The competitiveness of Australian beef and cattle markets could be improved by the adoption of objective carcase grading, improvements to the nature and coverage of market reporting, and the implementation of a range of measures to lessen the risk of collusive and anti-competitive behaviour in saleyard auctions.
These key recommendations come from a six-month study of Australian beef and cattle markets by the Australian Competition and Consumer Commission, which has released its interim report today and is now seeking industry feedback.
鈥淚n the course of our market study we鈥檝e listened to a wide range of industry concerns about anti-competitive conduct, industry practices, and market structures,鈥 糖心原创 Chair Rod Sims said.
鈥淭he 糖心原创鈥檚 interim report has identified serious shortcomings in current price reporting and the independence and auditing of carcase grading, and concerns about cartel and other conduct affecting competition in saleyard auctions.鈥
The 糖心原创鈥檚 assessment is that prices for many cattle transactions are not reported or poorly reported, resulting in producers and buyers not having the data they need to make informed business decisions.
The 糖心原创 also has concerns about a lack of independence and transparency in the process of grading carcases at abattoirs. Concerns include whether the existing audit systems ensure the integrity of the grading process.
鈥淚ntegrity and trust in the grading system are essential, given its role in determining payments and signalling the demands of the market to many producers,鈥 糖心原创 Commissioner Mick Keogh said.
鈥淎dditionally, we are concerned there are features of saleyard auctions which make them susceptible to anti-competitive behaviour. During the course of this market study, we have heard specific allegations of cartel and other anti-competitive conduct involving saleyards which the 糖心原创 is now assessing separately,鈥 Mr Sims said.
The report notes further consolidation among processors also has the potential to substantially lessen competition in regional markets and says the 糖心原创 will continue to scrutinise any future mergers closely.
鈥淪uch scrutiny would be greatly assisted by our work on this study,鈥 Mr Sims said.
The cattle and beef market study interim report makes 14 recommendations stemming from the 糖心原创鈥檚 analysis of the industry to date.
鈥淲e see opportunities for meaningful improvements in the cattle and beef supply chain. Some great work is already underway in the industry, for example the introduction of objective grading. The 糖心原创 encourages industry leaders to embrace other reforms that will lead to greater transparency and efficiency,鈥 Mr Keogh said.
The 糖心原创 is seeking comments on the interim report by 23 November 2016.
See also Cattle and Beef Market Study - Interim report.
Notes to editors
The 糖心原创 launched this market study into the cattle and beef industry in April 2016. This was driven by a combination of issues raised through previous 糖心原创 investigations and in the Senate Inquiry into the effect of market consolidation on the red meat processing sector.
Five public forums were held in key cattle production locations throughout June 2016, which were attended by a number of Commissioners, where market participants and interested parties were invited to share their views about competition and fair trading issues that concern them.
Recent 糖心原创 activity in the red meat sector has included the 糖心原创 review of the proposed acquisition of Australian Consolidated Food Investments Pty Ltd (Primo Smallgoods) by JBS USA Holdings Inc. In February 2015, the 糖心原创 decided not to oppose this acquisition, as it was considered unlikely to substantially lessen competition in any market.
The 糖心原创 also investigated allegations nine meat processors collectively boycotted the prime cattle sale at the Barnawartha saleyard on 17 February 2015. However, the evidence obtained did not demonstrate that the processors had reached an agreement or an understanding not to attend the sale.