Direct-contract warning

This is according to the new AuctionsPlus chief executive Anna Speer, who has warned North East producers of the growing trend of direct contracts.

"We are at risk of moving towards more direct sales, which means we remove the transparency of price," Ms Speer said.

"I'm not an advocate to say auction is the only way to go – I think it is important to expose risk across a number of platforms – but I do believe if we don't support the auction system we are putting ourselves in a corner that will be very hard to get out of long-term."

Ms Speer asked attendees at a Victorian Farmers Federation pre-conference at Benalla: "Do we risk being at the mercy of the buyers if the majority of sales are direct, particularly when we rely on the saleyard industry as the price indicator?"

Cattle market saleyard throughput since 1986 has declined by 40 per cent and is continuing to decline.

The 2012-13 cattle sales across the country included 6.2 million head sold through the auction system, 5.3 million over the hooks and 2.5 million through paddocks.

"Processors are actively securing direct supply and that is important to them because it ensures they can buy stock for the price they want and shore up their supply," she said.

"We are seeing a lot of farmers go that way because of the current market volatility that means you are at risk of getting a great price or not-so-great price (at auction)."

In the past 12 months AuctionsPlus logged record sale numbers (including 240,000 head of cattle and 2.2 million sheep), attributed to the industry embracing the technology.

"Forty per cent of our users have moved to mobile devices to access results and the catalogue in the past three to four years, which has seen a significant increase in users accessing the system from 2011-13 – we have seen a 823pc increase in people using the technology," she said.

However, the system has its challenges with the integrity of the assessments, according to Ms Speer, who said there had been issues with "buying bananas and getting apples".

"AuctionsPlus' biggest complaint is when you buy something online and it is not what you thought it would be," she said.

"We are working on our assessor accreditation and the integrity of assessments – it is difficult to crack down on."

Ms Speer said some of the challenges facing livestock sector at the moment were increasing costs or production, animal welfare, extreme environment conditions and consolidation of competitors, reflected in JBS' recent Primo acquisition.

She said some of the issues arising from these challenges were addressed in the privacy of online sales and the competitiveness of private bidding.

"Another challenge is the competition (within the industry) or lack thereof – the issue you are going through at the moment with Barnawartha (saleyard processor boycott).

"There are more commission buyers and if they are buying on behalf of seven or eight different people they are not going to bid against themselves, so there are issues around that."

Currently NSW, Victoria and South Australia are the strongest supports of the auction system – a situation explained by their proximity to saleyards – while Western Australia, the Northern Territory, Queensland and Tasmania lag due to distance and saleyard competitiveness.

AuctionsPlus will launch mobile bidding technology in the next 12 months, which Ms Speer said could see an increase on its 1.5pc share in the Australian cattle market.

"If we stop investing in physical and online saleyards we might find ourselves at the mercy of buyers in five to 10 years' time, with not a lot of opportunity to do anything else," she said.