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Rural and Regional Affairs and Transport Legislation Committee - 26/05/2015 - Estimates - AGRICULTURE PORTFOLIO - Australian Meat Processor Corporation

Australian Meat Processor Corporation

[09:59]

CHAIR: Welcome. If you could give your name rank and serial number when you are given the first question. Do you want to make an opening statement?

Mr Lind : No, thank you.

CHAIR: Where have you come from this morning?

Mr Lind : We came from Sydney, but unfortunately the flight was delayed.

CHAIR: That can happen.

Mr Lind : It can happen and it does happen.

CHAIR: Senator Sterle?

Senator STERLE: Senator Bullock actually has questions.

CHAIR: Are you going to declare an interest?

Senator BULLOCK: This is a vague reference to my name with which Senator Heffernan has no end of fun. We heard just a while ago, while you were probably in the taxi coming from the airport, from the MLA on their new True Aussie brand. Could you tell us how you are working with the MLA on that, because I think you are joint owners on that—no, with AusMeat you are joint owners. What are you doing with the MLA on this True Aussie?

Mr Lind : In the relationship with MLA, we are a funder into the joint program, which includes marketing, market access and food safety and product integrity. The carriage of marketing activities in both domestic and international markets is the responsibility of MLA. They have been the driving force behind the True Aussie branding. We certainly contribute to that initiative through the joint program, but we do not have a significant amount of activity within AMPC associated with marketing. Our prime focus within AMPC is research, development and extension activities for the processing sector.

Senator BULLOCK: Is part of your funding directed towards marketing, or is it all R&D?

Mr Lind : Not our operational function. We do invest through the joint program and support marketing activities. Our primary focus in investment is actually market access. Our members have told us repeatedly that market access is the No. 1 issue as far as they are concerned, and so we continue to focus on investing in that particular area, as far as MLA operations are concerned, and also continue to support areas like integrity systems and food safety, which underpin a lot of the market access activities which are currently underway.

Senator BULLOCK: Now that you have raised that, how is meat faring through our free trade agreements, with particular emphasis on the new ones?

Mr Lind : There is an expectation, of course, that the free trade agreements are going to improve market opportunities for the industry, and I guess that remains to be seen. But the opportunities look good. We have seen some significant increases in export over the last couple of years, and hopefully that will continue with the constraints that currently exist in terms of supply, because clearly, post the drought, the supply of animals will start to decline. We expect to see that certainly this financial year and into the new financial year.

Senator BULLOCK: I am a little bit surprised, if you are interested in market access and expanding the penetration of Australian meat into overseas markets, that you are not really intimately involved in this True Aussie stuff, because that would seem to be the way to go.

Mr Lind : We are absolutely not. As I said before, MLA have carriage of that activity. They have the resources and the funding to implement the generic branding—which is the True Aussie brand. Our members themselves, of course, are branding their particular products in their own way in international markets, and that is a separate exercise that they conduct on behalf of their own companies. But the True Aussie initiative is something that is being driven by MLA.

CHAIR: Can I just interrupt. It is bleedingly bloody obvious that some of your membership have a conflict of interest when it comes to branded Aussie beef. I note Swifts and their recent—I have an email trail on that too—interconnection with China. Obviously they are not going to want Aussie beef branded if they are trying to do a deal back home with the Brazilian beef, would they? I can give you the detail, if you like, but it is a serious conflict of interest.

Mr Lind : I am not aware of that.

Senator BULLOCK: I think there was an invitation to make him aware of it.

CHAIR: I will get to the trim in a minute—bloody rogues.

Senator BULLOCK: I am going to ask you a broad question; knock yourself out with the answer. Give us a run-down on your R&D and where you are working in all the different areas of research and development.

Mr Lind : I mentioned that we have a program in the joint area where we invest with both MLA and ourselves. That covers, as I have already indicated, market access, marketing, food safety and integrity systems. But our prime focus in AMPC is our core program, which is our industry program for meat processors. Within that we have some subprograms which include what we call technology and processing, which is automation and sensing systems—you may be aware that there is a significant and increasing amount of automation in the industry to enable improved quality and to reduce costs; environmental sustainability, which is clearly an ongoing issue and something that we have to continue to pay attention to; a program which looks at food safety, product integrity and meat science within AMPC, but they tend to be interventions which occur on the plant and not outside the processing part of the supply chain; and a capability program, which includes both vocational training and also the development of scientists and technologists. As the industry develops, there is a growing demand for process engineers, software engineers and electrical engineers, and so the skill sets that are required by this industry are progressively increasing, and we believe that it is our responsibility to help provide a supply of those professionals for the future. The most recent program that we have introduced is one we call industry improvement and economic analysis, which takes a holistic view of the whole industry to see if we can develop models which are going to benefit the whole of the industry in an economic and systems sense. Those are the core activities within the main meat processing program.

The third area that we invest in is one we call the Plant Initiated Projects Program. This is a program where we allow our members to utilize 25 per cent of their levies if they are prepared to match that funding with their own submission. That is then matched by the government. Most of the projects which come to us for funding, using PIPs—we call them PIPs: plant initiated projects—are initiated through a program within MLA called the Collaborative Innovation Strategies Program. The whole rationale behind this program is to enable new technologies which are developed in the lab or an engineering workshop—

CHAIR: Or a new chain.

Mr Lind : to be transferred to a commercial planning environment.

CHAIR: You agree there has been a new chain put up in one abattoir under a research grant?

Mr Lind : There have been some new investments in automation as a result of—

CHAIR: Mate, the old chain was worn out. Years ago they got a grant to put up a new chain. They put up a new chain. It did not work and they had to pull it down.

Mr Lind : I am afraid I am not aware of that.

CHAIR: How much do you get paid?

Mr Lind : Is that something—

CHAIR: I am entitled to ask it. You do not have to answer; we will find out by other means.

Mr Lind : I get paid $200,000 a year.

CHAIR: Righto. There you go. Perhaps we could slip you over to the GRDC. The guy there gets $500,000.

Senator STERLE: He has fewer people.

CHAIR: How many people do you have in your organisation?

Mr Lind : We have 11 full-time staff.

Senator STERLE: GRDC has 79.

CHAIR: Anyhow, back to you.

Senator BULLOCK: I enjoy you when you get going on the subject, Chair. If you want to keep going, you can.

CHAIR: I want to get to trim if I can.

Senator BULLOCK: All right. Finally, what are the impacts of the budget on you? Is it a good budget? Is it where you expected to be? Have there been any adverse impacts of the budget.

Mr Lind : I think for us, to the extent that I can make a comment on that, we would say it has been fairly neutral. The weakening of the Australian dollar—not that the exchange rate relates to the budget—is a clear benefit to our members and will continue to support the fact that we are an export-driven industry; 70 per cent of what we now manufacture is exported. There are a wide range of factors that contribute to the profitability of the sector, but certainly the extent to which the Australian dollar is either stronger or weaker has a major impact.

Senator BULLOCK: One of the factors that contributes to farmer's profitability is the level of the trim, and I am sure that the chair is keen to pursue that topic now.

CHAIR: Since the last estimates, not last year, a feedlot grower who wants to remain anonymous graded a lot of cattle. It is well known the variation in the trim—and I will not go through all the abattoirs—but there is about four per cent variation. Your guys are in this up to their necks, especially the big fellas. This guy graded them, weighed them and split them just to see what would happen with the trim, and there was $67 variation in the price because of the trim—a bit over four per cent.

The MLA has a role in this. But one of the guys that supervises the trim in the abattoir had that much pressure put on him by the owner of the abattoir—one of your guys—that he told them to stick it and left, because it was so bloody obvious they were doing the growers over. I want to know what you are going to do about evening up the trim. It is a bloody joke.

Mr Lind : As you know, our role is as a research, development and extension corporation.

CHAIR: And part of that is the trim. The yield is the body.

Mr Lind : We absolutely invest to extract the maximum value from the carcass. There is no doubt about that.

CHAIR: Yes, but who for? I absolutely agree with that, but at the moment the maximum yield goes not to the grower, because he does not get paid for the trim; the processor does. I mean it is a bloody joke. It is a bit like the Bishop of Bendigo turning a blind eye to all the crap that has gone on down there. You blokes turn a blind eye to it, and we are sick of it. So I want to know what you are going to do about it.

Mr Lind : As I say, as a research corporation it is difficult for me to comment on individual instances that may occur in a particular processing plant. But I can say that the processors certainly do invite producers to come to their plants to inspect the way the plant operates.. Hopefully, that will give some—

CHAIR: I realise it is not all in your court, AMIC and others, but do you really think that a cattle grower who sends in 30 calves to the abattoir is going to know when he has been done over with the trim and it all happens like that? Give me a break.

Senator STERLE: Could I assist, if I may, and I know how serious this matter is. It something you have never been quiet on, but we do have a Senate inquiry coming and, with the greatest respect—and I think Mr Lind is big enough to look after himself—but I think these questions should be posed to other bodies within the industry.

CHAIR: Yes, I accept that. I just thought—

Senator STERLE: Without letting them—

CHAIR: I would give you a cheerio call today. I am a naturally grumpy old so-and-so.

Senator STERLE: Other people have described you as otherwise.

Mr Glyde : It would be useful and, as Mr Lind has said, they are a research and development corporation but, if you have some specific allegations that can be provided, then perhaps—

CHAIR: The difficulty with this is that it is a bit like the ACCC and some of the things I have had to deal with there. If you have got a contract with Woolies and Coles, the intimidation factor of being done over by the processor is what the problem is. They would like to remain anonymous as would the meat inspector guy that walked out of the plant.

Mr Glyde : I understand that. It is hard to act on when we do not have the information.

CHAIR: Yes, okay. Further questions?

Senator STERLE: I have none.

CHAIR: You have done good.

Mr Lind : Thank you.

Senator EDWARDS: With that answer, you might have just said, 'it’s a matter of public record' to him.

CHAIR: You didn't have to answer that. It is just a given. I will not go through this. We have had enough.

Senator STERLE: Why don’t we move on?

CHAIR: Yes, we will. Thank you.