Government Intervention in Australias Meat Industry - Case Study Example

Government Intervention in Australia’s Meat Industry Introduction Australia is at the forefront of red meat and livestock exports and an expert producer of meat – cattle, sheep and goats – with an average per person per year domestic consumption of red meat standing at 46.5kg. This includes 2kg of mutton, 10.8 of lamb, and 33.7kg of beef. It is estimated that Australia’s sheepmeat and off-farm beef industry is pegged at a whopping A$16.1 billion. Even though there has been a more competitive industry scenario in the recent years on account of several factors as agricultural land use changes, drought, and international fibre market, the livestock inventory stands at an impressive 72.7 million head; 27.9 million head for beef cattle herd size, dairy cattle 2.6, and goat at 3 million. Of the all farm cattle activity, major share goes to beef cattle commanding 44% of the production. This beef segment has around 121,000 workers; and sheep 173,965 workers. Australians love lamb as no one else does in the world; dubbed as world’s biggest lamb consumers around 52% of all meat buyers prefer to buy lamb. Despite that the country is left with a lot to export – the country exported 79% of its mutton and 45% of its lamb production in 2009-10. The US buys the most (MLA Meat & Livestock Australia, Retrieved from http://www.mla.com.au/) The meat industry in Australia has become reliant in the last two decades even though there have been some trade barriers like EU import quotas on beef and sheep, and imported beef tariffs in Japan. While major meat exports from Australia go to developed nations; developing ones are fast becoming a market to bank on (Fletcher, Buetre and Morey, 2009). Government’s intervention The meat industry in Australia is regulated, though not fully controlled, by the government’s Department of Agriculture Fisheries and Forestry. Considered as a Commonwealth agency, it is responsible for production and processing policy, and is engaged in integrated policy development, stakeholder engagement, innovation, and pricing across the industry. The industry shoulders it’s own responsibility and has to decide the future and strategic developments on its own; however Australian Government intervenes when it comes to providing research expertise, funding for development, collection of levies and deliberating on management issues that might impact the nation nationally. The development opportunities in the industry are explored jointly by the government and the industry and government facilitates business dialogues and multilateral negotiations with overseas importers or governments (Australian Government: Department of Agriculture, Fisheries and Forestory, Retrieved from http://www.daff.gov.au/agriculture-food/meat-wool-dairy/red-meat-livestock/facts) Regulatory framework and the structure Australian Meat and Live-stock Industry Act 1997 outlines the industry’s regulatory framework and structural, governed by a Memorandum of Understanding (MOU) the signatories of which were the Australian Government, Sheepmeat Council of Australia (SCA), Cattle Council of Australia (CCA), Australian Livestock Exporters Council (ALEC), Australian Meat Processor Corporation (AMPC), Meat & Livestock Australia Ltd (MLA), Australian Meat Industry Council (AMIC), Australian Livestock Export Corporation Ltd (LiveCorp), and Australian Lot Feeders’ Association (ALFA). The act gave way to some statutory marketing arrangements vis-à-vis export and domestic use of lamb following the setting up of a statutory authority known as WA Lamb Marketing Board (WALMB) – operational between 1972 and 1999 – with an aim to look into the price volatility that affected lamb producers seasonally. The idea was to fetch higher prices for their produce. WALMB, apart from taking up other activities, operated in order to achieve price equalization for producers to get price equivalent to domestic and export returns weighted average (Zhao, Griffith and Mullen 1996). Several studies have pointed out how Australian meat industry has attained a competitive market in the world. (Mullen, and Alston, 1994; Piggot, 1992; Wohlgenant, 1993). The MOU led to the above entities entering a regulatory partnership where each entity is assigned a specific role and responsibility, including planning, service delivery arrangements, funding, industry reserves; research and development; the Meat Industry Strategic Plan (MISP); and the schedules. In the responsibilities spanned the following heads/ functions that include Red Meat Advisory Council (RMAC), AUS-MEAT Ltd, joint and core functions, SAFEMEAT, intellectual property, and crisis and issues management. For example, RMAC, which is a single industry touch-point for the government, looks into industry’s cross-sectoral matters and policy development and implementation. Top industry councils form a conglomeration with RMAC as its members, and these are Sheepmeat Council of Australia, Cattle Council of Australia, Australian Livestock Exporters' Council, Australian Lot Feeders' Association, and Australian Meat Industry Council. RMAC is also linked to The Goat Industry Council of Australia, but the latter is not its member. Primarily, RMAC works on four agendas, which are: advise Minister industry or on cross-sectoral matters; make sure industry investments are correctly and properly managed in accordance with the government agreement, be Meat Industry Strategic Plan’s (used as a benchmark for industry programs) custodian, and be a forum to discuss issues of multi-sectoral nature among five peak industry councils (CCA, SCA, ALFA, AMIC and ALEC). The government acts as an observer at RMAC meetings. The peak bodies, on the other hand, are supposed to i) give direction, formulate policies and provide leadership, ii) give policy advice on the sector, iii) develop, in collaboration with RMAC and remaining councils, meat industry strategic plan and ensure its consistency, iv) assess industry service companies’ performance and goals achieved, and v) propose/ discuss levy motions at meetings (Red Meat Advisory Council Limited, Retrieved from http://www.rmac.com.au/about.html) Platform that works for producers, feeders, and traders, is Meat & Livestock Australia Ltd (MLA) that was established by Goat Industry Council of Australia (GICA), SCA, CCA, and ALFA. MLA, formed under Corporations Act 2001, can be termed as a service company owned by producers that delivers deliver promotional and marketing impetus, and research and development. The Australian Government doesn’t have any shareholding in it and no place in the board of directors. MLA receives funds from independent participants and statutory livestock charges, producer and processor levies. Alternately, livestock exporters and processors own Australian Livestock Export Corporation Ltd (LiveCorp) and the Australian Meat Processor Corporation (AMPC) and respectively; which operate independently but in consultation with MLA. Industry members control both LiveCorp and AMPC taking care of delivery and direction of programs that are run in the industry along with services. Slaughter houses fund AMPC by way of levies, whereas custom charges from exports fund Live Corp. Both companies are governed by Board of Directors and members who have special qualifications, and eligible for matching funding from Australian Government for research and development programs that they embark upon. AUS-MEAT Ltd, in the meanwhile, monitors standards as laid down by Australian Government for processing and producing meat. Furthermore it is responsible for audit services and training. AMPC and MLA fund AUS-MEAT Ltd. It offers these services through all sectors of meat and livestock in Australia. That is all on the commercial front. On the safety front, Australian Government works with SAFEMEAT in association with industry and State and Territory Governments. The three work in collaboration with each other in a manner that ensures the red meat produced, processed and sold is safe for consumption meeting highest hygienic standards set by the government (Animal Health Australia Annual Report, Retrieved from 2006/07http://www.animalhealthaustralia.com.au/wp-content/uploads/2011/05/AHA-Annual-Report-200607.pdf). The standards met are so high that it must not be an overstatement to say that Australia has so far escaped cattle and sheep- related epidemics as Scrapie, Bovine Spongiform Encephalopathy (BSE), and Foot and Mouth Disease (FMD). SAFEMEAT has representation from both industry and the government and ensures red meat safety right from the farm to feedlot to saleyard, transportation, processing and distribution. Innumerable number of safety measures are in place at almost every point of the supply chain that are executed by carefully designed programs till the final seal of approval by Australian Quarantine and Inspection Service (AQIS). Prior to this the safety checks are passed through rigorous standards and systems which include The Australian Standard, AQIS Health Certificate, on-plant product traceability , distribution protocols and microbial assessment and monitoring programs (SafeMeat, Retrieved from http://safemeat.org). Conclusion Government does everything possible to protect public interest in as far as production and consumption of meat is concerned; both at domestic and export level. Licensed export units cannot function until they follow Australia Standard (AS) for Hygienic Production. That is followed by another stringent measure following world’s best practice and called Transportation of Meat and Meat Products for Human Consumption (AS4696:2002). This one is ISO 9002:1994-compliant. Not only that, government’s directive to the industry is to record in National Livestock Identification System (NLIS) all Australian meat processed in the nation. On account of government interventions as these, Australian meat market has witnessed unparalled trading in the international markets and garnered for its sheepmeat and cattle products an extremely high rating and feedback. This can also be attributed to the fact that Australia has been able to save its produce from cattle diseases that have been epidemics elsewhere in the world. This has been possible on account of several bodies working scientifically and in tandem with each other to give the world the quality meat products. In all it is a case of evidence-based farming and sale. Thus far it has been a dynamic partnership between livestock industries and Australian government that has streamlined and strengthened this industry and created consumer trust within overseas and domestic meat markets. References Alston, J.M., Sexton, R.J. and M. Zhang 1996, "The effects of imperfect conditions on the size and distribution of research benefits", Conference Proceedings, Global Agricultural Science Policy for the Twenty-First Century, Invited papers, August 26-28, Melbourne, 453-488 Australian Government: Department of Agriculture, Fisheries and Forestry, Retrieved on August 04, 2001, Available from http://www.daff.gov.au/agriculture-food/meat-wool-dairy/red-meat-livestock/facts Animal Health Australia Annual Report, Retrieved on August 04, 2001, Available from 2006/07http://www.animalhealthaustralia.com.au/wp-content/uploads/2011/05/AHA-Annual-Report-200607.pdf Fletcher, S, Buetre, B and Morey, K. (June 2009). The value of the red meat industry to Australia, ABARE research report 09.13, Canberra. MLA Meat & Livestock Australia, Retrieved on August 04, 2001, Available from http://www.mla.com.au/ Mullen, J.D. and Alston, J.M. 1994. The impact on the Australian lamb industry of producing larger, leaner lamb, Review of Marketing and Agricultural Economics 62(1), 43-62. Piggot, R.R. 1992, Some old truths revisited, Australian Journal of Agricultural Economics 36(2), 117-140 Red Meat Advisory Council Limited, Retrieved on August 04, 2001, Available from http://www.rmac.com.au/about.html SafeMeat, Retrieved on August 04, 2001, Available from http://safemeat.org Wohlgenant, M.K. 1993. Distribution of gains from research and promotion in multi-stage production systems: the case of the U.S. beef and pork industries, American Journal of Agricultural Economics 75(4), 642-51. Xueyan Zhao, Garry R. Griffith and John D. Mullen. (1996). The Competitive Structure of the Australian Beef Industry: Accounting for Trade, paper presented at the 40th Annual Australian Agricultural and Resource Economics Society Conference, Melbourne. Read More