Pic source: ampc.com.au
BY finance reporter Elysse Morgan
The meat processing industry is coming under fire for the way the big players treat farmers.
Takeovers and mergers have led to a massive concentration in the meat processing industry and sheep and beef producers say they are being exploited, with evidence meat processors use heavy handed tactics and abuse their market power.
Currently beef is selling at near-record prices across Australia, but farmers like Mark Ritchie said they were not getting much of a cut.
“Farmers feel like they've been missing out,” Mr Ritchie told the ABC from his farm in Mansfield near the Victorian alps.
“They know that there's a lot of money being made in the red meat industry and they haven't seen it for the last few years.”
Farm gate returns at the property, which runs 2,000 cows, have flat-lined over the past decade despite inputs rising sharply.
It is a problem across Australia and producers blame the rapid consolidation in the processing industry.
“Farmers feel the level of consolidation we've seen in the past 15 years has meant a reduction in options for them every time a plant is taken over, or there's a consolidation that effectively one more buyer out of the market,” Mr Ritchie said.
In the past 10 years 40 per cent of abattoirs in New South Wales have closed as they have been bought out or merged with larger groups.
Under the nose of the Australian Competition and Consumer Commission (ACCC), Brazil's JBS and Australian-American owned Teys Cargill have taken control of 50 per cent of the market.
The remainder is in the hands of just a few firms.
'We are getting into a duopoly type situation'
Less processors mean less competition between buyers at saleyards and farm gates, which NSW Farmers Association president Derek Schoen said was worrying.
“We are very closely getting into a duopoly type situation similar to the Coles and Woolworths in the grocery,” he said.
“There's consolidation by creep and one by one the processors are getting picked off and its no good for competition.”
Mr Schoen said the market was open to abuse, made evident at a boycott that was staged at a saleyards in Barnawatha, on the Victorian-New South Wales border.
When major meat buyers failed to show at the opening sale at Barnawatha, it sent cattle prices tumbling and left many unsold.
The boycott was designed to pressure the saleyard into changing the sale method from pre-sale to post-sale weighing.
As cattle can lose up to 4 per cent of body weight while in the yards, processors prefer to weigh and pay after the sale.
The saleyard caved in to processors demands.
The ACCC launched an investigation and a Senate inquiry was set up in response to the boycott.
But Teys boss Geoff Teys was unapologetic about not turning up to Barnawatha.
“In our years of experience in buying cattle in saleyards over direct from paddock, post weighing gives us the best, most consistent result,” he told senators.
Lack of transparency through supply chain
Victorian Nationals senator Bridget McKenzie, who prompted the inquiry, was scathing about the boycott but said the problems go far beyond the saleyards
She said there was an incredible lack of transparency throughout the supply chain.
Most animals do not even go through saleyards and are sold directly by farmers to processors at undisclosed prices.
Cattle farmer Julian Carroll said he wanted the senators to change that.
“If we can get more transparency, then we can make better decisions on how when and where we sell them,” he said.
Victorian and New South Wales farmers associations are both lobbying the Government for change, saying there was too much opportunity for processors to take advantage of producers.
What goes on inside abattoirs is a major rub point between processors and producers.
The final price of many animals is determined by how the carcass is scored for things like fat depth and colour, and a poor score can mean hundreds of dollars less per animal for the farmer.
But the people scoring the carcasses are employees of the processors, and farmers said that was a clear conflict of interest.
Senator McKenzie said more transparency would lead to a better deal for farmers, but not necessarily higher prices for consumers.
“That is up to the retailers, at the end of the day there is a huge margin between what the producers of what that beef are being paid and what you are paying for at the supermarket,” she said.
The Senate committee is due to report next year.