Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697636842593.pdf (Australia)
EFFECT OF MARKET CONSOLIDATION ON THE RED MEAT PROCESSING SECTOR.

Name: Vin O’Neill To: Committee Secretary Senate Standing Committee on Rural and Regional Affairs and Transport I am a fourth generation farmer, in North East Victoria, operating a beef producing property with 100 breeding cows on 230 hectares.

I use the Barnawartha facility to sell my cattle.


I wish to lodge a submission in relation to the effect of market consolidation on the red meat processing sector and in particular the first three of the five dot point headings the committee will be considering.

a.

The potential for misuse of market power through buyer collusion and the resultant impact on producer returns.
Within the auction system I’m sure there is some level of buyer collusion taking place, though it is more likely to be in a falling market than in a rising market.

The problem is, it’s very difficult to prove and from what I’m hearing from within the industry, it’s mostly the larger company’s buyers working together that are accused of this type of collusion.
Within an open bidding system such as in a saleyard situation there is always a danger of buyer collusion taking place within it, though it’s fair to say, any auction in any industry is exposed to the dangers of buyer collusion.

That said, though I’m concerned about it, I don’t perceive it to be a particularly big issue.

b.

The impact of the red meat processor consolidation on market competition, creation of regional monopolies and returns to farm gates.
The number of meat processors in Australia has declined over recent years and in addition (and most likely a product of that) takeovers and buyouts by other larger company owned abattoirs has reduced competition and may well provide an unhealthy opportunity to manipulate the market through the processing part of the supply chain.
Two of the largest meat retailers in Coles and Woolworths are regularly in the press as a result of complaints against them raised by their suppliers, who are for the most part, smaller producers at the bottom of the red meat supply chain.
(Front page headlines in the weekly farming magazine The Weekly Times newspaper edition Wednesday June 12th is a classic example of how red meat producers are treated by our two largest supermarket giants and domestic red meat retailers) It concerns me that going forward, there is a real danger the entire red meat supply, processing and retail supply chain is at threat by way of “Cartel Type” arrangements between meat processers and certain major retailers, which could only be to the financial detriment of the red meat producing farming community.
c. The existing selling structures and processes at saleyards, particularly pre-and post-sale weighing, as well as direct sales and online auctions, and whether they remain relevant.
Effect of market consolidation on the red meat processing sectorSubmission 32 Of particular concern to me is the arrangement of post-sale weighing, which incidentally was forcefully implemented by the red meat buyers at Barnawartha saleyards, much to the disgust and disdain of local farmers, who basically had no input or say on the matter, as “the deal” was done between the buyers and selling agents late on a Friday afternoon in March this year and implemented without any form of written notice to the producers on the following Tuesdays cattle sale.
The agents were a guilty party to this arrangement, however because of their role as agents in the form of an intermediary between the buyers and sellers, opted to begrudgingly, but fearfully, side with the buyers to protect their financial position as agents of supply to the large retail operators.

There are two distinct negative outcomes to red beef producers under the post- sale weighing system: 1.
At any another auction I have ever been aware of, the price and deal is always completed at the fall of the auctioneers hammer, therefore transferring ownership and responsibility to the new owner immediately.

Under the post weighing system the producer has no idea at the fall of the hammer of exactly what price per head he has sold his product at, even though he has technically had ownership of his product transferred to the successful bidder.

2.
2.

At the fall of the hammer the cattle being sold have been without feed for as much as 24 hours, and longer in some cases.

Though I’m not qualified to make a definitive statement as to how much weight any particular beast will lose in a 24 hour period, it is a common belief that after 12 or so hours without feed the animal will definitely suffer some degree of weight loss and distress as a result.
As the weight loss and distress accelerates as time goes by, any delay in post- sale weighing only adds to the effect of both issues.

As it currently stands, I believe there is no fixed time frame between the fall of the auctioneers hammer and the time that transpires before the cattle are post-weighed.

Therefore the more time that elapses between the fall of the hammer and the weighing that determines the price paid to the producer, the less the actual selling price will be.
Add to this, the possibility of weighing equipment failure through breakdowns and staffing problems, along with a host of other possible delays to the post-weigh system and it becomes anyone’s guess as to how much weight loss and stress the cattle have suffered from since the sale and ownership of the cattle has been transferred until the final price is determined.

A distinctly unfair disadvantage to the producer/seller.
Yours Sincerely Vin O’Neill Effect of market consolidation on the red meat processing sectorSubmission 32