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TAS Country : October 14th 2010
Friday, October 15, 2010 Tasmanian Country 9 Opinion MLA should have performance anxiety PLATE TO PADDOCK: Not enough of the beef dollar comes back to the producer. CHEWS THEFAT David Byard ''WAL'S meat axe'' said the headline in The Weekly Times. Cattle Council of Australia chairman Greg Brown has accused the Australian Wool Innovation chairman Wally Merriman of signing a petition brought on by the Australian Beef Association. This petition has been presented to the MLA board so at the MLA conference in November the motion will be brought forward to remove and disband MLA. This brings a number of intriguing questions. Who told Mr Brown that Mr Merriman had signed the petition? MLA says it will not release the names of signatures on the petition. It is very interesting to look at the AWI board, which in turn has had its challenges and problems. However, this board represents the interests of levy payers and is elected by levy payers in a truly open democratic process. This, of course, leads to people with strong opinions and the inevitable clashes of personalities, which is what democracy is all about. On the other hand, MLA never seems to have any problems with clashes of personalities. This year the MLA election will put three candidates forward to be ratified at the annual meeting next month. Sadly this ratification will be nothing more than a rubber stamp. The selection process is vastly different from AWI's. MLA calls for expressions of interest, and, according to my information, received 127 applicants for the three positions. It seems that MLA short-listed seven applicants, who then went to an internal MLA selection panel that chose three applicants out of the seven. Two of the applicants are board members who have completed their term and want to stay on the board. People on the selection panel have at times found themselves being selected as directors. This sort of process makes sure that the person elected to the board has the sort of personality and pedigree that will fit in with MLA thinking and will be the sort of individual who will be compatible with the MLA board. This leads to a board of like-minded people --- unlike the AWI board, where you have a mishmash of personalities, ideas and skills. Personally I would prefer to see people who are individuals and are prepared to rock the boat by asking the hard questions and putting forward new ideas. This month's MLA Feedback magazine makes some interesting reading. It asks: Does our marketing measure up and does it work? It goes on to say that during times of stagnant and falling commodity prices, producers often focus on the perceived under-performance of their marketing body. Communications manager David Pietsch explains some of the factors affecting the MLA's marketing program. MLA focuses on building demand and increasing the amount of consumer dollar spent with the industry. To me, MLA is there to serve the livestock industry. However, the big retailers can be the major beneficiaries. Groups such as Coles and Woolworths do not pay any MLA levies. David Pietsch says the Australian producers' share of the retail dollar has been relatively stable at about 30 per cent, and that driving retail demand and/or expenditure correlates to higher prices for livestock over time. But ABARE figures suggest that the retail price of beef has risen by 25 per cent since 2000, and yet cattle prices have remained unchanged. From 2000 to 2008 we saw an economic boom in the Western world. Supermarkets reacted by putting the price of meat up, while putting the screws on producers and keeping the farm-gate price of beef low. According to MLA, domestic consumption is not a reliable indicator of the health of an industry. It says that in 1970 consumption of beef was about 65kg per head --- that was when the industry was on its knees. In 2010 the beef industry is not exactly booming but perhaps not on its knees yet. However, with the dollar reaching parity, who knows. Our present beef consumption is about 34kg per head --- a huge reduction from 1970. In fact, one article I read said consumption of beef was dropping by 8 per cent per year. In contrast to this, over the past decade pork consumption has risen by 28 per cent and chicken consumption has risen by 21 per cent. If I was trying to sell these sort of results on the market to demonstrate MLA's success, I would suggest MLA's marketing department would struggle to attract much business. The question is, why is MLA not being questioned? Claims that Australian producers get less of the retail dollar than producers in other countries can be very misleading, as comparisons with other countries are both difficult and of questionable relevance. Retail systems in other countries are so different. The MLA article goes on to talk about the price of grain and labour. In this situation, I don't care what the cost of production is in the US. What interests me is that the producer in the US gets 45 per cent of the retail dollar and the producer in Australia probably gets about 25 per cent. This difference will make up any fluctuation in the Australian dollar, and more. In 2007 the then agriculture minister Peter McGauran wrote to the ACCC requesting it to examine the prices paid to farmers for livestock and the retail meat prices. The minister was concerned that farmers were receiving minimal returns for their livestock while consumers were paying record prices for red meat. Coles and Woolworths both submitted information. Coles suggested that it made a 3 per cent profit from meat. It went on to say that 53 per cent of the retail price went back to the producer. MLA did not submit anything to the inquiry, saying it was not its role to give evidence to something like this. It said its role was marketing and research and development. This left the producer without any expert evidence. This makes me wonder how much of MLA's marketing dollar is spent on the two major supermarkets. The simple fact is that we will never know under the present structure. MLA suggests levy payers will quite rightly continue to scrutinise the value that they receive for their investment in marketing through the MLA. There are 217 people who have had the courage of their conviction to sign a petition to remove the MLA board. The MLA says scrutiny is healthy and very welcome. After what has happened to Wally Merriman and people who have signed the petition, I wonder how welcome scrutiny really is. 2018759-101015 Rural Development Services 4/29 Elizabeth St, Hobart, 7000 PH: 6231 9033 www.ruraldevelopmentservices.com Sustainable Farms Tasmania To have your farming practices accredited by Sustainable Farms Tasmania, you will need to have approved Property Management Planning modules in place. 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October 7th 2010
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