in early 2015 were described by a number of producers as a
misuse of market power; while others suggested that the processor 'boycott' of
the prime cattle sale was done with the primary purpose of changing the selling
practice at the saleyard from pre-sale to post-sale weighing.[6]
2.9
One of the major consequences of consolidation and rationalisation
across the processing sector has been that fewer buyers actually attend cattle
markets. A situation such as Barnawartha – where processors withdrew at short
notice – or where they don't attend at all – can have a significant impact on
the market price of livestock. As noted in the committee's interim report, the
events at Barnawartha were viewed by many producers as a reminder of the
excessive level of market power buyers and processors are able to demonstrate.
2.10
The events at Barnawartha also gave rise to concerns about market
competition, the reporting of livestock sales, the selling systems at saleyards
and the role of commission buyers. Submitters told the committee about a number
of practices used by buyers designed to influence the purchasing price for
livestock and limit market competitiveness. The committee also heard evidence
about stock agents operating on both sides of a transaction – by representing
both vendor and buyer. As noted in the interim report, evidence provided to the
inquiry built a clear picture of practices and conduct used specifically to
influence market prices.[7]
ACCC's Cattle and beef market study
2.11
The committee therefore welcomed the ACCC's announcement (on 5 April
2016) that it would be undertaking a market study into Australia's cattle and
beef industry and that it would be examining issues such as competition,
efficiency, transparency and trading issues in the beef and cattle supply chain.
In announcing its study, the ACCC acknowledged that it was a combination of the
issues raised during the committee's inquiry, and its own work that had led to
the market study.[8]
2.12
In its May 2016 interim report, the committee signalled its intention to
review the findings of the ACCC's market study – including its final
recommendations – to determine whether the issues raised by stakeholders echoed
the concerns raised during its inquiry. For this reason, the committee sought
an extension to report from the Senate.
2.13
The ACCC's Cattle and beef market study was conducted in two parts. The
ACCC commenced its market study in April 2016, and its Cattle and beef
market study – Interim Report was released for comment in October 2016. The
ACCC's Cattle and beef market study – Final report – which incorporated some
minor changes – was released on 7 March 2017. The committee notes that the
recommendations contained in the ACCC's final report are closely aligned with
many of those in the committee's interim report – tabled in May 2016.
2.14
The following chapter provides an overview of the process undertaken by
the ACCC in conducting its study. It also outlines some of the issues considered
by the Commission, its findings and its recommendations. The chapter also
examines the question of whether the ACCC's current investigatory powers are
sufficient to protect witnesses, gather useful evidence and make binding
recommendations.
Purpose of the market study
2.15
In undertaking the market study, the ACCC indicated that its purpose was
to:
-
examine competition and transparency in the supply chain; and
-
consider whether there are impediments to competition and
efficiency at various stages of the supply chain in cattle and beef markets.[9]
2.16
The key issues examined as part of the ACCC's market study included:
-
competition between buyers of cattle, and suppliers of processed
meat to downstream customers;
-
the implications of saleyard attendees bidding on behalf of
multiple buyers;
-
impediments to greater efficiency, such as bottlenecks or market
power at certain points along the supply chain;
-
differences in bargaining strength, and the allocation of
commercial risk between cattle producers and buyers;
-
the transparency of carcase pricing and grading methods;
-
information on the share of profits among the cattle and beef
production, processing and retailing sectors; and
-
barriers to entry and expansion in cattle processing markets.[10]
Consultation
2.17
In conducting its inquiry, the ACCC indicated that it had sought
evidence through both written and oral submissions and held five public forums
in a number of regional areas. It was also noted that, in undertaking its
inquiry, the ACCC had accepted confidential submissions (and additional information)
from anonymous sources.
2.18
The ACCC received 85 written submissions and consulted with a wide range
of interested parties "including industry bodies, producers, agents,
commission buyers, processors, supermarkets and live exporters".[11]
2.19
It was also noted that the market study had involved "consultations
with all parts of the supply chain, and analysis of available market
information and industry data".[12]
The final report does not specifically indicate whether feedback was sought (or
received) in relation to its interim report. However, the committee notes
comments made by the CCA which indicated that it had been engaged throughout
the review period, and had:
...provided significant feedback on the draft recommendations –
particularly regarding existing policy positions and the relevant work already
being undertaken by Meat and Livestock Australia at our direction.[13]
'Boycott' at Barnawartha
2.20
The ACCC's interim report noted that prior to commencing its market
study, it had conducted a detailed investigation "into an alleged
collective boycott by cattle buyers at the Barnawartha saleyard on a day in
February 2015".[14]
The ACCC reported that evidence obtained during the investigation:
...did not demonstrate that any of the processors entered an
arrangement or reached an understanding not to attend the sale, which is
required to establish that the behaviour of buyers amounted to anti-competitive
agreements pursuant to the Competition and Consumer Act 2010.
However, these matters prompted the ACCC to examine the
dynamics of the industry in depth and in a context broader than the specific
provisions of the Act.[15]
2.21
The ACC's final report did not expand further on the comments made in
the interim report in relation to the 'alleged' collective boycott by cattle
buyers at the Barnawartha saleyard in February 2015.[16]
Summary of findings[17]
2.22
In providing its findings, the ACCC prefaced its comments by suggesting
that any concerns about particular industry practices (and any impacts they may
have on farm profitability) can vary between small and large-scale producers.
It was noted, for example, that smaller scale producers tend to rely more on
saleyards than large-scale producers – who often sell direct to abattoirs.
2.23
The ACCC also suggested that there is a cyclical element to many of the
concerns raised about the competitiveness of market structures in the
Australian industry. The report noted that strong concerns about market
concentration and buyer power were being expressed during the peak of the
2013-14 drought. By 2014, the industry was characterised by high rates of
cattle turn-off and strong overseas demand for Australian beef in export
markets – conditions which were favourable to the profitability of cattle
buyers. Export processors in particular, found themselves in a stronger that
usual bargaining position. At the same time however, producers' profits were considerably
down, due largely to the high costs of supplementary stock feed and low cattle
prices.
2.24
The ACCC argued that since 2015 (and the end of drought conditions in a
number of areas) the supply of cattle to processors has altered significantly. It
was noted that many producers have taken advantage of good seasonal conditions
and have started to rebuild cattle herds, and that this has resulted in a
decrease in cattle turn-off and producers purchasing re-stocker cattle. In turn,
there have been greater numbers of buyers in cattle acquisition markets which
has been putting upward pressure on prices. The reduction in the supply of cattle
has also resulted in the under-use of processing facilities – with processors
reporting significant excess capacity during 2016.
Competition for the acquisition of
prime cattle
2.25
The ACCC reported that in most regions of Australia, producers have a
range of potential buyers – including the major supermarket chains,
re-stockers, processors and live exporters – competing for their cattle. It was
acknowledged, however, that the presence of buyers in particular regional
markets and the competition between them, will vary according to a number of
seasonal and commercial factors. As a result of these findings, the ACCC
reported that:
...there are circumstances where further consolidation in the
processing sector through mergers or acquisitions, or other conduct, could
substantially lessen competition and the ACCC, as it has previously, will
carefully scrutinise proposed future aggregation.[18]
Conflicts of interest
2.26
The ACCC indicated in its interim report that, not only does it share
the concerns of many in the industry about collusion in saleyard auctions, it
considers that conflicts of interest "between individuals who bid for
livestock on behalf of multiple clients or cattle vendors and buyers are likely
to be common".[19]
2.27
The ACCC's inquiry found that conflicts of interest are also a regular
occurrence in saleyard transactions "when agents represent both a cattle
seller and a cattle buyer in the same transaction".[20]
Further, it was noted that, as cattle producers are generally unaware of these
arrangements, it can reduce competition for their cattle.
Collusion in saleyard auctions
2.28
The ACCC reported that it had heard serious allegations regarding
bid-rigging among buyers in particular saleyards. Allegations also emerged
during the market study about anti-competitive agreements between livestock
agency businesses. The ACCC noted that because "cartel conduct has a
serious impact on competition" it is currently investigating these
allegations separately from the market study.[21]
Price transparency
2.29
In reporting its findings in relation to price transparency, the ACCC indicated
that cattle prices are not "usefully transparent, particularly prices for
prime cattle".[22]
It argued that there are significant gaps in reporting and that the prices for
paddock sales and over the hook (OTH) and saleyard transactions are
"inconsistently reported and in some cases incomplete in terms of the
cattle types and geographic locations".[23]
The ACCC argued that, as a consequence, it is difficult for producers to
compare historical prices between sales channels on a like-for-like basis. It was
also argued that this lack of transparency has the capacity to distort pricing
signals (used to guide production decisions) and create information asymmetries
between industry participants.
2.30
The ACCC also found that:
-
direct sale prices are frequently not reported, and the prices
reported for OTH transactions actually reflect the prices offered to producers,
rather than the prices subsequently paid; and
-
pricing grids are difficult to interpret and sometimes difficult
to access.[24]
2.31
It was noted that some data does exist in relation to cattle prices, OTH
sales, saleyard purchasing and online auctions and this data is published on a
regular basis by MLA (and other sources). The ACCC highlighted, however, that
some gaps and inconsistencies still remain in relation to this information. Further,
it was argued that not all of the data that is available and published is easy
to interpret or use comparatively, which reduces its usefulness to the
industry.[25]
2.32
The ACCC's final report did acknowledge, however, that while there are
still some gaps in useful price data, the industry has started to take steps to
address this situation. It was noted, for example, that MLA had launched an
update of the market reports section of its website, "which allows
producers to access and interrogate historical data more easily".[26]
Pricing grids
2.33
The ACCC once again acknowledged the complexity of price grids, and
added that:
An important test of the usefulness of pricing grids is
whether a seller of prime cattle can easily compare the price the stock would
realise if sold to any one of a number of competing processors. Some producers
experience difficulties in doing this.[27]
Mandatory price reporting
2.34
At the present time the debate regarding the mandatory reporting of all
non-saleyard cattle sales is finely balanced. The ACCC argued that Australian
beef and cattle markets are currently so complex it could make mandatory price
reporting difficult to implement, and perhaps reduce its potential benefits.
Importantly, the ACCC once again indicated that it does not recommend the
introduction of mandatory reporting at this time. It was again stressed,
however, that:
... if market participants do not take steps to improve the
market reporting in line with recommendations on price reporting ... the
arguments in favour of mandatory reporting will become more compelling over
time.[28]
The grading system
2.35
The ACCC's interim report raised concerns about some aspects of the
grading system. Specifically, it was argued that there is a lack of
independence and transparency in the process of grading carcases at abattoirs,
and that this is particularly concerning, given that the existing audit systems
are not sufficient to ensure the integrity of the grading process. The ACCC
concluded that "integrity and trust in the grading system are essential,
given its role in determining pricing received by producers".[29]
2.36
The ACCC asserted that the "quality assurance process for grading
carcases to AUS-MEAT and MSA standards is rigorous, and AUS-MEAT's audits and
training of chiller assessors (graders) lessen the risks of unfair
grading".[30]
At the same time, however, it was argued that the potential for conflicts of
interest in the trimming and grading process does remain "because
AUS-MEAT's audits of grading in individual plants are infrequent".[31]
2.37
The ACCC's findings about the meat grading system echoed views expressed
during the committee's inquiry:
Although there is a detailed training and oversight system
administered by AUS-MEAT, a conflict of interest remains during the process of
grading carcases at abattoirs. Existing audit systems do not appear to give
many producers faith in the integrity of the process, and there is no industry
wide standard for dispute resolution. Integrity and trust in the grading system
are essential, given its role in determining prices received by producers.
AUS-MEAT, processors and other industry participants need to work together to
extend education about the existing grading and oversight processes to
producers.[32]
2.38
Further, the ACCC argued that some producers may be more likely to view
a negative grading result as procedural unfairness, rather than a case of a
carcase not meeting the required grade or specification. It was also
acknowledged that these are problems that are not necessarily isolated to
producers and processors, but "are also known to occur between the feedlots
and processing plants of vertically integrated players in the industry".[33]
2.39
Both the committee's inquiry and the ACCC's study have brought to the
fore the shortcomings in price reporting, a lack of trust in the carcase
grading system and concerns about anti-competitive conduct affecting
competition in cattle and beef sales.[34]
The ACCC's final report stressed that changes are required if there are to be
improvements in transparency in Australia's cattle and beef markets.
2.40
Further, in making its final recommendations, the ACCC again emphasised
the importance of objective carcase measurement (OCM), arguing that OCM
technology "will increase accuracy and transparency of value
assessments". It also welcomed moves by MLA to "introduce objective
carcase measurement technology throughout the industry, as recommended in the
Interim Report".[35]
2.41
In supporting MLA's proposal to introduce OCM throughout the industry,
the ACCC argued that any data produced as a result of OCM grading would be of
increased benefit to the industry if it was aggregated and shared. The ACCC
suggested that the sharing of data would allow producers to measure their own
performance against the rest of the industry "and make any production
adjustments necessary to achieve higher cattle grades and prices".[36]
2.42
The ACCC argued that the development of common data standards across the
meat industry and the implementation of industry-wide agreements (to cover data
access rights) would increase stakeholder confidence in data systems and
facilitate better risk management options. The ACCC also noted, however, that
while conducting the market study, producers had raised various concerns about
the grading technology – including who would be responsible for overseeing its
calibration. [37] The ACCC concluded
therefore, that while it may provide certain benefits, "technology is not
a panacea", but something that "should be implemented in conjunction
with suitable auditing systems and an independent dispute resolution
system" to maximise system integrity.[38]
Analysis of margins and profits
2.43
The ACCC noted that its ability to undertake an assessment of margins
and profits had been limited. While it was able to engage positively with the
industry in general (and a number of organisations had provided useful
information) it "did not receive sufficient data showing the prices paid
for cattle purchases, prices received for the wholesale supply of beef, or margins
for the retailing of beef". Therefore, more information would be required
to "identify how profits are distributed throughout the industry, and to
identify the existence or exercise of market power with greater
certainty".[39]
Pre-sale versus post-sale weighing
2.44
The ACCC received insufficient information to "analyse any
differences in outcomes resulting from pre-sale versus post-sale weighing of
cattle at saleyard auctions". For the purposes of the Competition and
Consumer Act 2010 the market study has, however:
...revealed the categories of information that would be
relevant to future assessments of competition issues arising under the CCA
[Act]. In specific circumstances where the ACCC considers there may have been a
breach of the CCA [Act], it has the capacity to compulsorily obtain information
and documents to inform its investigations.[40]
ACCC's conclusions
2.45
In making its conclusions, the ACCC noted that the diversity of the
cattle herd, production regions and producers are key features of Australia's
cattle industry. This diversity means that commercial outcomes for producers
will vary and are not necessarily an indication of market failure. It was also
noted however that "certain long-standing and accepted practices, when
combined with other industry features such as intersecting personal and
professional relationships, are characteristics which risk damaging transparency,
competition and efficiency in the industry".[41]
2.46
Regardless of whether mandatory reporting is introduced at some time in
the future, the ACCC stressed the importance of producers, processors and
stakeholder groups such as MLA, the Australian Livestock and Property Agents
Association (ALPA), the Australian Livestock Markets Association (ALMA) and the
Red Meat Advisory Council (RMAC) working together. It was the ACCC's
expectation that stakeholder groups work cooperatively to: educate industry
participants about carcase grading; expand data collection; improve market and
price reporting; increase transparency in the saleyards and standardise
licensing of livestock agents to benefit the industry as a whole.
ACCC recommendations
2.47
The ACCC's market study identified a number of areas that require
improvement across the cattle and beef supply chain. The ACCC indicated that
some of its recommendations are intended to improve the work of specific
organisations, while the implementation of some of its more general
recommendations will, however, require industry leadership and stakeholder
cooperation.
2.48
The following are the recommendations contained in the ACCC's interim
report:
Transparency in cattle markets
Recommendation 1: Availability of price grids
All processors and major cattle purchasers should routinely
make price grids publicly available in a timely manner to increase market
transparency.
Recommendation 2: Price grids
-
All buyers should consider whether their price grids can be
improved to make it easier for the industry to understand and compare grids.
-
Buyers, agents and producer representative bodies (led by the CCA)
should improve their engagement with producers to enhance industry
understanding of price grids and their interpretation.
Recommendation 3:
Improvements to existing market reporting
The ACCC encourages MLA
to make changes to the way existing cattle sale prices are collected and
published to improve transparency and usability, including specifically:
-
standardising cattle types for reporting across channels;
-
publishing time series data of saleyard prices in a format which
allows for easy interpretation (prices are currently only reported weekly in
.pdf files, making comparison through time difficult);
-
producing a co-products index for comparison with cattle prices;
and
-
improvements to the domestic retail beef price series.
Recommendation 4:
Additional market reporting
The ACCC encourages
MLA, ALPA and ALMA to work together to expand data collection and reporting of
prices, including specifically:
-
direct (paddock) sales prices;
-
actual prices paid for OTH sales;
-
saleyard prices for additional saleyards of regional market
importance which are not currently reported; and
-
actual prices for cattle sold to the live export market.
Recommendation 5:
Mandatory reporting of non-saleyard transactions and prices
The ACCC considers the
arguments for and against mandatory reporting of all non-saleyard cattle sales
are finely balanced, and does not recommend its implementation at this time.
If market participants do
not take steps to improve market reporting in line with recommendations 3 and
4, the arguments in favour of mandatory reporting will become more compelling
over time.
Over the hook
transactions and grading
Recommendation 6:
Objective carcase grading
The industry, led by
the processing sector, should allocate high priority to the adoption of
technology to enable objective carcase grading to be introduced as soon as
possible. This will, of necessity, include the development of appropriate
auditing and verification systems that instil confidence in the integrity of
such systems.
Recommendation 7:
Dispute resolution for OTH sales
-
Processors and buyers should review, and in many cases improve,
their internal processes for responding to complaints about OTH sales.
-
Cattle processors should develop a uniform and independent
complaints and dispute resolution process, with AUS-MEAT filling the role of an
independent and binding arbitrator.
Recommendation 8:
Auditing of carcase grading
The industry should
implement a more robust auditing system for carcase grading, with AUS-MEAT
implementing random and unannounced audits in addition to the current audit
regime. The result of these audits should be made publicly available on a
regular and timely basis.
Recommendation 9:
Carcase feedback and producer education
-
All buyers and agents should consider whether carcase grading
feedback can be improved.
-
Buyers, agents, and producer representative bodies (led by the
Cattle Council) should increase their communication and education surrounding
the current grading and feedback system to ensure that producers better
understand cattle market trends and why some cattle attract a premium compared
to others.
Conduct in cattle
markets
Recommendation 10:
Saleyard buyer register
The ACCC encourages
the introduction of a mandatory Buyers Register to be publicly available prior
to the commencement of all physical livestock auctions. This register should
include details of commission buyers and livestock agents intending to bid at
the sale and the principals that those commission buyers will be acting for.
ALPA should work with
its members to have this requirement incorporated into auction terms and
conditions at saleyards.
Recommendation 11:
Terms of sales at auctions
The ACCC encourages
MLA to work with ALPA to introduce a mandatory requirement that the terms of
auction be displayed in a conspicuous position at all saleyards. This should
include a notice about the penalties for collusive practices under the Competition
and Consumer Act 2010, in addition to any notices required by state and
territory legislation. The ACCC notes that many saleyards and agents are
already demonstrating industry leadership by doing this.
Recommendation 12:
Livestock agent licensing
Legislation should be
introduced requiring standardised national licensing of livestock agents and
professional buyers (applying to commission and salaried buyers), in order to
raise the levels of compliance with the Competition and Consumer Act 2010
and general professionalism within the industry.
Recommendation 13:
Implementation of recommendations
The ACCC encourages
the Agriculture Ministers meeting (AGMIN) to consider the above
recommendations, particularly with a view to monitoring their implementation.
This will be especially important to ensure that recommendations are
progressed, given the diverse industry interests. Ministers may wish to
consider alternative approaches if progress is not made.
ACCC concluding comments
2.49
At the time of releasing its interim report, the ACCC indicated that –
in addition to its concerns about cartel and other conduct affecting
competition in saleyards – it had identified "serious shortcomings"
in areas such as current price reporting and the independence and auditing of
carcase grading at abattoirs.[42]
2.50
In summary, the ACCC's interim report concluded that the competitiveness
of Australia's cattle and beef markets could be improved by adopting objective
carcase grading, making improvements to the nature and coverage of market
reporting, and implementing measures to lessen the risk of collusive and
anti-competitive behaviour in saleyard auctions.[43]
ACCC's Cattle and Beef market study - final report
Recommendations
2.51
The ACCC released its findings in relation to its Cattle and beef market
study on 7 March 2017. In releasing its findings, the ACCC made a series of
recommendations aimed at improving transparency and reporting in Australia's
beef sector. Whilst they were articulated using slightly different language,
the fifteen recommendations made in the ACCC's final report did not differ significantly
from those included in the interim report. The ACCC's recommendations again
covered the following issues:
-
The improvement of price information by requesting that meat processors
publish price grids for sales made direct to processors. This is aimed at
making it easier for producers to consider and compare price offers. (Nationally,
the vast majority of prime cattle are sold this way).
-
The need to increase the frequency of AUS-MEAT's random and
unannounced audits of cattle grading and trimming in processing plants to
improve integrity in the system.
-
The introduction of an independent dispute resolution process to
apply across the industry.
-
The need to prioritise OCM technology to increase the accuracy
and transparency of carcase assessments, and the sharing of data arising from
the technology with cattle producers.
-
The introduction of a buyers' register and post auction buyers
report for major saleyards.
-
An expansion of the reporting of historical prices to make it
easier for producers to compare prices paid for cattle sold through saleyards,
paddock sales and OTH.[44]
Implementation of recommendations
2.52
In its interim report, the ACCC indicated that it would be
"encouraging" the Agriculture Ministers meeting (AGMIN) to consider
its recommendations "particularly with a view to monitoring their implementation".[45]
2.53
In its final report, the ACCC amended this recommendation and indicated
that it would be asking RMAC to implement its recommendations on behalf of
industry. However, the ACCC stopped short of making the changes compulsory.[46]
In giving primary responsibility to RMAC for monitoring compliance, the ACCC
also added a requirement that it report annually to Commonwealth, state and
territory Agriculture Ministers, "detailing progress in implementing these
recommendations and any reasons for a lack of progress".[47]
2.54
The decision to have RMAC take responsibility for implementing its
recommendations was questioned in a Beef Central article published
shortly after the release of the ACCC's final report. The article's author argued
that despite having no direct authority to enact the type of change the ACCC had
called for, RMAC was being asked to "pick up the ACCC's ball and run with it"
– a move that was likened to RMAC being thrown "one serious hospital
pass".[48]
On-line stakeholder comments echoed the views expressed in the article and argued
that RMAC does not have the capacity to deliver change of the scale encompassed
by the recommendations, nor does it have the "legal authority or the
organisational remit to take this role on".[49]
2.55
In response to questions about why RMAC had been given responsibility
for the implementation of its recommendations, the ACCC's Agriculture
Commissioner, Mr Mick Keogh, told Beef Central that "no single
organisation or level of government has the responsibility or the power to
implement all of the ACCC's recommendations". While acknowledging that the
ACCC has no direct 'power' as such, the Commissioner argued that as the body
responsible for 'whole of industry matters' under the industry's Memorandum of
Understanding (MOU), RMAC "comes closest to being an overarching body to
progress the matters raised".[50]
Mr Keogh added that:
The ACCC could have made a recommendation that the Minister
direct RMAC to progress the matters raised, but generally took the view that it
would be better for industry to progress these matters than the Commonwealth
Government, noting that the option is available to the ACCC to revisit this
issue in the event it seems progress is not being made.[51]
2.56
Following the release of the ACCC's final report, the committee held
further hearings with a number of industry stakeholders. In the first instance,
the committee had the opportunity to get a clearer picture of the ACCC's
motivation for giving RMAC the responsibility for implementing its
recommendations. The committee also sought stakeholders' responses to the
ACCC's findings and recommendations.
2.57
At its hearing on 8 August 2017, the committee questioned the ACCC about
why, given all the stakeholders in the industry, it had chosen RMAC to take the
lead. Ms Gabrielle Ford, General Manager, with the ACCC's Agriculture Unit
responded by saying that:
Initially you would have seen our draft report suggested that
agriculture ministers take that role. But we know that these recommendations
are less about legislation or policy than industry action. So rather than
choose, for example, processor representatives or Cattle Council as a
representative of producers, there should be more of an umbrella organisation
that can oversee all the different aspects of the recommendations because they
reach different parts of the industry.[52]
...
The basis of our recommendation about RMAC was that it was in
a position of leadership in the industry and, as distinct from any powers to
actually make changes, that it was in a position to lead the industry to make
the changes itself.[53]
2.58
In correspondence to the committee, ACCC Agriculture Commissioner, Mr
Mick Keogh indicated that the ACCC had identified the industry participants it
considered to be in the best position to implement or progress certain
recommendations and it had allocated specific recommendations accordingly.
Further Mr Keogh noted that:
...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. As a result, RMAC is uniquely
placed to facilitate discussions about implementing the ACCC's recommendations
and to report back to the Minister on progress.[54]
2.59
Mr Keogh's correspondence also indicated that the ACCC had not wanted to
burden the industry with the additional costs associated with establishing an
industry body (for the purpose of implementing its recommendations) and
therefore had not recommend it. Further, Mr Keogh stated that the ACCC remains of
the view that there is no other organisation with capabilities that are more
suitable than RMAC's. In making this point, Mr Keogh pointed to RMAC's own
evidence, which stated that RMAC:
...was designed to provide a forum so that we could interchange
and exchange views. Where it is possible to have a consensus on things, we
prosecute that case on behalf of the whole industry.[55]
Stakeholders' responses to the
implementation of ACCC recommendations
2.60
MLA indicated that it had been working through the ACCC recommendations
that were within its remit. In addition to making enhancements to its 'reporting
and insights services', MLA noted that it had been working toward providing producers
with a greater variety of market information. MLA also told the committee that
it had prioritised the development and adoption of objective measurement
technology – including the proposal to accelerate the adoption of DEXA
technology and the investment of $28 million in new research into the objective
measurement of the eating quality of meat.[56]
2.61
MLA representatives also outlined the steps that were being taken in
response to ACCC's Recommendations 4 and 12, which go to the issue of price
transparency across the supply chain. MLA's response to these recommendations –
and some of the difficulties they have experienced in addressing them – are
outlined in more detail in Chapter 3.
2.62
Representatives from both AMPC and AMIC provided the committee with an
overview of the progress that their organisations had made to address some of
the problems being experienced across the industry. Both organisations pointed
to a number of positive advancements that had been made, but were less
forthcoming about the lack of a common industry position on many of the
challenges facing the industry. [57]
2.63
AMIC CEO, Mr Patrick Hutchinson told the committee, for example, that
since making its initial submission to the inquiry two years previously, the
change in the industry had been "dynamic and vast". However, when pressed
by the committee about whether in fact the industry had actually been
progressing "as one in one direction", Mr Hutchinson conceded that
there continues to be conflict between various industry stakeholders.[58]
2.64
In correspondence provided in advance of the committee's 16 August 2017
hearing, RMAC's Independent Chair, Mr Don Mackay stated that the membership of
RMAC was concerned that the ACCC's recommendations "would have no material
impact or improvement on competition for the beef cattle supply chain".[59]
Mr Mackay's correspondence also indicated that whilst RMAC did support aspects
of the ACCC's findings, RMAC was also of the view that it is not its "role
to lead competition policy reform as suggested in the ACCC's Study".[60]
2.65
At its 16 August 2017 hearing, the committee asked representatives of
RMAC to respond to the ACCC's proposal that it be given responsibility for
implementing all the recommendations contained in its Cattle and beef market
study.
2.66
Mr Mackay took the opportunity to outline the responsibilities of RMAC
and argued that the oversight and implementation of the ACCC's recommendations
was not within RMAC's jurisdiction. Mr Mackay reiterated the comments made in
his correspondence by stating that he was not sure whether the ACCC's
recommendations "would assist in growers being in a better place".[61]
Further, Mr Mackay told the committee that RMAC had not been directly consulted
by ACCC in relation to taking on the role of oversighting its recommendations
prior to the publication of its final report.
2.67
Mr Mackay's assertion that RMAC had not been contacted prior to the
release of the ACCC's report was disputed by the ACCC's Agriculture
Commissioner, Mr Mick Keogh. In correspondence to the committee, Mr Keogh
indicated that:
...I spoke with RMAC prior to the release of the ACCC's final
report to discuss RMAC's oversight role. Then, throughout April, May and July
of 2017 the ACCC contacted RMAC attempting to arrange a meeting to discuss
Recommendation 15 of the final report and the ACCC's view of the role RMAC
would play.[62]
2.68
The committee appreciates the clarification provided by the ACCC with
regard to identifying RMAC as the appropriate body to act upon and realise its
recommendations. As the ACCC has noted, RMAC is the body responsible to
represent the interests of the whole of the industry and should be in charge of
advancing industry reform.
2.69
However, separate to the ACCC's market study process, the committee has
held long-standing concerns regarding RMAC and its role. These concerns are
further considered in Chapter 5.
The ACCC's investigatory powers
2.70
As noted by the committee in its interim report, a number of submitters to
the inquiry have stressed the need for industry and regulatory reform.
Stakeholders argued that if, into the future, the red meat sector is going to
be able to prevent collusive practices and curtail the misuse of market power –
change will be critical. Various stakeholders also suggested ways to improve
fairness and transparency and increase legislative protections against
anti-competitive behaviour.
2.71
The Sheepmeat Council of Australia (SCA), for example, advocated additional
measures to address the power imbalance between processors and producers and
suggested that greater emphasis be placed on creating competitive markets and increasing
price transparency. The SCA also recommended:
...an increased role for the ACCC in regulating the red meat
processing industry, including oversight of mergers and improved investigatory
powers regarding incidents of uncompetitive market behaviour.[63]
2.72
While the SCA has suggested that the ACCC should be given an increased
regulatory and oversight role, some sections of the industry questioned whether
the ACCC's current investigative powers are actually adequate.
2.73
As an independent statutory authority, the ACCC enforces the Competition
and Consumer Act 2010. The ACCC has the power to investigate potential
breaches of competition and consumer law – including cartel conduct,
anti-competitive arrangements, misuse of market power, false or misleading
representations and unconscionable conduct.[64]
The ACCC's investigative powers include:
- the
power to obtain documents, information and evidence and to enter premises and
seize documents under Section 155 and Part XID respectively of the Competition
and Consumer Act 2010; and
- the
power to issue substantiation notices, requiring persons who have made
representations or claims in trade or commerce regarding the supply of goods or
services, or the sale or grant of interests in land, or the offer of
employment, to provide information or documents to substantiate the claims
(found in Section 219 of the Australian Consumer Law (ACL)).[65]
2.74
Under current legislation, the ACCC also has powers to:
-
issue Public Warning Notices where it has reason to believe that
a person has breached the ACL and one or more persons has suffered loss or
detriment as a result of the breach and it is in the public interest to issue
the notice;
-
issue an Infringement Notice where it has reason to believe that
a person has breached the ACL;
-
accept court enforceable undertakings where it believes that
there has been a breach of the ACL and the party in question agrees to give the
undertaking; and
-
commence proceedings to enforce breaches of the ACL, on its own
behalf and as a representative for a class of persons affected by the offending
conduct. It can also seek compensation orders on behalf of injured persons and
non-party consumers.[66]
2.75
It is also worth noting that in both its interim and final report, the ACCC
pointed to the existence of an "established immunity policy for both
corporations and individuals who have been involved in a cartel but then report
their involvement to the ACCC".[67]
The ACCC's policy document as it relates to immunity states that:
Cartels usually involve secrecy and deception. Collusion is
difficult to detect – there may be little documentary evidence and parties
often go to great lengths to keep their involvement secret. In these
circumstances, discovery and proof of cartels can be more difficult than
discovery and proof of other forms of corporate misconduct. An immunity and
cooperation policy in relation to cartels encourages insiders to provide
information and enables the ACCC to penetrate the cloak of secrecy. When the
extent of the immunity to be provided, or the process for recognising
cooperation with law enforcement authorities is certain, persons are more
likely to take advantage of such a policy and disclose illegal and harmful
conduct.
Just as importantly, an immunity and cooperation policy that
provides incentives to businesses and individuals to disclose illegal behaviour
is also a powerful disincentive to the formation of cartels, as potential
participants will perceive a greater risk of ACCC detection and court
proceedings. An immunity and cooperation policy does not offer a reward to
'good corporate citizens'. It is a detection tool designed to deliver benefits
to all Australians by identifying, stopping and taking action against harmful
and illegal behaviour.[68]
2.76
As previously noted, the ACCC's decision to undertake its Cattle and
beef market study was, in part, due to concerns raised by cattle producers
regarding an alleged misuse of market power by processors.[69]
2.77
In April 2016, the ACCC's Issues Paper invited submissions to its market
study into cattle and beef markets. The issues paper signalled that to protect
the interests of those providing evidence to its inquiry, both confidential and
anonymous submissions would be accepted and that the ACCC, would, to the extent
that it was reasonably possible, seek to protect the confidentiality of that
information. The ACCC's invitation to submit also stressed that the Commission would
take into account the possible 'commercial sensitivities' around industry
stakeholders submitting evidence.[70]
2.78
The ACCC noted – in both its interim and final report – that as a
self-initiated inquiry, its assessment of the issues was based on information
provided by industry participants on a voluntary basis. Using the evidence
provided, the ACCC conducted a detailed examination of industry margins in
relation to pre- versus post-sale weighing at saleyards and processor operating
costs. The ACCC requested additional data from industry participants, including
saleyards, processors, supermarkets and agents to support its analysis. In
response to its request, the ACCC received "positive engagement from the
industry in general and a number of companies provided useful information and
data".[71]
2.79
The information and evidence provided to the ACCC enabled the Commission
to determine that there are practices and issues in the industry that risk
harming both competition and efficiency. The ACCC was able to conclude that
conflicts of interest regularly arise in saleyard transactions – particularly
when agents represent both a cattle seller and a cattle buyer in the same
transaction. The market study also drew attention to possible anti-competitive
conduct which the ACCC indicated it would examine separately (and in more
detail) to determine whether any laws had been breached.
2.80
At the same time, however, the ACCC reported that it did not receive
sufficient detailed data – that showed prices paid for cattle, wholesale beef
prices or margins for the retailing of beef – and that this information "would
be necessary to identify how profits are distributed throughout the industry,
and to identify the existence or exercise of market power".[72]
While these topics are addressed to some extent in the body of its report, the
ACCC acknowledged that it was unable to make any definitive findings or
recommendations in relation to these issues.
2.81
The ACCC also noted that it had received insufficient detailed,
objective, research information about the relative impacts of pre- versus
post-sale weighing procedures at saleyards. As a result, the ACCC reported that
despite the Barnawartha dispute being the catalyst for its inquiry, it would
not be able rule on the pre-weigh versus post-weigh debate.
2.82
Following the release of its interim report (in October 2016) the ACCC
received feedback from a number of industry participants.[73]
The Australian Beef Association (ABA) for example, raised specific concerns
about the ACCC's use of "ten-year-old data in the interim report on the
percentage of the retail beef dollar producers receive".[74]
In raising its concerns, the ABA noted that the interim report referred to
information supplied by Coles in 2007 regarding the breakdown of retail prices.
The information provided showed the supermarket receiving a three percent margin
and farmers receiving more than half the retail dollar. The ABA suggested that
this was both incorrect and misleading "with industry service provider
figures indicating the average for the ten years to 2015 was 32 percent for
farmers".[75]
2.83
The ABA suggested that the major supermarkets' choice not to provide
evidence to the market study – because they were under no legal obligation to
do so – had resulted in the ACCC using outdated information in its report. The
ABA argued that there was a danger that legislative decisions (regarding
competition in the cattle industry) could also be based on incorrect data – to
the detriment of producers. The ABA called for the ACCC to be given more power
to collect relevant and up-to-date information.
2.84
In his response to the ABA's call for the ACCC to be granted compulsory
data gathering powers, the ACCC's Agriculture Commissioner, Mr Mick Keogh,
confirmed that the 2007 data was the only information available to the ACCC at
the retail level. Mr Keogh also acknowledged that this was contentious, but
explained that the information had been used as "an example of the sort of
calculation that might be required and how broad the information needed to be,
if mandatory price reporting was to be implemented".[76]
2.85
Mr Keogh also explained that there are two different types of ACCC
inquiries.[77]
In conducting internally-initiated inquiries (such as the Cattle and beef
market study) the ACCC does not have the power to compel market participants to
provide information and documents.[78]
If, however, the inquiry is government-initiated and the ACCC is instructed to
undertake an inquiry by a relevant Minister, the ACCC does have compulsory
information and document gathering powers (as detailed in Section 95ZK of the
Competition and Consumer Act 2010).[79]
2.86
It is worth noting that while the ACCC's market study was prepared on
the basis of evidence and information voluntarily provided by interested
parties, the study has been the catalyst for further ACCC investigations. The
ACCC has gone on to conduct investigations into several allegations of bid
rigging at cattle auctions under anti-cartel laws and at least two
investigations of illegal, anti-competitive behaviour. Under the terms of the concurrent
investigations the market study has prompted, the ACCC is able to exercise its
powers under section 155 powers to compel witnesses to provide evidence and
produce documents.[80]
2.87
Following the release of its final report, ACCC Agriculture
Commissioner, Mr Mick Keogh, once again conceded that the market study had not
been provided with sufficient useful data to support detailed responses to some
issues. Mr Keogh also acknowledged, however, that in terms of the ACCC's
ability to effect change:
Even if we were inclined to make a mandatory recommendation,
the ACCC probably doesn't have the power to enforce it, and there are certain
situations at the saleyards where one situation or the other doesn’t suit.[81]
2.88
It is also worth noting that, on 5 September 2016, the Government began
consultations on an exposure draft of the Competition and Consumer Amendment
(Competition Policy Review) Bill (the Bill). The purpose of the Bill is to
implement, in part, reforms identified by the Competition Policy Review (Harper
Review). One of the reforms included in the Bill is the amendment of the Competition
and Consumer Act 2010, to introduce prohibitions against 'concerted
practices' that substantially lessen competition.[82]
2.89
The Bill, which was introduced into the House of Representatives on 30
March 2017, would, if enacted prohibit corporations from engaging in a
'concerted practice' that has the purpose, effect or likely effect of
substantially lessening competition. Under the proposed legislation, the ACCC
would also be granted additional powers, under certain circumstances, to obtain
information and documents.[83]
Committee comment
2.90
The committee has, during its many inquiries, heard evidence from industry
stakeholders about what they describe as the 'culture of collusion' that exists
in cattle saleyards. Stakeholders – particularly producers – have consistently
raised concerns about a number of saleyard practices – including uncompetitive behaviour
– on the part of commission buyers. The committee has been clear in its
opposition to any form of collusive practice and in its support for mechanisms
which increase transparency in pricing and fairness in grading systems.
2.91
The committee was encouraged by the ACCC's decision to carry out a
market study of Australia's cattle and beef industry, particularly given the study
came about, in part, on the basis of issues raised during the committee's
inquiry. The committee was pleased to see that the terms of reference for the
study included an examination of issues such as competition, efficiency,
transparency and trading across the beef industry supply chain.
2.92
The committee had the opportunity to review the reports released by the
ACCC, including their findings and recommendations and acknowledges the subtle
differences (primarily in relation to the terminology used and the presentation
and format of the recommendations) between the ACCC's interim and final
reports. It is noted, for example, that ACCC's concerns about "conduct
affecting the competitiveness of saleyard auctions",[84]
no longer includes reference to "collusion among buyers".[85]
Apart from some 'softening' of the language used, however, the reports do not
vary substantially in their content or conclusions.
2.93
The committee appreciates the investigation undertaken by the ACCC and
supports the study's findings and recommendations. The committee notes the
difficulties experienced by the ACCC in its attempt to identify solutions to
some of the problems that exist across the cattle and beef industry. In taking
evidence from a number of industry stakeholders following the release of the
ACCC's final report, the committee is acutely aware of the resistance being
shown by a number of industry players, the lack of will to engage with the
problems that exist and the lack of commitment to drive much needed reform.
Whilst industry stakeholders have indicated their support for the ACCC's study,
the committee has serious concerns about the commitment these stakeholders have
to implementing the ACCC's recommendations and working toward reform,
particularly in relation to market and price transparency.
2.94
The response to the ACCC's recommendations has only served to confirm that
there is a lack of agreement across the industry about the exact nature of
long-standing problems and even less agreement about the solutions, and who is
responsible for leading reform.
2.95
In conducting the market study, the ACCC received evidence in relation
to bid-rigging among buyers (in particular saleyards) and heard specific allegations
of anti-competitive agreements between livestock agency businesses. The committee
notes that the ACCC has undertaken to assess a number of allegations of
anti-competitive conduct raised during the course of its market study. The
committee also notes that the ACCC has undertaken to monitor the industry, and
investigate reported instances of collective behaviour by cattle buyers;
including cattle purchasing boycotts designed to alter industry practices, and
other potentially anti-competitive practices in cattle acquisition markets.
2.96
The committee appreciates the work undertaken by the ACCC in conducting
its investigations. However, the ACCC's report, and evidence provided to the
current inquiry has only served to increase the committee's concerns about anti-competitive
behaviour and collusive practices in the cattle and beef sector. The committee notes,
however, that the Consumer Amendment (Competition Policy Review) Bill was
introduced into the House of Representatives in March this year [2017]. The
ACCC considers it likely that the introduction of this proposed new legislation
would have an influence on conduct across the industry. To this end, the ACCC
has indicated that it would give close consideration to allegations of
anti-competitive behaviour and concerted practice within the industry if, and
when, the proposed legislation is enacted.
2.97
In addition to identifying specific examples of anti-competitive conduct
– which it committed to investigating further – the ACCC's study also highlighted
a number of issues of concern to industry stakeholders, including shortcomings
in price reporting and a lack of confidence in the carcase grading system. The
committee shares the concerns of stakeholders in relation to these issues.
2.98
It is also noted that the concerns previously expressed by the committee
regarding the events that took place at Barnawartha, and the potential for
misuse of market power – through buyer collusion and concerted practices –
remain. The committee is firmly of the view that the disconnection between the
industry, and the structures that underpin it, is a continuing problem. As a
consequence, the description of the industry as one "beset by market
failures and plagued with a lack of integrity, transparency and
accountability" continues to be relevant.[86]
2.99
The committee has long advocated the need for change. Evidence provided
to this committee has ensured that it will continue to advocate for change, and
for systems to be put in place to ensure that events such as the 'Barnawartha boycott'
do not happen again. The committee has long been clear in its view that the
industry should work together to develop a set of guidelines around commercial
transactions – particularly in saleyards. Unfortunately, the committee has
become increasingly frustrated at the apparent lack of will on the part of
industry stakeholders to work cooperatively to develop appropriate systems and guidelines.
2.100
The committee therefore recommends that the industry take steps to
develop an industry Standards of Practice which covers all commercial
transactions in relation to livestock. The Standards of Practice should take
the form of an overarching set of guidelines for industry participants. The
Standards should be underpinned by best practice principles aimed at preventing
collusion and anti-competitive behaviour across the supply chain.
2.101
The committee is of the view that the industry's Standards of Practice
should apply to all parties engaged in commercial transactions. The committee
is also of the view that the Standards of Practice should contain specific
guidelines to ensure that parties act in good faith, and under the law.
2.102
The Standards of Practice should also deal with issues such as equity
between vendors and buyers, consistency across pricing mechanisms, the use of
commission buyers, nationally consistent industry training and registration,
reporting systems and dispute resolution practices.
Recommendation 2
2.103
The committee recommends that the Australian Livestock and
Property Agents Association (ALPA) lead the development of industry Standards
of Practice that cover all commercial transactions in relation to livestock –
including online, paddock and saleyard transactions. The Standards of Practice
should include guidelines which encourage all parties to conduct transactions
in good faith, do not mislead other parties, and ensure that all such
transactions are negotiated under the law.
2.104
The committee advises that it has been working toward the development of
a framework for a mandatory industry code of conduct. The committee notes that
it will pursue its enforcement should the industry not commit to the
development of industry Standards of Practice. The industry must demonstrate
its commitment by providing evidence to the Minister for Agriculture and Water
Resources within three months of the tabling of this report. Once provided to
the Minister, this evidence should also be made public.
2.105
The committee acknowledges the ACCC's finding that, on one level, data
in relation to saleyard purchases, online auctions, cattle prices and OTH sales
is available (and in some cases, published, on a regular basis). The ACCC also
found, however, that there is still a level of inconsistency which often makes
the available data difficult to interpret or use comparatively. The ACCC's
findings are consistent with the concerns raised by industry stakeholders, who
told the committee that the inconsistency of data reduces its usefulness to the
industry.
2.106
The committee notes that the Cattle and beef market study was a
self-referred inquiry and, as such, the ACCC did not have the power during its
inquiry to compel information and documents from market participants. The
committee also notes that, given its current legislative powers, the ACCC
stopped short of making its recommendations for change mandatory.
2.107
Increasing the ACCC's investigatory powers and enabling it to obtain
accurate, up-to-date data would assist the ACCC to undertake more detailed
analyses, reach more definitive conclusions, and make more accurate
recommendations.
2.108
Concerns have been raised about RMAC's ability to implement the ACCC's
recommendations. A number of stakeholders argued that RMAC currently lacks the
legal or organisational authority required to effectively deliver the level of
reform that is so desperately needed.
2.109
The committee also has some reservations about whether RMAC is the
appropriate body to oversee the implementation of these important reforms.
However, the committee is of the view that no one organisation should be
responsible for implementing the reforms that are so desperately needed across
the cattle and beef industry.
2.110
The committee acknowledges that the ACCC expressed a similar view when
releasing its market study. The Commission indicated that its study had
highlighted a number of areas of concern across the cattle and beef supply
chain. Further, it argued that while some of its recommendations were intended
to improve the work of specific organisations, the implementation of some of
its more general recommendations would require industry leadership and
stakeholder cooperation.
2.111
The committee has been involved in inquiries into the cattle and beef
sector for many years, and has observed the culture within stakeholder groups
becoming increasingly more insular. The committee acknowledges that, on one
level, it is natural for the leadership of industry representative bodies and
peak industry councils to see the specific needs of their own organisations as
their primary focus. However, the committee is concerned that for some representative
bodies and peak industry councils, this narrow view of the industry is being
worn as a badge of honour. The committee has also observed, that without real
consultation with members, and those at the grass roots level of the industry,
the views and agendas of those in leadership roles become more entrenched.
Increasingly, industry groups and representative bodies are reluctant to look beyond
the narrow scope of what they see as their immediate responsibilities. Unfortunately,
this limited way of operating discourages industry groups from looking beyond
their own interests, and makes it difficult for them to focus on anything other
than what will benefit their own small part of the industry.
2.112
The level of trust between industry stakeholders, (particularly between producers
and processors, and producers and their representative bodies) is currently at
an all-time low. The committee is of the view that the need for reform has
become critical. The future sustainability of Australia's cattle and beef
industry is now dependent on a complete cultural change, which will include finding
ways to rebuild trust, and an acknowledgement on the part of industry
leadership that it is not possible for individual sections of the supply chain
to operate in isolation.
2.113
It remains the committee's view that all stakeholder groups need to work
together to find solutions to the problems the industry is currently facing, and
work cooperatively to implement reforms that will lead to increased trust
between industry stakeholders, increased competitiveness, price transparency and
consistency in grading.
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