Red meat industry calls for $110m in red-tape relief, warns rivals are eating into key markets

Article by Sarah-Jane Tasker, courtesy of The Australian, March 27th.

Australia’s red meat industry is calling for a $110 million relief from government, warning that while local producers deal with the impacts of catastrophic droughts and floods, overseas competitors are pushing into its key markets.

The Australian Meat Industry Council of Australia today released a report that reveals that federal and state government regulation was estimated to be 54 per cent of total operating costs, excluding livestock purchases. That regulation cost is more than twice that of the USA and Argentina and more than three times that of Brazil.

The industry wants relief from $110m in export certification charges, which it said was the largest component of regulation costs.

AMIC said this relief could help the local industry compete on a more level footing with the USA, Argentina, Brazil and New Zealand. It added that the overseas competitors were working hard to increase access to Australia’s key overseas markets at a time when Australia’s product had been impacted by catastrophic droughts and floods.

Patrick Hutchinson, chief executive of AMIC, said Australian processors, and the wider red meat supply chain, were battling unsustainable cost pressures while continuing to remain competitive internationally. But he said the new report warned that they were fighting a losing battle, particularly as one of the biggest costs they faced was a result of excessive government red tape.

The report released today, Cost to Operate, found that one of the key contributing expenses was offshore inspections fees, adding around $110m in costs each year. The US and Brazilian governments offer support to their processors, covering around 95 per cent of these fees, while Australian processors fund the full amount.

“We are asking for relief in export certification charges, which is one of the largest cost contributors to why Australian red meat is becoming uncompetitive in the global market,” Mr Hutchinson said.

“The red meat industry is dependent on global trade for its viability. Streamlining the major federal and state regulatory and red-tape burden would be a good first step and will allow the industry to compete on a level footing with other red meat producing countries.”

The AMIC chief added that as demand for Australia’s “clean and green” product increased, particularly from Asia, the industry was saddled with the burden of being the highest-cost red meat processing nation in the world.

The industry body highlighted that the red meat “farmgate to plate” supply chain was the country’s largest agricultural exporter with more than 70 per cent of red meat and co-products produced sold overseas in 124 countries. It contributes more than $21 billion in value added to the economy.

AMIC plans to present its cost report to the major political parties from this week, with a call for bipartisan solutions.

It will be highlighted to the political parties that Australia’s government-regulated inspection and certification costs were 3.4 times higher than the USA and 4.5 times higher than Argentina. In Brazil these costs are fully funded by the federal government.

It will also be noted that the average cost per head, excluding livestock purchases, incurred in processing beef in Australia are 24 per cent higher than in the USA, 75 per cent more than Argentina and in excess of 100 per cent more than in Brazil.

AMIC said that Australian processors also faced unreasonably high energy costs and were paying 104 per cent more than North American processors for utilities, 53 per cent more than the Argentinians, 20 per cent more than New Zealanders and 0.3 per cent more than the Brazilians.

“The unfortunate (energy) policy paralysis is resulting in increased cost flows across the full supply chain as the industry is one of the biggest users of energy due to its refrigeration requirements,” Mr Hutchinson said.

“We all want farmers to thrive but the reality is that a weakened supply chain that is hindered from competing globally will be the next and long-lasting crisis for farmers if urgent action isn’t taken.”