THE independent committee charged with delivering a recommendation over future expenditure on red meat marketing and promotion has adopted a 'steady as she goes' policy, finding no grounds for change from the current $5 cattle transaction levy.
The Beef Marketing Funding Committee report was chaired by Nebo, Qld, cattleman, Peter Hughes, and its findings were presented during a Meat and Livestock Australia seminar at Beef 2009 yesterday afternoon.
It suggested that the current $5 levy be retained, as a "modest but appropriate" investment in the future of the industry.
It also urged that:
• A minimum return on investment to producers be set at three times the overall marketing levy as a performance yardstick in future reviews.
• All future levy reviews be undertaken as a result of industry need, triggered by peak councils, and not according to a predetermined timeframe.
Under the current arrangement struck by the Agriculture Minister when the levy was last changed back in 2006, a sunset clause was inserted where the levy would revert to its previous level of $3.50 unless the industry sought otherwise.
Among the steering committee's general findings were that:
• The additional $1.50 marketing levy raised since 2006 has delivered five times the investment back to producers.
• The major impacts on livestock prices since 2006 have been high exchange rates and high grain prices until late 2008, and more recently, credit restrictions on global trade and the collapse in demand for co-products like hides and offal.
Without these impacts, livestock prices would be at or near record levels.
In fact, the decline in offal/hide value alone almost entirely accounted for the decline in livestock prices between 2005 and today.
The marketing component of the $5 levy was helping cushion Australian livestock prices from the worst of these negative forces.
• The industry faced mounting attacks on its environmental integrity and increased competition in major markets, as well as valuable opportunities such as its world-leading systems in product quality, safety and industry integrity, standing the industry in good stead to grow existing and new markets.
• The industry must continue to invest in a broad range of programs to consolidate its position in beef markets and address the challenges and opportunities that lie before it.
Countering increasing misinformation in the community, both overseas and within Australia, about the industry’s animal welfare integrity and environmental impact was one of a number of challenges the industry faced over the next five years, the committee suggested.
Another was competing with significant volumes of cheaper product entering overseas markets from South America and India.
The committee argued that the additional $1.50 investment in beef marketing and promotion since 2006 has been spent effectively on a range of issues:
• Helping Australia capitalise on the absence of US beef in Japan and Korea, and better positioning itself as the US returns to those markets.
• Helping maintain high levels of consumer expenditure on beef within the domestic market in the face of calls to reduce red meat consumption on environmental and health grounds.
• Establishing offices in Russia and China to support and position Australian beef in those emerging markets.
• Strengthening Australia’s livestock export market position, particularly within Indonesia, and enhancing the evolution of the Australian industry from the status of a commodity supplier to a trusted source of quality beef products.
Without current funding levels, the position of Australian beef on the global market would be compromised, necessitating cuts in some domestic consumer campaigns, scaling back international programs designed to promote Australian beef’s main points of difference, and reducing the industry’s capacity to manage and respond to issues and crises as they might arise, the committee said.
Asked about the erosion of the value of the Australian dollar in international markets and what this meant for marketing and promotion overseas, the committee suggested the current purchasing power of the levy held roughly the same value as the original $3.50 levy applied in 1998.
Looking forward, assuming an inflation rate of two percent, would require a levy rate of $5.63 in 2015 to maintain the value of the current $5 levy, it said.
Offsetting this would be forecast increases in cattle transactions and slaughter, lifting levy income at the current levy rate to $55.2m by 2014-15.
The committee pointed out that at an average steer value of $800, the current marketing component of the levy represented 0.45pc on a grassfed beast (slightly lower on grainfed), compared with 1.2pc for lamb and 1.05pc for pork.
Early grassroots producer reaction to the findings yesterday suggested most cattlemen and women supported the ‘no change’ option as the most likely and prudent way forward.
The funding committee was made up of 14 levy-payer representatives from grass and grainfed beef production and processing.
The way forward over the levy issue from here will see an opportunity for widespread industry debate, including a series of more than 20 industry forums to be convened across the nation leading up to a vote among all levy payers to be conducted in conjunction with MLA’s annual general meeting in November this year.
A strong representation from the Beef Marketing Funding Committee will attend each of the forum sessions.
MLA members will be able to vote on a resolution regarding the cattle transaction levy at the 2009 AGM, while a parallel vote will also be held for levy payers who are not members of MLA.
Email a friend