Saleyards and price discovery
One of the consequences of consolidation of the processor and retail
sectors is the loss of operational transparency, as evidenced by the events at
the Barnawartha saleyards.
This chapter explores those concerns and considers price transparency in
relation to the selling systems available to producers. It focuses in
particular on saleyards as the primary price discovery mechanism for livestock
markets in Australia.
The extent to which producers can maximise the return on their livestock
is influenced by the extent to which they can meet market specifications, as
well as the method and process used. The various selling structures for cattle,
sheep and lambs include:
direct (paddock) sales;
'over the hook' sales;
online sales such as AuctionsPlus; and
forward price contracts.
In the case of beef cattle, cattle are sold to other cattle farmers for
fattening or backgrounding for entry into feedlots, to feedlots for grain
finishing or to abattoirs for slaughter.
Producers can choose to use 'any or all formats depending on the individual
circumstances including the farms geographical location, stock type and size'.
To add to the complexity of the market, there are a number of systems
available to sell livestock, with prices paid on the basis of carcass weight,
live-weight or per head depending on the system used.
This chapter considers selling methods with particular focus on saleyards.
Traditionally, cattle were sold through auctions at saleyards. This
process involves a producer transporting cattle to the saleyard and the buyer
then transporting the cattle on for processing.
Saleyards remain the main method of sale representing 66 per cent of
total beef sales in southern Australia in 2012–13. Saleyards are most commonly
utilised by producers who have smaller herds and sell in small lot sizes.
In regions such as Victoria, where land holdings are smaller, farmers are not
able to produce livestock in volumes that would provide bargaining power with
meat buyers and are therefore often reliant on saleyards.
Australian Livestock and Property Agents Association (ALPAA), observed that the
ability to handle small consignments at saleyards was particularly important,
given that 50 per cent of vendors sell less than seventeen head per year.
Similarly, Mrs Jane Carney explained that while there is growing reluctance to
sell at saleyards, many producers are too small for their cattle to be attractive
to buyers as individual consignments.
Sale by auction establishes the value of other forms of sale.
Therefore the saleyard provides the yardstick on prices that all vendors
Evidence to the committee suggested that while producers sell direct to
processors and other buyers at agreed farm gate prices, the agreed price is
usually set against a benchmark of recent local auction prices.
Therefore, if anti-competitive behaviour takes place at saleyards and results
in lower prices, such prices will impact the remaining 70 per cent of sales
across the market.
Furthermore, the argument was put that the disparity between the prices
achieved by producers compared to that taken by processors indicated that the
'current pricing mechanism is likely to be artificially repressed'.
Many producers argued, therefore, that it was fundamentally important to ensure
that the process at auction is fair and legal, and operates in a manner which
does not impede true competition.
According to the Livestock Saleyards Association of Victoria (LSAV), the
majority of producers in Victoria have a choice of local saleyards. It argued
that most producers could choose between two or three saleyards depending on
their location, as well as on-line selling and direct selling to processors.
Many smaller producers also sell via social media and directly to other local
In terms of price discovery, LSAV argued that:
These selling systems are well supported by a wide range of
publicly available, cheap market information that allows them to price their
livestock before sale and make an informed choice of selling system. The bulk
of this public market information is derived from saleyard reports, both the
official MLA service as well as locally produced market reports from many
However, according to ALPAA, almost 70 per cent of southern livestock
and 40 per cent of northern livestock are transacted through saleyards.
Yet, as a selling mechanism, saleyards are of diminishing value and use to modern
beef industry value chains, especially for those producers geared to supplying
premium quality beef to high value domestic and international markets.
Evidence to the committee suggested that increasingly, cattle are sold
directly to the processor with the producer paid on a carcass weight basis. As
a case in point, the country's second largest beef processor – Teys – purchases
up to 94 per cent of its cattle directly from producers, with the remainder
purchased at saleyards.
According to Mr Bradley Teys, the company prefers to purchase cattle directly
because there is 'less bruising and better meat quality'.
Expenses at saleyards
It was suggested that use of saleyards is becoming expensive for
producers with an estimated total cost of up to 10 per cent incurred per head
Such costs, which are borne by the producer, include commissions, yard fees,
cattle levies and freight.
Mr Richard Wilson explained:
With 4% agents commission, $14.50/head yard dues, extra
stress and losses, unloading onto concrete, penning, selling, weighing,
reloading in a strange environment, bruise and delayed kill losses and
additional freight, the total costs or losses realistically are say 10% of
In terms of transportation costs alone, the Sheepmeat Council of Australia
(SCA) noted that the cost of transporting sheep, based on industry estimates,
is $1.2 per head per 100 kilometres.
A number of other submitters highlighted that the considerable distances often
required to reach saleyards placed a significant cost impost on producers.
According to AgForce Queensland, in that state, livestock freight costs can
represent up to 35 per cent of market value.
Victorian Farmers Federation (VFF) – Wangaratta Branch raised concerns
that, in their quest for efficiencies, large processors may shift other costs back
to producers. It argued that such costs, including transportation and the
imposition of post-sale weighing, are particularly onerous on producers where
cattle have to be transported greater distances as a consequence of local plant
closures. According to VFF–Wangaratta, these concerns were realised in 2012
when the abattoir on King Island was closed, thereby forcing producers to bear
the costs of transporting live cattle to the mainland.
Pre- and post-sale weighing at saleyards
According to the department, in NSW, Queensland and South Australia,
most saleyards use a post-sale weighing system. That is, cattle are weighed
after being sold.
The committee was informed that while most of NSW now operates under a
post-sale weighing system, 'a lot of that has been achieved by stealth of the
processing industry' as Mr Derek Schoen, President of the NSW Farmers'
As saleyards have been redeveloped, the processors have put
the pressure on—just like what happened at Barnawartha—to get it changed over.
Traditionally in Victoria, saleyard operators used the pre-sale weighing
system. However, in 1999, when it opened its first facility in Pakenham, the
Victorian Livestock Exchange (VLE) introduced post-sale weighing to Victoria.
In recent years, many other saleyards have moved to the post-sale weighing
According to Mr John Buxton, while there was in the past a uniform Code
of Practice for Live Weight Selling applied across Victoria, this is no longer
the case as different systems operate in different selling centres across
Victoria. He observed that export meat processors used their market power to
break the code every time a new set of saleyards opens with the opening of the
new Northern Victoria Livestock Exchange (NVLX) at Barnawartha the most recent
One of the many questions raised about the post-sale weighing system is
that of why prime cattle sales are 'singled out' for post-sale weighing, given
that store cattle sales, feature sales and weaner sales are still weighted pre-sale.
For many producers, the move from pre-sale weighing cattle to a post-sale
weighing system demonstrated the power that processors command.
The VFF's Ovens Valley Branch noted that, despite industry-wide efforts over
years to provide objective data to enable productivity gains across all areas
of production, when it came to the sale of the product, 'we are suddenly told
via an ultimatum we will no longer have access to the cattle weight'.
Furthermore, the post-sale weighing system has made purchasing difficult
for producers who want to buy feeder cattle, bought within a very tight weight
range for a particular grid.
In addition, without pre-sale weighing data to support purchasing decisions, it
was argued that agents cannot be expected to draft correctly.
Access to information was the key concern in relation to the shift to
post-sale weighing. The VFF's support for pre-sale weighing was explained by Mr
Ian Feldtmann, President of the VFF Livestock Group:
The reasoning behind that is that it gives the maximum
information to all buyers and it allows the restockers or private operators,
who want to buy stock to finish for a market, to know what they are buying and
they can make their calculations based on that before the animals are actually
put up for sale. That is an important part to bring as many players into the
system for competition. That is where producers are coming from.
However, many processors voiced a preference for post-sale weighing
because of a variable dressing percentage that occurs with pre-sale weighing.
The VLE argued that post-sale weighing provides the industry with a more
transparent method of selling as buyers purchase what they desire which is meat
and not gut fill.
It was observed by VLE's Mr Wayne Osborne that there were methods to make
animals hold onto worthless gut-fill that the buyers ultimately pay for.
Mr Bradley Teys argued the point that post-sale weighing with a curfew
gave all involved 'the best and most consistent results' when purchasing
cattle. He continued:
Our belief is that post-sale weighing with a curfew gives
everybody the best and most consistent results when it comes to buying cattle.
At the end of the day we are buying yield of saleable meat. At the moment the
industry buys a carcass. Depending on your carcass yield, if you have a
pre-sale weigh you will get are a lot more variability in what that carcass
yield will be as against post sale. That is our belief, and the evidence that
we have been able to gather over the years has pointed to that.
Mr Teys cited a scientific study conducted by Dr Jennifer Wise in the
1980s which he argued had indicated that scientifically, post-sale weighing
enabled a more consistent result. He suggested that the paper's findings had
been verified by anecdotal experience.
Accurate price signals and market
A number of producers argued against post-sale weighing and in favour of
Mr Julian Carroll, for example, suggested that post-sale weighing was an
unnecessary solution to the processors' concerns about variability in dressing
Submitters drew on their own experiences to demonstrate their concerns
with post-sale weighing. Mr David Blum noted that in his experience, having
weighed his cattle some months prior to sale and fed then well, the sale note
revealed that the weight of his cattle had dropped by approximately 40
kilograms per head, thereby reducing his return by nearly $100 a
Some producers made the point that unlike livestock, no other product is
allowed to be sold without the weight or the volume of the product displayed at
the point of sale. For this reason, many submitters voiced support for pre-sale
weighing on the basis that it offered greater transparency as well as better
animal welfare outcomes. Mr James Neary noted that pre-sale weighing gives a
buyer measurable information to be able to buy an animal to fit a carcass
weight that they may require.
Otherwise, vendors have no idea of the actual per head value but rather an
estimation of the value of cattle sold.
Similarly, Mr Stuart Morant argued pre-sale weighing provided all parties with
access to cattle weights prior to sale and thereby provided everyone with a
clear picture of values.
Cattle and sheep producer, Mr John Buxton, argued that post-sale
weighing puts those with the least amount of market information at a
disadvantage. He made the point that if a producer does not know the weight of
cattle for sale, they will not be able to value it.
He argued that, for the purposes of a transparent and efficient marketplace,
which can send reasonably accurate price signals and maximise competition, 'pre
sale weighing is essential'.
Similarly, Mr Eddie and Mrs Jan Hooper suggested that whereas with pre-sale
weighing, everyone at the market has the information available to accurately
determine whether or not to bid on a pen, with post-sale weighing, bidders
remain in the dark.
They explained the consequences:
This effectively decreases competition, decreases information
available to prospective buyers, decreases prices paid for cattle and finally
ends with animals being left off food and water for longer when animal welfare
should rightly come first. How can this be not just allowed, but actively
promoted? How can agricultural producers be accountable for animal welfare
standards, yet a selling system be exempt?
Mr Eddie and Mrs Jan Hooper argued the point that:
Post weighing selling systems, whilst preferred by the
processors, is regressive and more difficult for the farmer and impossible for
the store cattle buyers, where margins are so fine these bidders are
automatically precluded in any post weighing scales system. Thus the processor
pressure has effectively reduced competition for themselves and likewise
reduced returns to farmers.
The VFF's Ovens Valley Branch recommended legislation to require all
selling complexes to implement pre-sale weighing of cattle to provide objective
data for all users and thereby establish a fair and reasonable system of
transaction to assist all parties in their purchasing decision.
Others raised concerns regarding the inconsistency in practices of
buyers. Mr Rob Atkinson raised the question of why beef processors would
purchase cattle at saleyards when they usually operate on a grid specification:
When processors purchase 'out of the yard', they do not know
what dentition, fat depth or fat colour, weight, dressing percentage, butt
shape, bruising, dark cutters etc. the carcasses will exhibit. So the question
has to be asked. When cattle are purchased at a sale yard, what happens to the
cattle that do not meet the grid criteria? Are those carcases downgraded as
they would be in a direct works transaction? I would suggest that there are two
sets of rules.
Another concern raised by producers was that of ownership. It was not
clear whether, under the post-sale weighing system, producers still own the
cattle from the time that the hammer falls until after the cattle is weighed.
There remains a lack of clarity regarding ownership as Ms Loretta Carroll
In Wodonga cattle are weighed sometimes several hours after
the hammer has fallen. This question was asked at the Barnawartha meeting as
well as the following two questions:
- At what time can a farmer 'no sale' his cattle?
- Can a producer place a reserve on his cattle?
No one was able to answer these questions at the meeting.
This question raised the matter of whether a vendor can declare a 'no
sale' if the post-sale weight disclosed is not sufficient.
Animal health and welfare concerns
A number of submitters also raised concerns regarding animal health and welfare
in relation to post-sale weighing.
The point was made that cattle are off feed and water prior to transportation
and during transportation to and from the saleyards. They are then yarded, and
it can be up to 24 hours or even longer before they are weighed.
In fact, according to the Gulf Cattleman's Association, the average 400 kg
beast will lose ten per cent of its body weight in the first 200 kilometres of
According to the Australian Standards and Guidelines for the Welfare of
Animals, at the receival of livestock, it should be determined how long the
livestock have been off feed and water from the person delivering the livestock
and/or consignment records and documentation. The guidelines specify that time
off water is calculated by accumulating the time that livestock are not
provided with water including assembly and when in holding facilities, loading
and time on the vehicle, as well as time during unloading into new holding
areas until water is provided.
The guidelines further note that watering facilities should be provided to all
animals that have been traveling for more than 12 hours or deprived of water
for a total period of more than 12 hours.
It further specifies that, ideally, animals should not be without food for more
than 24 hours.
However, these are maximum limits and certain classes of animals, such as
pregnant or young animals, as well as cattle transported under difficult
conditions, such as dry hot weather, will need regular access to water.
One of the concerns raised in relation to the Barnawartha saleyard was
the curfew. Originally, the curfew was six hours prior to weighing. However
with the change to post-sale weighing, a 9.00 pm mandatory cut-off was
introduced which effectively increased the curfew twofold.
The logic of a 9.00 pm curfew was questioned given that at least 12 hours would
expire by the time the sale opens at 9.00 am the following day and
livestock are not weighed until after sale.
Many producers voiced their preference for the past practice whereby the last
load could arrive by midnight.
Furthermore, the point was made that animal welfare and practical difficulties
arise when unweighed cattle can remain in sale pens for some
time after sale.
VFF's Ovens Valley Branch noted that MSA accreditation requires that
cattle be killed within 36 hours of despatch from the farm which suggests that
it would be difficult for post-sale weighing saleyards to gain MSA
Furthermore, concerns were raised in relation the stress levels of stock and the
overall impact on the grading of the carcass. MSA documents highlight the
importance of livestock handling and the effects that detaining animals for
extended periods can have on carcass quality:
"The long period of care in producing an animal with
high eating quality potential is most at risk in the two weeks pre-slaughter
and first few hours post slaughter” (MSA03). The longer curfew reduces
glycogen levels in the muscle affecting eating quality and causing dark
Mr Pat Larkin suggested that if post-sale weighing is to continue,
producers should be afforded a reduced curfew period so that livestock are not
'off feed' for extended periods prior to being weighed, a situation that does
not occur in relation to on farm paddock purchasing. Further, he argued that if
livestock are not weighed until mid to late afternoon, they should not be
required at the saleyards any longer than six hours prior to that weighing.
Mr Julian Carroll suggested the establishment of a national protocol based on
pre-sale weighing and National Vendor Declaration (NVD) trucking times.
NVD serves as the movement documentation required when cattle are being moved.
Saleyards and price discovery
The Australian Meat Industry Council (AMIC) suggested that the range of
supply arrangements in place throughout the supply chain reduced the relevance
of saleyard indicator prices, including direct purchasing by various export and
other processors and by major retailers.
However, a substantial number of other submitters made the point that the
saleyard system serves as the prime market indicator or reference point with
the auction system providing a critical price discovery mechanism for livestock
marketing throughout the country.
As the ACCC put it, the saleyard is the 'most transparent means of price
discovery for buyers and sellers'.
The VLE explained:
Just as with live auctions of real estate, saleyards are the
primary means of determining the monetary value of livestock. This in turn
provides the value that under pins transactions of private/direct sales of
livestock. Without saleyards it is difficult for farmers to assess which
product (class of animal) and marketing channel (buyer) is providing the better
return, as the details of direct sales remain private.
Therefore, the saleyard price for fat cattle sets the price for the entire
cattle production chain, impacting stock breeders, cow and calf producers,
backgrounders, feedlots and stockers.
As the VFF noted, the present value of unfinished cattle is based, therefore,
on the expected future value of fat cattle. Thus, the estimated eight per cent
of the finished/fat cattle sales that large processors compete for at the
saleyards is the means by which price is determined, not only for all fat
cattle sales but also all the way up and down the cattle production chain,
'affecting every transaction from breeder to stocker to backgrounder to lot
Evidence to the committee suggested that, with some variation, only 30
per cent of all cattle sold domestically are sold through the saleyard auction
system with the remainder sold over the hooks and by way of direct (paddock)
Two of the largest processors, Teys Australia and JBS Swifts purchase only 8
per cent and 5 per cent respectively of their livestock from the saleyards.
However, saleyards remain particularly important for small-scale producers.
This is particularly the case in Victoria, where up to 60 per cent of cattle
are sold through the saleyards.
Mr Eastwood from JBS Australia recognised that there was a price
relationship between the saleyard price and the grid price.
ALPAA also accepted that the saleyard price sets over the hook pricing and
argued that this benefited the producer:
In January this year, after rain in a lot of areas,
processors were constantly changing their prices upwards for over the hooks livestock
due to the increase in saleyard prices that were set by the auction system.
This fact proves that the auction system is one of the most important methods
of setting prices. Processors were forced to pay more over the hooks to
producers due to the competition at auction. This was widely reported and
commented on by all rural newspapers. The EYCI hit a record high of 530.25c
kg/LW in June 2015.
Drawing on the events at Barnawartha, Ms Loretta Carroll noted that in
circumstances where Teys-Cargill doesn't attend a market, it can impact the
market price. However, if Teys, as well as JBS and Nippon (who between them
hold a 55 per cent share of the processing sector) don't attend a market, it
can significantly affect the average price. Producers described selling
livestock at saleyards for these reasons as a 'lottery',
whereby sales are unsatisfactory due to 'unreliable and erratic prices'.
In terms of control over the market, Mrs Loretta Carroll made the following
When you consider the national benchmark pricing system,
being the Eastern Young Cattle Indicator only collects its data from public
selling centres, you can understand how easy it could be for processors to
influence the market price.
At best, market reports and benchmarking indicators including the Eastern
Young Cattle Indicator (EYCI) are based on a smaller and cheaper sample of the
market as these serve as the only reference point for prices.
Notwithstanding some fluctuations, the argument was put that lower prices at
saleyards, resulting from lack of tension in the market, serve as a benchmark
to lower over the hook prices.
This dynamic is made particularly problematic when over the hooks bookings are
made as far as four months ahead.
The VFF Wangaratta Branch described the two distinct channels for cattle
sales – direct (70 per cent), and saleyard auction (30 per cent) – both of
which rely on a pricing mechanism which is a closed, self-reinforcing loop,
controlled by the same buyers operating in both channels. It continued:
A feature of the two-channel system however, is that the
buyers in both channels are the same, and the prices being offered in the
Direct channel are set at auction by the same buyers in Saleyard channel, in
what is essentially a closed and self-reinforcing pricing mechanism. It
therefore follows that should prices in saleyards auctions be repressed by
buyer collusion, the effect is carried through to the other Direct channel.
The Gulf Cattleman's Association explained the consequences for northern
In support of this potential of uncompetitive behaviour in
north Queensland there are grazing enterprises sending stock as far south as
northern Victorian processors (2,500 km freight) and getting better net
returns. Regardless, net returns to beef producers for commercial based herds
(not MSA) has been negative to marginal since the Live Export ban in 2011,
followed by drought sales.
In Victoria, the VFF Wangaratta noted that from 2000–2013, the average
per kilogram price achieved by producers at saleyard auctions grew by 20 per
cent, compared to a retail price increase of 45 per cent and CPI increase of 49
per cent. Over that four year period, the margins for processors grew by 400
per cent. The VFF Wangaratta suggested that such disparity was seen by
producers as a symptom of buyer collusion.
Eastern Young Cattle Indicator
The VFF Ovens Valley Branch argued that a fundamental problem with the
current selling system is that of the reporting of livestock sales. The EYCI is
the general benchmark of Australian cattle prices. It is a seven-day rolling
average produced daily by Meat and Livestock Australia's (MLA) National
Livestock Reporting Service (NLRS). The results include cattle purchased for
slaughter, restocking or lot feeding and are expressed in cents per kilogram
carcase (dressed) weight (c/kg cwt). The VFF Ovens Valley Branch raised the
following concerns with the EYCI:
A serious concern with the EYCI is that store cattle and
poorer quality cattle are included in the calculation for the average price
reducing the real value of the quality cattle especially when the EYCI does not
report on the C4 cattle (being the higher quality). The fundamental problem,
however with the reporting system is that only approximately 30% of livestock
are sold through the sale yards leaving a staggering 70% of livestock sales
Furthermore, processors use the EYCI as their benchmark pricing gauge. At
the same time, they generally utilise cattle markets as a last resort to top up
their kill. The VFF Ovens Valley Branch put the argument that using the EYCI as
a benchmark is 'detrimental to producers' as the EYCI is used by processors to
set their price when purchasing cattle directly from producers. Moreover, it
noted that with consolidation of the processing sector, it is far easier to
control the saleyard price. In this regard, JBS and Teys-Cargill have a 49 per
cent share of the red meat processing sector, while Coles and Woolworths have a
combined market share of the domestic retail beef market of 57 per cent.
Price discovery mechanism
CCA recommended a voluntary prescribed industry code to establish an
industry standard practice for demonstrating price transparency through the
Nanthes' Park British White Cattle Stud agreed but argued that the code should
be enforceable for all participants at saleyards to ensure that the rights of
the vendor are protected. It made the point that saleyard operations need to be
structured in a way to ensure that the vendor has every opportunity to best
present their stock for sale.
The point was also made that there needs to be a base price which is
determined from the totality of the market.
The VFF argued that:
Price transparency and reporting that will allow for a true market
rate of the beast will allow people to operate in a certain sector in a true
market. In a market where collusion occurs, if you are not getting the true
market value for that beast, then you know you should not be operating in that
market as a producer or a buyer.
The VFF Ovens Valley Branch made the following two recommendations to
address this situation:
Recommendation: Establish a mandatory reporting system for
all cattle sold through the various selling channels and to establish a
transparent reporting system all along the retail chain.
Recommendation: Investigate the selling mechanisms and
structures between the farm gate and the processor to better manage the
negative effects of processor consolidation.
3.55 Mr David Hill of DL & EM Hill also argued in favour of a clear
value based price signal that would allow producers to achieve a price return
based on the value of livestock to the supply chain.
He further argued that there is a need to focus on value-based returns.
Mr Roger McDowell advocated for a system whereby cattle are weighed
before sale with the average weight per pen announced or displayed on the pen
prior to bidding.
Similarly, Nanthes' Park British White Cattle Stud recommended the introduction
of the Dutch auction system which, it argued, would benefit vendors, improve
competition, and is used in locations such as the Sydney Fish Market where the
same commodity is being sold.
Mr Craig Cross explained the process and its benefits:
The start-off price would be set at, say, $5 a kilo, which is
well and truly above what people would be expected to pay. It would then drop
down and the first person to place a bid would win the lot. That way, because
it would be all electronic, bidders would know it is transparent because the
buyers are recorded. Currently when I sell cattle through the saleyard I do not
know where the cattle were sold to. The agent gives you a list of what they
were sold for but not to whom they were sold. That information is not readily
AuctionsPlus suggested that the establishment of a national price
disclosure mechanism in the form of data provided by AuctionsPlus and MLA/NLRS
would also allow producers to make informed decisions to determine the best
marketing channels for their livestock.
During the committee's grass-fed cattle levies inquiry, the committee
received considerable evidence regarding the lack of information that producers
can access regarding prices, profits and margins along the beef supply chain.
In this regard, the development of a transparent pricing and trade practices
system was viewed as one possible method to counter industry trends towards
concentration and consolidation of the retail and processing sectors.
The committee recommended that the Department of Agriculture, in
consultation with the cattle industry, conduct an analysis of the benefits,
costs and consequences of introducing legislation akin to the Packers and
Stockyard Act 1921 and Livestock Mandatory Price Reporting Act 1999.
In response to this recommendation, MLA was commissioned in December
2014 to conduct an analysis of United States (US) legislation along with agribusiness
consultants, agInfo. As part of the analysis, MLA distinguished price
transparency as a complete horizontal and vertical understanding of every point
in the supply chain from price reporting or information on data at specific
points along the chain. In regard to the latter, Mr Norton informed the
committee that MLA's market reporting service had 'identified specific areas
along the chain where reporting is of value to producers'.
At a committee hearing on 17 November 2015, when providing an update on
its analysis, Mr Andrew Norton, Managing Director of MLA, made the following
The crux of the issue that must be confronted therefore is:
will providing more information lead to better decision making or other
discernible benefits? If it does not, there will be little point in investing
in collecting such information. Fundamental characteristics of cattle markets
that may act to the disadvantage of producers will remain unaltered post the
introduction of any price transparency improvements.
Evidence to the committee, gathered over years of inquiry into the
livestock and red meat industry, has strongly indicated that a mechanism of
price discovery is one of many reforms required. Again, a mandatory price
reporting system by means of the introduction of legislation akin to the US Packers
and Stockyards Act, 1921 was supported in evidence to this inquiry.
Moreover, it was clear to those who gave evidence to the committee
during this and other inquiries that price transparency alone can't fix what
amounts to a largely dysfunctional system which is no longer fit for purpose.
Whether it be some form of price discovery, market reporting or full
price transparency, is a matter for industry. However, it is abundantly clear
from the evidence of producers and producer-groups that such a mechanism should
be introduced as part of a suite of reforms which strengthens representation
of, and service to producers, while also addressing anti-competitive behaviour,
including concerted practices and the culture of collusion that permeates many
of the country's saleyards today. Ultimately, it is market competition which
gives producers the most direct farm-gate price.
Navigation: Previous Page | Contents | Next Page