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.
“In the course of our market study we’ve listened to a wide range of industry concerns about anti-competitive conduct, industry practices, and market structures,” ACCC Chair Rod Sims said.
“The ACCC’s 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.”
The ACCC’s 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 ACCC 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.
“Integrity and trust in the grading system are essential, given its role in determining payments and signalling the demands of the market to many producers,” ACCC Commissioner Mick Keogh said.
“Additionally, 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 ACCC is now assessing separately,” Mr Sims said.
The report notes further consolidation among processors also has the potential to substantially lessen competition in regional markets and says the ACCC will continue to scrutinise any future mergers closely.
“Such scrutiny would be greatly assisted by our work on this study,” Mr Sims said.
The cattle and beef market study interim report makes 14 recommendations stemming from the ACCC’s analysis of the industry to date.
“We 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 ACCC encourages industry leaders to embrace other reforms that will lead to greater transparency and efficiency,” Mr Keogh said.
The ACCC is seeking comments on the interim report by 23 November 2016.