ACCC beef and cattle report highlights lack of transparency and alleged anti-competitive conduct

An ACCC study into Australia’s cattle and beef sector has identified changes that are needed to improve transparency and competitiveness, highlighting shortcomings in price reporting, a lack of trust in the carcase grading system and concerns about anti-competitive conduct affecting competition in cattle and beef sales.

The findings arose from a detailed market study the ACCC conducted into beef and cattle markets in Australia, which involved consultations with all parts of the supply chain, and analysis of available market information and industry data.

The market study was prompted by a combination of issues raised through previous ACCC investigations and in the Senate Inquiry into the effect of market consolidation on the red meat processing sector.

“Many Australian cattle and beef businesses successfully operate in competitive export markets, but there are issues that need to be addressed to improve competition along the domestic supply chain,” ACCC Chairman Rod Sims said.

Report recommendations

The ACCC’s final report makes 15 recommendations on issues including:

• improving price information by requesting that meat processors publish price grids for sales made direct to processors. This will make it easier for producers to consider and compare price offers. Nationally, the vast majority of prime cattle are sold this way;
• an increase in the frequency of AUS-MEAT’s random and unannounced audits of cattle grading and trimming in processing plants to improve integrity in the system;
• the introduction of an independent dispute resolution process to apply across the industry;
• the prioritisation of objective carcase measurement technology to increase the accuracy and transparency of carcase assessments, and the sharing of the data arising from the technology with cattle producers;
• the introduction of a buyer’s register and post auction buyer’s report for major saleyards;
• expanded reporting of historical prices to make it easier for producers to compare prices paid for cattle sold through saleyards, paddock sales and over-the-hooks.

“There is a need for the entire industry to take responsibility for implementing these changes; therefore the ACCC recommends that the Red Meat Advisory Council assume responsibility for implementing the recommendations. We encourage industry participants to work constructively with the council to ensure that they are implemented as quickly as possible,” ACCC Commissioner Mick Keogh said.

The ACCC is also concerned about suggestions of anti-competitive conduct that emerged during the market study.

“The ACCC takes allegations of this nature very seriously and we are currently assessing if there are any breaches of the law. Misconduct in the agriculture sector is an enforcement priority area for the ACCC this year and if we find substance to these allegations, we won’t hesitate to take action,” Sims said.

Progress made since interim report

Since the ACCC’s interim report was released in October 2016, industry has progressed some of its recommendations, including Meat and Livestock Australia’s updated online market reports, and moves to introduce objective carcase measurement technology.

Keogh said the improvements to MLA’s market reports allow producers to easily access historical price information so they can see which way prices are moving for stock. He also urged the industry to support the move to objective carcase measurement technology, to improve integrity and trust in the cattle grading system.

Image credit: ©iStockphoto.com/Smokeyjo