Senator McKenzie: beef leaders ‘continue to stick their head in the sand’

“I think it’s an absolute indictment on those peak industry bodies to continue to stick their head in the sand when it comes to the problems within the beef industry,” she said.

Senator McKenzie spoke to Fairfax Agricultural Media offering forthright comments, after holding an urgent meeting with farm leaders of the NSW and Victorian livestock industries yesterday.

It follows hot on the heels of her recent venting at groups like the Red Meat Advisory Council (RMAC) during the Senate Rural and Regional Affairs and Transport References Committee’s inquiry into competition concerns in the red meat supply chain.

Senator McKenzie said the inquiry was initiated after a boycott by nine buyers of the cattle saleyards at Barnawartha in north-east Victoria in early 2015, which saw prices plunge, and the farming groups she met with yesterday had helped write its terms of reference.

Originally referred to the committee in August 2015, the inquiry has been extended serval times and survived being cut at the end of the 44th parliament - but is now fine-tuning considerations, ahead of reporting its findings on December 6.

Senator McKenzie used the inquiry’s previous four hearings, held in Canberra from August 8 to 16, to hammer the peak representative bodies about their responses to the Australian Consumer and Competition Commission’s (ACCC) detailed study of the beef and cattle market.

The ACCC’s Agricultural Enforcement and Engagement Unit handed down the findings of its year-long investigation in March this year, making 15 recommendations for reforms to address core issues like sale yard operations and market transparency.

In a separate body of work, the ACCC also investigated the Barnawartha boycott with an eye on legal action, where the nine meat processors concerned had their phone records seized as part of the collusion investigation - but wrongdoing as per the Competition Act, ultimately could not be proven.

But with the Senate Committee report closing in on its final recommendations, Senator McKenzie said she was “furious” at stalled progress towards an industry driven solution that would avoid any need for political interference in the market.

As well as RMAC, Senator McKenzie said she was disappointed with responses to her questions at recent Senate inquiry hearings, on industry’s work to advance the ACCC report’s findings, by the RMAC, Australian Meat Processor Corporation (AMPC), Cattle Council of Australia, Australian Meat Industry Council (AMIC) and Meat and Livestock Australia (MLA).

She said a mandatory industry code of conduct was still on the table as part of the Committee’s closing considerations - but market intervention wasn’t her preferred option.

The mandatory code was raised at today’s meeting with leaders from the livestock groups of the NSWFarmers and Victorian Farmers’ Federation but “the three of us would prefer an industry led solution”, she said.

“Industry has the ACCC recommendations before it but when I listen to the peak industry bodies reject again, the solutions before it, it seems industry is not interested in an industry led solution which we’d prefer,” she said.

“I’d encourage, AMIC, AMPC, RMAC, MLA and the Cattle Council to actually look at the evidence and if they do, are they seriously still going to argue that there’s no issue?

“I don’t want to see government stepping in – that’s not how I think markets should be run.

“But when there’s market failure, which there clearly is here, which is why a market inquiry was done by the ACCC, which made a suite of recommendations, what are our choices?

“The ACCC didn’t say ’nothing to see here’.

“They said, ‘yeah, you’ve got problems and here’s how we can work together to fix them’ but nobody’s picked up the ball.

“That’s all I heard two weeks ago at the Committee hearings.

“I don’t think the Committee has made a decision yet about a mandatory code of conduct but I think we all want this fixed and in the face of industry refusing to lead, somebody’s got to do the job.”

Senator McKenzie said there was “frustrations all-round” in regards to the complex issues covered by the ACCC report and Senate inquiry.

“I don’t know how much more evidence these people need and what’s incredibly disappointing is that many of these bodies are getting producer levy-monies and government funding,” she said.

“There’s a lot of trust invested in these peak bodies and for them to continually reject the evidence that something’s amiss and we need to do better, is just wrong.

“Having the ACCC report handed down and prosecuting the report in hearings two weeks ago in the Senate inquiry with the main players, RMAC, AMIC, AMPC and the like, I was extremely disappointed by the response of those bodies to the report.”

Senator McKenzie said disappointed was “too meek a word - I was absolutely furious”.

“It doesn’t matter if it’s the ACCC inquiry, or the Senate inquiry, across the board this industry has problems of conflicts of interests, of collusion, of bad behaviour, or bullying and intimidation that end up in resulting in the producer not having confidence in the market,” she said.

“So for them to continue to stick their head in the sand around those issues, I find incredible.

“When I was asking questions of Cattle Council 18 months ago, it was clear that there’s a big difference between the northern industry and the southern industry.

“But the issues that started this inquiry were southern industry issues and I’m committed to ensuring the southern industry’s needs are met and that the market functions appropriately for them.

“It’s not only the market conditions - it’s about the representative bodies and the R&D money, to ensure that’s working for the southern industry.”

Senator McKenzie said the outcome of yesterday’s meeting with livestock industry leaders was “We’re all on the same page about backing the ACCC inquiry findings”.

“And we’re in unanimous and fierce agreement that the ACCC recommendations would go a long way towards increasing competition and dealing with many of the issues identified in the inquiry, like transparency around pricing, behaviour of agents, design and operation of saleyards etc. etc.,” she said.

“We were also in fierce agreement about the appalling response by peak industry bodies and so what I’m going to do is head back to Canberra and meet with these peak industry bodies again – particularly RMAC – and question their evidence to the inquiry.

“I will also be meeting with the ACCC to get their response to the evidence given and have submitted questions on notice today asking the ACCC to address each and every issue raised in the evidence by the peak bodies.

“When I was questioning a lot of the peak bodies, I went specifically to the ACCC recommendations and their answers basically suggested they didn’t agree with the ACCC or the ACCC got it wrong but that’s not the case.

“I’ve asked the ACCC to respond to each of the answers by the peak bodies but my fear once again is the peak bodies turning a blind eye to reckless and anti-competitive behaviour that is rife in this industry.”

Senator McKenzie said when presented with clear evidence that everybody accepts, it was wrong for peak bodies to ignore the facts.

“It’s not just Senators who are saying this and it’s not just farmers in NSW and Victoria,” she said.

“The ACCC which has conducted a market inquiry across the entire industry for over a year, they are also saying this.

“So in the face of that evidence, for people and organisations who are responsible agents in this system, to reject that evidence, I’d say it’s the peak industry bodies’ fault, problem and issue.

“We’re all saying the same thing – the evidence is in - it’s now time for peak industry bodies to stop ignoring the evidence and to actually start doing something to address the problems.

“The ACCC has provided a framework which everyone can kind of agree on and made some recommendations to move forward on.

“It’s time people picked it up and started dealing with it instead of thinking these cosy relationships can continue.”

The ACCC report’s final recommendation said RMAC had “prime responsibility” for overseeing the implementation of its recommendations and monitoring compliance.

It also said RMAC should report progress annually to state, territory and federal Ministers.

“This will ensure that recommendations are progressed, given diverse industry interests,” it said.

“The RMAC should also prepare an annual report to the Australian state, territory and federal Agriculture Ministers detailing progress in implementing these recommendations and any reasons for a lack of progress.”

But Senator McKenzie said for RMAC to be identified by the ACCC as an industry leader and to be tasked, as an industry leader, to oversee implementation of the report’s findings but to then “reject its leadership role in such an emphatic way” at the Senate hearing in Canberra on August 16, questioned their leadership capacity.

“I have serious concerns about RMAC’s capacity to provide any advice to government or community or industry, if they can’t see the facts in front of them that nobody disputes,” she said.

“Are they calling the ACCC liars?

“They like to tout that they’re industry leaders and they’re viewed as leaders, as the body that can speak on behalf of industry.

“But when actually tasked with a critical job they’ve failed.

“Leadership is not just about going to all of the prize giving - true leadership is about being able to envision something different and better and take people with you, to that place.

“Now the fact that they cannot and will not and are not prepared to go on that journey, really questions their role as industry leaders.”

Senator McKenzie said given the role of the NSW and Victorian state bodies in developing the terms of reference, “It’s only appropriate I consult with them” as the final report nears publication.

Cattle Council CEO Margo Andrae said the peak bodies held a phone hook-up with ACCC Agricultural Commissioner Mick Keogh yesterday to show where industry had been progressing implementation of the report’s findings and stressed work was being done, to achieve workable outcomes.

At the Senate hearing, RMAC Independent Chair Don Mackay his group didn’t have any issues with the ACCC report or with what it was designed to do.

“We provided a full written response previously, I think, a few days ago, or last week on our views around every aspect of that and I've no doubt there will be questions regarding it,” he said.

“One of the problems that we had was that we weren't directly consulted in terms of being the body that, for want of a better term, oversees this, and we don't believe that in most cases we are the correct body - particularly around dispute resolution and things, where there are a couple of existing systems in place.

“We are, in fact, meeting with the ACCC on Friday week to work through the report and what is happening in industry today, especially around terms and conditions of sale.

“I know there has been discussion around codes of conduct so we're trying to make sure that what exists can be modified to satisfy the issues that were raised in the report.

“A lot of the other parts of the report are ongoing improvements.

“A lot of them are undertaken by Meat and Livestock Australia and, while we don't have a direct role in RMAC itself, our member bodies have a direct role in directing MLA and AMPC.

“RMAC's role is to coordinate all those groups together, and we act on behalf of them.

“So RMAC doesn't sit in isolation from its membership; the membership tells us what to do.

“Our report that we presented to the ACCC was done in lengthy consultation with all those members.”

At the hearing, Queensland Nationals Senator Barry O’Sullivan said the only argument he’d seen from RMAC was that the mandatory code of conduct would have an increased “regulatory environment cost” on producers and processors and the like.

“And you bet it will - it will be almost prohibitive - but that alone, Mr Mackay, is not grounds to resist reform in a marketplace where, on the evidence we've seen and, for some of us, on some personal experience, there needs to be significant change,” he said.

“We think there is behaviour there that is completely inappropriate, bordering on collusion, certainly anticompetitive, and Barnawartha is just one profound example of that.”

Senator McKenzie also asked Mr Mackay about the ACCC’s recommendation.

“We will have a role from an industry perspective - but in terms of straight oversight - I don't think we're the correct organisation,” he said.

RMAC CEO Anna Campbell said the ACCC only raised the issue of recommendation 15with them “on the day the announcement was made”.

She said during the interim report “we did provide a submission to the ACCC which is very much consistent with the briefing paper we provided”.

Senator McKenzie said “We will follow that up with the ACCC”.

“I'm not confident, though, that the rest of the industry actually is as aware that you are not the appropriate body as you are,” she said.

Mr Mackay said “all the members of the Red Meat Advisory Council certainly are of that view - we're expressing their views”.