In proud partnership with our members

ACCC Cattle + Beef Market Study Request for UpdateFebruary 2018

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28 February 2018 Mr Rod Sims Chair, Australian Competition and Consumer Commission 175 Pitt St, Sydney NSW 2000 Via email: MarketStudy@accc.gov.au; rod.sims@accc.gov.au Dear Mr Sims, REQUEST FOR UPDATE – ACCC CATTLE & BEEF MARKET STUDY I refer to correspondence received by the Red Meat Advisory Council (RMAC) from the Australian Competition and Consumer Commission (ACCC) on 25 January 2018 requesting an update on the March 2017 Cattle & Beef Market Study – Final Report (Market Study). As you are aware, RMAC are committed to promoting market confidence in our sector and appreciates the spirit of the Market Study’s 15 Recommendations. Since March 2017, RMAC as a cohort and individually have reflected seriously on the Market Study and retain their commitment to an evidence-based competition policy framework for Australian agribusiness. We are pleased to provide the following assessment of the status of each Recommendation which highlights the collective serious considerations and actions undertaken by the Australian red meat and livestock industry. As committed to in the meeting with the ACCC in August 2017 (Attachment 1), RMAC is able to provide an annual status report to the ACCC, the relevant Ministers and the Department of Agriculture and Water Resources and provides the attached to assist the ACCC in concluding their Market Study. In informing this 2018 Update, RMAC has drawn on our network of our members and our strong relationships with other relevant bodies to remain informed of their progress in relation to the Market Study. It is important to note that RMAC does not have the authority to direct our members, other special interest stakeholders, industry corporations and relevant state and territory governments. We trust that this correspondence satisfies the ACCC’s concerns that our industry takes evidence-based competition issues within our supply chain very seriously, and are working, where practicable, to overcome to address these economic and reputational concerns flagged by the Market Study. We thank the ACCC for the extension provided in providing this Update. Please do not hesitate to contact RMAC Chief Executive Officer Anna Campbell on anna@rmac.com.au or 0448 692 245 should you require further information.

Yours faithfully,

Don Mackay RMAC Independent Chair

RED MEAT ADVISORY COUNCIL Locked Bag 9 Kingston ACT 2604

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In Progress | Awaiting further advice from the ACCC or AGMIN | Disagree |

Market Study Status Recommendations “At A Glance” # Recommendation Status Key Update

R1 Price grids should be made publicly

available

Awaiting further advice from ACCC on this

R2 Price grids should be easy to interpret and compare

[Buyers, agents and producer representative bodies (led by the Cattle Council) should expand their engagement with producers to enhance industry understanding of price grids and their interpretation]

Key activities are ongoing

R3 Price grids should be easy to interpret and compare

[All buyers should simplify their price grids where possible]

Consideration of this remains underway given the individualities of grids

R4 Improvements are needed to market reporting

MLA continues to improve market reporting within its remit

R5 Additional market reporting is needed

MLA continues to improve market reporting within its remit

R6 Objective carcase measurement should be prioritised

This is an existing agreed to priority under the Meat Industry Strategic Plan 2020

R7 Objective carcase measurement data should be shared

This is an existing agreed to priority under the Meat Industry Strategic Plan 2020

R8 A uniform dispute resolution system should be developed

RMAC has commenced scoping work for FY 2018 – 2019

R9 Carcase grading audits should be strengthened

Whilst best refered to Aus-Meat, a range of activities are underway

R10 Carcase feedback and producer education should be clearer

Dealt with through an industry up-and-down chain data sharing strategy as part of OCM roll out

R11 Saleyard buyer register should be developed ACCC should strongly consider the removal of this recommendation

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R12 More detailed reporting of saleyard purchases

If the cost-benefit and willingness of market particpants exists this direction should be provided by levy payers for MLA to progress this

R13 Terms of sales at auctions should be displayed

Existing industry practise

R14 Livestock agent licensing should be consistent across all states

Standing policy of RMAC and has been referred to AGMIN for consideration

R15 The RMAC to drive implementation of recommendations

RMAC agreed to in August 2017 to provide an annual status report as opposed to direct implementation

RMAC has mapped out the key stakeholder engagement and formal referrals made by the ACCC to the Australian red meat and livestock industry relating to the Market Study subsequent to March 2017.

1 Received formal written referral of report/ implementation from the ACCC 2 Received formal written request for consultation update from the ACCC

Stakeholders engaged by the ACCC “At A Glance”

Key

Yes No Unknown

Stakeholder March 20171 January 20182

Direct (did these parties received any formal contact from the ACCC) AGMIN AUS-MEAT Cattle Council (CCA) Meat & Livestock Australia (MLA) Red Meat Advisory Council (RMAC) *verbal Indirect (did these parties receive any formal contact from the ACCC) Australian Livestock Exporters Council (ALEC) Australian Livestock & Property Agents Association (ALPA) Australian Lot Feeders Association (ALFA) Australian Meat Industry Council (AMIC) Australian Meat Processing Corporation (AMPC) LiveCorp Department of Agriculture & Water Resources JBS Sheep Producers Australia Teys Australia

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DETAILED RESPONSE TO RECOMMENDATIONS # Recommendation Status Key Updates R1 Price grids should be made

publicly available

RMAC has asked the ACCC for further detail on the evidence base behind this recommendation and the competition policy framework that necessitates this reform and is waiting on further detail (February 2018).

RMAC has undertaken to understand the concerns in relation to this with leading Australian food manufacturers who have highlighted the following key unaddressed concerns:

- Legal implications in terms of price signalling (amongst others) under the ACCC’s own act - The individuality of grids does not lend itself to a blanket approach for publication - Not all sales are based on the distribution of grids but rather through an existing commercial arrangement - Grids are not offers but are indicators - Publication of grids – given the scale and quantum in which they exist Australia wide – could lead to

confusion - The impacts this level of visibility may have on our industry’s international competitiveness

Given the range of legalities and practicalities identified it is important the ACCC provides a clear rationale and evidence base in order to fully address the concerns raised by the Australian and cattle and beef industry.

Current industry practise and feedback is that:

- Grids are widely available to sellers or potential sellers of cattle as standard operating practice - Marketing of cattle – as is the case with the sale of land or other agricultural assets or infrastructure – is the

responsibility of the vendor - There has not been an influx of the member concerns on the need for widespread publication of grids

through the RMAC partner network. It is unclear why such a broad inconsistency exists with Market Study findings

- There are a range of products that have been developed by the production community as value adds to the marketing of cattle, for example Cattle Facts Market Intelligence

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- The role of an agent is a paid market consultant to provide this analysis which is generally commission based. This service is readily available to market participants of any size

Given the above, further information is required prior to this recommendation being further considered by industry. We look forward to receiving this from the ACCC and thank them for their engagement on this Recommendation to date.

R2 Price grids should be easy to interpret and compare.

[Buyers, agents and producer representative bodies (led by the Cattle Council) should expand their engagement with producers to enhance industry understanding of price grids and their interpretation].

RMAC understands that both AMIC and CCA are supportive of additional capability building being provided to the production community; and CCA has scoped out a series of webinars commencing in 2018 – 2019 that will be ongoing industry resources to better understand grid products and pricing based on northern, western and southern markets. This recommendation is therefore considered to be in progress.

R3 Price grids should be easy to interpret and compare

[All buyers should simplify their price grids, where possible, to ensure they are easy to interpret and compare].

As the ACCC is aware, there are many different grids issued for many different products. Consolidation of grids would represent a major industry project. In the spirit of seriously considering the recommendations of the ACCC, RMAC would be supportive of an industry funded audit of all price grids available over a single period and the range of product it supports as an initial first step. This would be a matter for the relevant RMAC members in consultation with key industry service providers.

Consideration of this remains underway pending an agreed pathway forward by industry and this recommendation is therefore considered to be in progress.

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R4 Improvements are needed to market reporting.

RMAC commends the work of MLA in continuing to improve its market information services within the gamut of its responsibilities and the powers afforded to it. MLA have provided detailed information to the ACCC on this matter.

This includes but is not limited to:

- In response to the ACCC’s interim recommendations in 2016, MLA implemented enhancements to its market information services and the NLRS.

- All of the enhancements have been captured in the launch of the new Prices and Markets section of the new MyMLA website. This tool offers a significant increase in the amount of data available to the Red Meat industry plus, offers a variety of tools for improving the ease of use of the data. These address recommendation 4 in the ACCC final report (March 2017).

- As part of the development of the new Prices and Markets portal, MLA have developed a tool to improve the efficiency and amount of data collected from processors. MLA sent all of their current over-the-hook (OTH) price providers (46 processors) a letter (September 2017) seeking interest in working on a pilot. This remains a work in progress this year.

RMAC further understands that MLA have written to the ACCC (August 2018) highlighting some key limitations to the ACCC led recommendations to achieving this.

The Australian cattle production community has also been presented with anecdotal evidence that confirms the public reporting of domestic industry production data is already being utilised by trade partners as a price/demand indicator to distort international prices. Industry must carefully consider the ramifications of increasing public reporting and the negative affects this will have on our $18 billion dollar trade and the production community in particular. Given the above, this recommendation is considered to be in progress.

R5 Additional market reporting is needed.

RMAC understands and supports MLA in continuing to improve its market information services within the gamut of its responsibilities and the powers afforded to it. As per above, a range of reforms have taken place; and MLA have provided detailed information on their broad range of work being undertaken to the ACCC. RMAC have requested that the ACCC provide comparative examples of other sectors where this level of price

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reporting has provided a more competitive environment across the chain. Compiling this data which would represent a major industry project; and it is suggested that this is done on a cost-benefit analysis by all parties throughout the supply chain. AMIC and CCA are supportive of exploring this further on a voluntary basis; but recognise the likely impracticalities (i.e. ability to generate this data) of this level of reporting.

Given the above, this recommendation is considered to be in progress and RMAC looks forward to receiving additional details from the ACCC on this.

R6 Objective carcase measurement should be prioritised.

An industry-led Objective Measurement, Adoption and Commercialisation Committee (OMAC) has been formed to provide strategic advice about the introduction of Objective Measurement practises throughout the supply chain. OMAC will guide the implementation of uptake of technology, ownership and dissemination of objective carcase measurement data. RMAC understands MLA have provided a detailed summary of key actions taken to date by their organisation.

It is unclear how great an understanding the ACCC have of the significance of introducing this technology throughout the supply chain represents; and what their expectations for a suitable timeframe are for this. Objective measurement technologies remain a core imperative of the Meat Industry Strategic Plan 2020. This is a measure that was to be taken by the industry irrespective of the ACCC Market Study process. Given the transformative nature of Objective Measurement technologies to the supply chain (as well as investment required), a robust dialogue and proper consideration of all issues (as was the case with the introduction of the National Livestock Identification System, NLIS) is considered at once appropriate and important.

Given the above, this recommendation is considered to be in progress.

R7 Objective carcase measurement data should be shared.

A priority for RMAC in 2018 through our policy statement Feeding Our Nation is ‘innovation in data’; and one key action arising out of this is for the OMAC Committee to develop an up and down chain data sharing strategy within the perimeters of the law. This will include a clear and available set of business rules and appropriate governance structure as is the case with

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NLIS. The red meat industry has a long history in delivering reforms of this kind and will continue to work through the range of matters to be considered.

Further information can be found at: http://rmac.com.au/policy-leadership/feeding-our-nation-2018/ This recommendation is considered to be in progress as existing industry work.

R8 A uniform dispute resolution system should be developed

RMAC has commenced scoping work for FY 2018 – 2019 for the delivery of a uniform dispute resolution on a cost recovery basis by an appropriate third party and expert industry panel. RMAC recognises the potential confidence such a program may provide the marketplace and have undertaken to deliver this in a responsible manner.

RMAC has requested the ACCC provide data from their Hotline in order to understand likely volumes of such a process. RMAC also notes a range of post farm gate businesses have dispute resolution systems in place which are avenues already available to buyers and sellers of cattle in the chain; and understands there is in general limited uptake of these services.

This recommendation is therefore considered to be in progress.

R9 Carcase grading audits should be strengthened

RMAC understands that AUS-MEAT were not offered the opportunity to participate in this Market Study update process and therefore requests the ACCC engages them accordingly. RMAC continues to support AUS-MEAT in its various roles and services. RMAC is aware AUS-MEAT throughout 2017 undertook to improve producer understanding of the information made available to them from the processing sector. These workshops have been well attended and are likely to be continued throughout 2018 and as required. AUS-MEAT also has a suite of comprehensive awareness information on their website available to buyers or sellers of cattle: https://www.ausmeat.com.au/links-tools/aus-meat-producer-resourceS/

RMAC encourages AUS-MEAT to continue these activities, but notes that not all manufacturers are AUS-MEAT participants and there should be no move to make this mandatory.

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This recommendation is therefore considered to be in progress.

R10 Carcase feedback and producer education should be clearer

RMAC is of the view that this would be addressed by a data sharing strategy that industry was committed to achieving independent of the Market Study. CCA has engaged with industry media outlets to organise a series of webinars to deliver extension around interpretation of grids and carcase feedback. These will be delivered throughout 2018 and, if effective, will form part of CCA’s ongoing extension strategy to producers. These webinars will be delivered by CCA members from a variety of production systems and locations, providing insight not only into how to interpret grids and carcase information, but how to utilise this information to make informed business decisions. AMIC have also pointed out that Meat Standards Australia (MSA) is a likely avenue where data sharing exists through my MSA and this system could be enhanced. RMAC is supportive of this approach that builds on an industry led, world class system.

This recommendation is therefore considered to be in progress.

R11 Saleyard buyer register should be developed.

ACCC should strongly consider the removal of this recommendation and appreciates the ACCCs acknowledgement of the complications of this. This recommendation is not supported by industry and has not been progressed further in line with our contribution to the Interim Report.

R12 More detailed reporting of saleyard purchases.

If the cost-benefit and willingness of market participants exists this direction should be provided by levy payers for MLA to progress this.

Cost benefits by investors (shared by producers and other players in the supply chain) are the ultimate determinants of industry funded market reporting and RMACs position remains that “This recommendation should be investigated to see whether there is a cost benefit to expanding the existing scope of work being undertaken by Australian red meat and livestock industry corporations by their levy investors.”

It is unclear how recommending a feasibility study is providing resistance to such a recommendation and asks that

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the ACCC amend this accordingly in their Market Study update.

Given this remains under consideration by all parties – acknowledging the broad suite of initial impracticalities – this recommendation is considered to be in progress.

R13 Terms of sales at auctions should be displayed.

Our position stands.

RMAC have encouraged ALPA to undertake a communication strategy in relation to the Terms and Conditions (T&Cs); and have offered to review the T&Cs in consultation with key stakeholders including the ACCC (no response has been received as yet on this from the ACCC). It is important to note that ALPA has national terms and conditions, the ALPA Livestock Auction Terms and Conditions of Sale and it is law in some states that the T&Cs are publicly displayed. RMAC is aware that ALPA strongly recommends to all members that these T&Cs be prominently displayed at all sale venues. The current version is February 2017.

This recommendation is considered to be in progress.

R14 Livestock agent licensing should be consistent across all states.

RMAC wrote to the Council of Australian Governments Agricultural Ministers Forum (AGMIN) in advance of their last meeting in July 2017 on this matter. No response has been received from the AGMIN secretariat and it is unknown whether this was considered as part of the agenda. There is great value add to a system of harmonisation for a range of regulatory matters for Australian red meat businesses and RMAC would welcome a successful model for achieving this.

Given the above, this recommendation is pending further progression subject to AGMIN consideration.

R15 The RMAC to drive implementation of recommendations

RMAC recognises that role of the ACCC as a competition and consumer watchdog and is respectful of that. As identified above, a suite of industry-led reform has been undertaken since the release of the Market Study in March 2017 and this work will continue into the next financial year 2018 – 2019. Much of the information received from the ACCC to RMAC with the exception of meetings in August 2017 and February 2018 has been relayed to RMAC via the media or through the Senate Standing Committee process. As a general comment, it is disappointing additional regulation has been proposed via the media and alluded to in the

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latest request for information. RMAC have written to the ACCC seeking clarity on this but have not received a response (Attachment 2).

RMAC has attempted to work with the ACCC on a range of measures and have outlined these below in line with meaningful supply chain improvement in line with its roles and responsibilities:

- Understanding the evidence base behind the identified Recommendations throughout – RMAC are still awaiting a response on this.

- RMAC offered to host a Red Meat Competition Forum featuring key industry players and the ACCC prior to every AGMIN in order to connect industry with competition authorities and decision makers in real time rather than through a Market Study process; a communique could then be issued on the same. The ACCC have not acknowledged or responded to this offer.

- In line with their leadership role, RMAC agreed to provide updates to the ACCC in relation to industry activity on the Study and continue to engage with the Agricultural Unit. RMAC will not however “monitor” or “oversee” this process. ACCC have not acknowledged or responded to this offer which was made in August 2017 (Attachment 2).

- It is the view of RMAC the ACCC would benefit from increased agribusiness expertise and also grassroots communications support to provide cut through on many of the matters highlighted in the above. RMAC will advocate for increased financial and technical expertise in the ACCC Agricultural Unit under the Agricultural Competitiveness White Paper to empower it as the competition watchdog for the agrifood sector. RMAC have included information on this in our 2018 – 2019 Budget Submission. RMAC commend the establishment of the ACCC Agricultural Hotline.

- RMAC also provided a standing offer to facilitate a review of the detail and distribution of the Terms and Conditions in liaison with key stakeholders. ACCC have not responded or acknowledged to this offer.

- RMAC, together with our members, are opposed to additional supply chain regulation in line with the very same mandate in the Federal Governments Agricultural Competitiveness White Paper (which established the Agricultural Unit). RMAC have reached out to the responsible Ministers on this matter.

- It remains unclear what competition benefits “furthering … recommendations” would provide back to Australian red meat and livestock businesses and the broader Australian community and how this could be justified through a legislative consultation process. Overall it would seem to be counterintuitive to the reform agenda set out in the Agricultural Competitiveness White Paper (which established the ACCC Agricultural Unit itself).

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**ENDS**

- In the interests of best practise public policy, it would also be helpful if the Market Study, prior to publication was subject to a rigorous fact checking process external to consultation rounds and internal drafting.

- Review of the Market Study should also be undertaken by the ACCC-appointed Agriculture Consultative Committee. It is possible some of the lack of understanding of market dynamics outlined in the Recommendations may have been avoided had this level of check-and-balance been applied and that Recommendations could be further advanced by this point.

In any case, RMAC have seriously reflected and considered each recommendation and remain committed to working with the ACCC as outlined above; and with our own industry on critical competition issues. We thank the ACCC for the opportunity to contribute and for the extension afforded to RMAC.

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29 August 2017 Mr Rod Sims Chair, Australian Competition and Consumer Commission Level 20, 175 Pitt St Sydney NSW 2000 Via email: rod.sims@accc.gov.au Dear Mr Sims, RE: ACCC CATTLE & BEEF MARKET STUDY – FINAL REPORT As you may be aware, the Red Meat Advisory Council (RMAC) is an inclusive forum that is working strategically to unlock a seven-billion-dollar growth opportunity through the Meat Industry Strategic Plan 2020.

We thank you and your team for your consideration of the Australian beef and cattle value chain through the Cattle & Beef Market Study – Final Report.

RMAC, together with our members and the Australian Livestock and Property Agents Association, met with the ACCC team in relation to this on Friday 25 August 2017.

In this meeting:

• RMAC offered to host a Red Meat Competition Forum featuring key industry players and the ACCC prior to every AGMIN in order to connect industry with competition authorities and decision makers in real time rather than through a Market Study process. A communique could then be issued to the red meat agribusiness community in relation to the same.

• In line with their leadership role, RMAC will provide updates to the ACCC in relation to industry activity on the Study and continue to engage with the Agricultural Unit. RMAC will not however “monitor” or “oversee” this process.

• RMAC will advocate for increased financial and technical expertise in the ACCC Agricultural Unit under the Agricultural Competitiveness White Paper to empower it as the competition watchdog for the agrifood sector.

• RMAC also provided a standing offer to facilitate a review of the detail and distribution of the Terms and Conditions in partnership with the ACCC, the Australian Meat Industry Council and ALPA.

We respect the role of the ACCC in their role as Australia’s competition and fair-trading watchdog, and support their new endeavours as part of the newly formed agricultural unit. We trust the above will be of meaningful assistance to your team and look forward to hearing from you.

In addition, RMAC seeks to address the concerns and recommendations raised by the ACCCs Cattle & Beef Market Study – Final Report in an open and transparent manner.

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For the benefit of industry and decision makers, we have today published our position on the Market Study on our website: http://rmac.com.au/our-policy/red-meat-competition-policy/.

Please do not hesitate to contact RMAC Chief Executive Officer Anna Campbell on 0448 692 245 or anna@rmac.com.au should you require any further information. Yours faithfully

Don Mackay Independent Chair Red Meat Advisory Council

CC: Rebecca Johnson, Senior Advisor, Minister for Agriculture CC: Hon Barnaby Joyce, Deputy Prime Minister, Minister for Agriculture CC: Mick Keogh, Agricultural Commissioner

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5 October 2017 Mr Rod Sims Chair, Australian Competition and Consumer Commission Level 20, 175 Pitt St Sydney NSW 2000 Via email: rod.sims@accc.gov.au Dear Mr Sims, RE: ACCC CATTLE & BEEF MARKET STUDY – MEDIA REPORTS Further to my correspondence of 29 August 2017, I write to express our disappointment in relation to comments made by the ACCC in media in relation to ‘ACCC threatens to advocate beef cattle market “legislative change”’ (Source: The Rural, 7 September 2017).

RMAC met with the ACCC team on Friday 25 August 2017. At no point was additional regulation discussed. RMAC, together with our members, are opposed to additional supply chain regulation in line with the very same mandate in the Federal Governments Agricultural Competitiveness White Paper.

It is unclear what competition benefits this would provide back to Australian red meat and livestock businesses and the broader Australian community and how this could be justified through a legislative consultation process.

We seek clarity in relation to this matter; and also follow up on the key initiatives we offered to the ACCC on the August 25 meeting as per previous correspondence.

Please do not hesitate to contact RMAC Chief Executive Officer Anna Campbell on 0448 692 245 or anna@rmac.com.au should you require any further information.

Yours faithfully

Don Mackay Independent Chair Red Meat Advisory Council