MLA boss backs consolidation of meat sector RDCs

MLA boss Richard Norton backs consolidation of meat sector RDCs


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MLA Managing Director Richard Norton at today's Senate hearing in Canberra.

MLA Managing Director Richard Norton at today's Senate hearing in Canberra.

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MLA Managing Director Richard Norton has expressed agreement with potentially merging three meat industry RDCs into the one entity.

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MEAT and Livestock Australia (MLA) Managing Director Richard Norton has expressed agreement with potentially merging three meat industry Research and Development Corporations (RDCs) into the one entity.

The concept was mooted via questioning led by Queensland Nationals Senator Barry O’Sullivan during MLA’s appearance at today’s hearing at Parliament House in Canberra, of the Senate Rural and Regional Affairs and Transport References long-running Committee’s inquiry into competition concerns within the red meat supply chain.

The inquiry was initially referred by the Senate in March 2015 and survived the change of parliament after last year’s federal election, where an interim report was released.

It has also undergone several reporting date extensions, while other another inquiry into the red meat sector has also unfolded, by the Australian Consumer and Competition Commission.

But Senator O’Sullivan said a draft report was now with the Committee Chair – WA Labor Senator Glenn Sterle – and was being “fine-tuned” with a final version and its recommendations due for release in coming weeks.

The idea of merging the research agencies has been put to committee members privately and would see MLA join together with the Australian Meat Processor Corporation and LiveCorp which services the livestock exporting sector.

The combined total budget for the three agencies is currently about $200 million per year, through combined levy-payer and government funding, with MLA comprising $165m.

Ultimately, any such structural change would need to be a decision driven by industry via levy-payers voting to alter the underpinning legislation.

Federal Agriculture and Water Resources Minister Barnaby Joyce would also need to provide backing to pass the changes in federal parliament and would be unlikely to block any such reforms, if agreed by producers.

In discussing the RDCs coming together, Senator O’Sullivan said given the modern world, with one industry, there were some “serious commonalities” about their objectives, particularly market ones.

He asked why the industry would not look at consolidating the bodies charged with trying to deliver common market objectives, like technical barriers to trade

Mr Norton said, “fundamentally I agree”.

“Now that will cause myself some grief but I believe that not only would there be cost savings but there would be a lot more decisions made a lot quicker and you’d be more nimble (responding to) to those external market forces, as an organisation,” he said.

Mr Norton said under MLA’s current structure “touch wood”, the income and distribution of levy-streams had always been accounted for correctly, through an annual audit process.

“When those levy streams work together for, as you put it Senator, common goals, and meeting the demands of consumers globally, that’s when the most effective outcomes are achieved,” he said.

Senator O’Sullivan said the committee was had been told by some of Mr Norton’s colleagues that the past 18 months in the sector had been “rosy” and “progressive”.

“I don’t need to spend any time telling you what I think of that,” he said in a backhanded reference to Australian Meat Industry Council CEO Patrick Hutchinson’s evidence to the committee at another hearing in Canberra this week.

“We bring ourselves to the question of things like the R&D institutions that sit within red meat and the difficulties that exist there.

“Some people have suggested we should look at consolidation of R&D into one place, for easier management, decision making, better governance, supervision and a whole range of things.

“I’d like your view on that – with an eye on my concern about equitable power capacities within the industry.

“There are some that are more powerful than others – there are some who are more organised than others.”

Senator O’Sullivan said he was also on the public record to say that the existing Cattle Council of Australia “historically, represents the eight men at the table and little else”.

Queensland Nationals Senator Barry O’Sullivan.

Queensland Nationals Senator Barry O’Sullivan.

“I know that that will cause a reaction from them once more, where I’m concerned,” he said.

“But I think that until we get a very, very powerful advocacy body for producers - well-funded, well-structured (and) with a genuine claim to grass root engagement from tens of thousands of producers - then we’re going to continue to have the strong people in the industry fill this space and that won’t always be in the (collective interests) of producers,” he said.

“If we’d have had a powerful advocacy body around cattle producers we wouldn’t be in this room today let alone having to agonise over what happens next with structures and futures.

“I’m interested in a candid view because we’re at the point now where deliberating over what’s in a report.”

Mr Norton said “things aren’t that rosy in the cattle, beef red meat industry and for anyone to say that they are, is a little bit disingenuous and not quite understanding the associated issues with industry”.

“By the time we get our product to a retail shelf, it’s now some of the most expensive red meat in the world,” he said.

“If we benchmark what happens on farm we are amongst the most productive producers at farm gate, in the world.

“It’s our processing sector that, as manufacturing in this country is subject to, has very high costs.

“Now to address that, I’d ask the question around which entity, across the RDCs, has worked over the last decade, to reduce the cost of production, particularly in the processing sector, with innovation, such as what we’re talking about today.”

Mr Norton referred to the committee hearing’s extended discussion about the merits of Dual Energy X-ray Absorptiometry (DEXA) technology which is currently being installed in meat processing plants throughout the nation - backed by MLA funding - to deliver objective carcase measurement for the red meat sector.

Mr Norton said MLA’s work was providing transparency through the processing sector by applying objective measures, “so producers actually know what they’re producing and that’s not being told to them perhaps by someone working inside a processing facility”.

“And DEXA is just one piece of the jig saw puzzle – a very big piece – to providing producers with objective measures,” he said.

“We’re in this process talking about the way producers get paid in the future – not the current averaging system.”

Mr Norton said rising energy costs were also coming through the processing sector but the increases were passed onto producers, not consumers.

“If we don’t look at innovative ways to reduce the cost of processing red meat in this country we are going to have situations where perhaps all that manufacturing goes off shore,” he said.

“Where the carcase is just cut up here in Australia, fore-quartered, sent overseas and then processed.

“We don’t want to see that because there is so much opportunity to value-add Australian product here in Australia and to continue processing it here in Australia.”

Mr Norton said while “we want to sit here and talk about industry structures”, 75 per cent of product was exported and competitors like Brazil were “killing us” in export markets due to lower production costs.

He said the cost of protein production of which consumers had choices, was also a consideration and “we’re losing that battle”.

The story MLA boss backs consolidation of meat sector RDCs first appeared on Farm Online.

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