The Australian Competition and Consumer Commission’s Mick Keogh has issued a pointed statement criticising the “disappointing” level of improvement to transparency in cattle and beef markets.
The national competition watchdog’s agricultural commissioner wants government authorities to enforce better cattle market price transparency because the wider beef industry is not acting on last year’s recommendations to improve market efficiency.
Meat processors and the peak industry advocacy body representing processors, producers and retailers, the Red Meat Advisory Council, have copped particularly stern criticism for not making market pricing information clearer.
Reforms suggested by the ACCC last March included greater price reporting of non-auction sales, more processor price offer transparency, simplification of pricing grids, and measures to increase transparency in saleyard auctions.
Mr Keogh said the Red Meat Advisory Council had dragged its heels on implementing the reforms for too long.
“Given the RMAC’s reluctance to engage with the recommendations during the past 12 months, we no longer believe it should have this leadership role,” Mr Keogh said.
The ACCC will act on its threat to industry to seek political reforms to implement its regulations, Mr Keogh said.
“We will instead engage with Commonwealth and state governments through the Agriculture Ministers’ Forum to push for implementation of the recommendations.”
The ACCC’s 2017 market report issued 15 recommendations to address concerns about transparency in cattle and beef markets.
“The ACCC’s recommendations proposed meaningful improvements to transparency in cattle and beef markets, but little progress has been made toward most of these,” Mr Keogh said.
“There have been some improvements to market reporting and producer education activities, but the level of action is disappointing overall.”
Mr Keogh noted Meat and Livestock Australia (MLA) has improved its market reporting systems, but said further improvements are restricted by the unwillingness of processors and other major cattle buyers to provide market information.
The ACCC report said given the lack of industry leadership and progress on many recommendations, the competition authority would “engage with Commonwealth and state governments to advocate for theconsistent implementation of the recommendations across these jurisdictions”.
“We do not believe that RMAC should be tasked with a voluntary process for which they have no enthusiasm, the report said.
“RMAC has indicated the implementation of the recommendations does not fall within its role.”
The report highlighted how production and investment decisions made by cattle producers were an important determinant of industry efficiency.
It said the better informed about relevant market conditions producers are in making those decisions, the more productive the sector will be.
“Transparency of price and other key market information is a prerequisite for functional markets and effective competition, which results in greater industry efficiency and improved welfare for producers,” the report stated.
“In a transparent market, producers have access to accurate, relevant and timely information so that they can make decisions that are in their best interests and are not at a significant information disadvantage compared to processors.
“In livestock markets this information includes:
- representative data regarding cattle and beef production
- representative data regarding cattle and beef sales
- information about the carcase quality of animals slaughtered
- prices from farmgate to retail or export information on who is participating in the market.
“This information should be available across the supply chain and across time, and to producers and buyers equally.
“The ACCC found much of this information is either not available to producers, is not presented clearly, or is not available in time to help inform producer’s decisions.
“For example, a range of cattle price data for over the hooks (OTH), saleyards and online auctions is published on a regular basis by MLA and other sources, however, gaps and inconsistencies mean not all of the reported data is easy to interpret or compare, reducing its usefulness to the industry.
“Price grids are not freely available or easy to compare between processors.
“A degree of producer distrust in the OTH grading and feedback system reduces its ability to send market signals to producers
“There are several characteristics of saleyard auctions which make them susceptible to anti‑competitive conduct, including a lack of transparency regarding participants.
“Furthermore, there are information asymmetries between producers, who (while having access to consultants and livestock agents for advice) predominantly rely on publicly available information, and, buyers who have wider market knowledge, systems to interpret their own prices and those in the broader industry.
“Improved and more equal information flows and transparency would provide clearer signals about allocation of farm resources, production, sales, processing and marketing, helping markets to operate more efficiently.
“Producers would have better access to the information required to make well informed business and risk management decisions, negotiate more effectively, and adapt to changing market signals or consumer trends.”
The full ACCC report into the progress reform in the 12 months since it released its market study is here.