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Joint Standing Committee on Foreign Affairs, Defence and Trade
Australia’s trade and investment relationship with the United Kingdom

LEE, Ms Stella, Industry Development Manager, Australian Meat Processor Corporation

OXLEY, Mr Alan, Trade Consultant, Australian Meat Processor Corporation

RIZZO, Mr Peter, Chief Executive Officer, Australian Meat Processor Corporation


CHAIR: I welcome the representatives of the Australian Meat Processor Corporation. We have your submission; thank you very much for that. I will allow you to make a brief opening statement and then we will proceed to questions.

Mr Rizzo : An introduction is probably in order for us. We are the Australian red meat industry research and development corporation for the sector. We represent the levy paying processors in the red meat sector, which includes sheepmeat, goat meat and beef. Our responsibilities to our levy members are to provide the appropriate research in circumstances like this about industry-related issues, as well as a number of other things that we have recently highlighted in our sustainability reports for the red meat sector. We work in a complicated circumstance between the peak industry councils and ourselves. For your benefit, we are represented on the peak industry council by the Australian Meat Industry Council. We provided a submission to you with the encouragement of the Meat Industry Council in order to provide some information around the opportunity that is available to us as a result of the changes in the UK's membership in the EU.

Our industry, just for your benefit, is the largest trade-exposed manufacturing industry in Australia now, which is remarkable to understand. We represent something like 35,000 to 36,000 full-time employees processing meat, and probably a broader employee base across the supply chain of over 200,000 people.

CHAIR: Direct or indirect?

Mr Rizzo : Indirect. That would include everything outside the farm-gate activities. The farmer representation, as you will hear, typically represented by the MLA, would be to the tune of 70,000-odd beef producers and 40,000-odd lamb and sheepmeat producers.

In our context, as a country we export meat currently to 86 countries around the world, which constitutes around a $23 billion contribution to our economy. The post farm-gate job opportunities represent something like 100 different jobs in this sector, and it is deeply regional Australia focused.

Our role in circumstances like this one is to bring in export support. Obviously, trade is very important to the red meat sector. We export close to 70 per cent of our red meat production, which makes it quite a significant part of the agricultural sector. That is probably a good enough introduction without getting into too much of the minutiae.

CHAIR: What about the specifics of the UK and EU arrangements?

Mr Rizzo : Currently, we have a chilled meat export dollar value that is quite small in comparison. It is around a $200 million meat sale of chilled meat. Chilled meat, you will appreciate, is a high-value, high-quality meattypically, more primal meat cuts, as an example. There is about a $50 million contribution from frozen meat. Frozen meat is typically of a different quality in that respect. That goes to the broader EU.

The current opportunities for us in something like lamb meat particularly is about looking at the potential of the unused portion that has previously been awarded to New Zealand. The barriers to trade in the EU are well known, and with the UK exit from within that, we believe there is potential for access by the Australian red meat industry, particularly for high-quality chilled meat to that market, to increase. Thus we have made the submission, which includes some of the thoughtfulness that Alan's team has brought regarding how we might go about that.

CHAIR: Just to be clear, we heard from JBS yesterday. Are they members?

Mr Rizzo : Definitely.

CHAIR: They are?

Mr Rizzo : I will put JBS in context: they are the largest red meat producers in Australia. In fact, the four largest processors represent around 50 per cent of the total production of meat. JBS is Brazilian owned. JBS is not a member of the Australian Meat Industry Council. That is the peak body that sits as the policy group. Of course, JBS is not only a member but they have a representative on our board as well.

CHAIR: They are represented on AMIC by you?

Mr Rizzo : No.

CHAIR: I know that the web of red meat, MLA, the Cattle Council and processors can get quite tangled, but I think it is important that we understand some of that.

Mr Rizzo : The structure of the industry is that you have an overarching peak industry council called the Red Meat Advisory Council, RMAC. Within that you have the groups that include Simon Crean's ALEC, which is the Australian Livestock Exporters Council, the Australian Lot Feeders Association, ALFA, the sheep council, the Cattle Council and AMIC. They sit as the peak industry councils, and ourselves, MLA and LiveCorp are the research and development corporations.

CHAIR: How are you three, the research and development arm of industry, represented? How do you feed into that peak process?

Mr Rizzo : It is complicated.

CHAIR: Yes, but I think it is important for everybody to understand.

Mr Rizzo : AMIC as an organisation represents members that join the association by paying a membership fee that exists from a levy. They are out there adding to their membership. They have essentially three membership groups. There is a group in AMIC that is called internally the Australian processors group, which represents the Australian red meat processing sector. They have a group that represents the retailers, butcher shops and the small goods. Our association obviously concentrates more on the APC side.

Between us we work quite collaboratively with the MLA about access to government matching funds. Of course, when you think of the red meat industry and you start at the supply chain at the farm gate and perhaps finish up in London in a restaurant, or in a supermarket, for argument's sake, there are industry-related research activities that we all join together on, or on which we all, in various circumstances, may have perspectives that are a little different, because of the producer versus processor perspective. It is complicated.

CHAIR: I know. I am in the middle of an industry inquiry, as you know, with the Senate. So we have some sense of it now. We will go to questions from the deputy chair.

Mr PERRETT: Thank you for your presentation, Mr Rizzo. Did you say beef, sheep and goats?

Mr Rizzo : Goats.

Mr PERRETT: Why not kangaroos? Who looks after kangaroos?

Mr Rizzo : It is an industry that is still very much in its infancy. There were 194 registered levy payers last year. Those operators range from very large groups like the Teys-Cargill joint venture and the JBS and the Nippon Beefs all the way down to very small operations, which could process less than 80 cattle a day. In context, JBS would process more.

Mr PERRETT: On every head of cattle they slaughter they are paying a levy that pays your wages somewhere along the line?

Mr Rizzo : Yes, eventually we get paid. But the idea is that those levies are to be applied in areas of researchfrom economic research, like in this situation, in assisting in non-trade barriers, as much as FTA-type research, but also all the way through to some of the meat science activities.

Mr PERRETT: Preservation, packaging, feeding, et cetera.

Mr Rizzo : Exactly, yes.

Mr PERRETT: So who looks after kangaroos? Mr Littleproud and I have a particular interest in this.

Mr Rizzo : It is still a tiny industry in the context of the scale of the beef and cattle, the sheep and the goat side. Goat, as an example, represents a processing now of close to 500,000 head. That is a surprise. The market for goat meat is an exciting opportunity for Australia, given that we used to consider them vermin, in some contexts. They are now being farmed and processed for profit. I am sure that some of our processes for plants are also being used for processing and boning in accordance with the appropriate health and safety issues, and licensing issues that they may have as well.

Mr PERRETT: Thanks for that. We have heard evidence from a range of economists, academics, and industry groups, about whether we should be rushing into a trade agreement or delaying. The 'rushing in' group are saying that an earlier mover will bring advantage. Do you have any thoughts on that? This is through the lens of, I assume, preserving our current trade. Did you say that 70 per cent of your trade goes to the UK?

Mr Rizzo : No; 70 per cent of our total production goes to export. It can go to 86 different countries.

Mr PERRETT: Did you give a figure for what goes to the UK?

Mr Rizzo : We said that for chilled meat it is to the tune of $200 million.

Mr PERRETT: And for frozen, $50 million?

Mr Rizzo : Yes.

Mr PERRETT: It is to the UK? It is not a gateway?

Mr Rizzo : The UK is typically considered a gateway. Felixstowe is a port, and is often considered an entry into northern Europe, just by virtue of the trade routes and what have you. Those containers sometimes can be deconsolidated from a sea freight context and then transmodally transported in truck transport throughout northern Europe. So it is not that simple. We are lucky: we have clearly defined borders by the sea. Every time we export something it is in a boat, whereas in the UK it is quite complex. Our in-depth understanding of where the meat actually finishes up is something we haven't had a degree of understanding of for everybody's benefit because of the previous trade barriers. We just couldn't get access at certain times for those markets.

Mr PERRETT: Would you be doing advertising campaigns for Australian beef for that $200 million in chilled or frozen, or is that up to the Tescos or the French supermarkets or whatever?

Mr Rizzo : We are quite small by comparison to the MLA as an organisation. We have a team of about 20 people. We co-invest with the MLA. They have recently moved their head office for Europe from Brussels to the UK, because they so strongly believe that the opportunity for the UK is a bigger one for us than Europe. So they have offices in different places.

Mr PERRETT: When did they move thatbefore the Brexit vote or after?

Mr Rizzo : It has kind of been simultaneous. Their London contractorwhich cooperates with the Austrade guys, and already has deep relationships with the Sainsburys, Tescos, and Marks and Spencer peoplewill be responsible for part of the administration of our moneys, which we give to them to work in aspects of international trade and also the domestic market. Stella deals with that teamit is part of Lisa Sharp's team. There are 25 to 30 people within that team globally, I think.

Ms Lee : I think so. They have international business managers located globally.

Mr Rizzo : Singapore, for Asia.

Ms Lee : There are a few in China.

Mr Rizzo : Tokyo. Korea.

Ms Lee : The US.

Mr PERRETT: So they try to facilitate the consumers meeting the producers; that is their role?

Mr Rizzo : They try to provide insights into the market sector for that. The industryif you can see it simplisticallyis represented by the big guys, the medium-sized processors and then the tiny guys. They also have a significant collection of producer groups, which range from very large producers, like AACo, down to mum-and-dad operations that might be commercial in their orientation. Their rather involved understandings of the meat industry then come back to the producer and our processor members, as well.

Ms Lee : In essence, they provide the technical access and economic access, and they work closely with Austrade in terms of driving promotional work. They have a brand that we jointly fund. A lot of these activities we jointly fund because it is a value chain integration that, as processors, we need to support. So that will also include promotional activities. They have a brand called 'True Aussie' which they are trying to drive in the marketplace.

Mr PERRETT: Is True Aussie specific to red meat? It is not connected with

Mr Rizzo : other food products?

Mr PERRETT: Or anything Australian?

Mr Rizzo : It is red meat. It is an MLA initiative.

Mr PERRETT: What is it?

Mr Rizzo : It is a branding and an advertising they are using in markets to make sure that, when meat hits the supermarket chiller

Mr PERRETT: What is it? Is it a kangaroo?

Ms Lee : It is a picture of Australia, in multicolours.

Mr Rizzo : A multicoloured thing.

CHAIR: Could you provide that on notice?

Mr Rizzo : Yes.

Mr PERRETT: We are interested in our team Australia.

Mr Rizzo : The bilateral relationships that the trade have, if we use the JBS example, with the supermarket chains like Tesco, are very strong. Tesco has an incredible supplier approval process, if you will. The specifications for the lamb leg, as an example, that they want for the Jamie Oliver brand of ready-to-eat meals is quite a detailed context. The MLA provides an oversight role. It wouldn't be involved in those commercial things. It has moved away, as I understand from the last beef presentation it did in Brisbane, from perhaps the in-store promotion of Australian beef and more into the support of the economic macro trend type issues and where they see market niches for a high-value product. High value, high quality meat is important to Australia because we are an expensive producer. Our labour costs and the costs of production for us are significantly higher than for somewhere like the US, even. And you have the low cost of labour in countries that are big beef producers like Brazil, and more recently the entry of the Indian market as well, which is a little more fickle as far as them being into the sale markets.

Mr PERRETT: Does India produce red beef?

Mr Rizzo : Yes, believe it or notamazing, right?

Mr PERRETT: The Hindu nation?

Mr Rizzo : Yesamazing.

Mr PERRETT: I read that people have been slaughtered because they mentioned beef.

Mr Rizzo : It has a significant meat industry, and is a major exporter of bringing buffalo meat into our traditional beef markets in Indonesia. I digress.

Mr PERRETT: No; thank you.

Mr Rizzo : Those relationships are typically held and quite competitive. A Tesco will want to choose someone big and international like JBS because they can not only give them Australian meat, but they also have pork and chicken production unitsor had, until recent events. They will have multiple origins, as well. Tesco can do a lot with one of these larger organisations. So our smaller guys are finding little niches. We have some branded and strong, clever companies that are finding important niches, for example.

Mr PERRETT: Thank you very much, Mr Rizzo.

Dr McVEIGH: Thank you, Mr Rizzo, for your submission and preparation. I want to share with you some quotes I have noted in evidence we have received thus far in this inquiry about the timing of potential negotiations with the UK. They are across various sectors, and available in the evidence for everyone to study, should you be interested. From this morning: 'Australia has potentially a late mover advantage. We should, therefore, not rush into negotiations with the UK.' Another quote—'We should get on with it.' And, correct me if I am wrong, there are reflections in your submission that delays with Brexit, and now the recent UK election, 'give us all time to adjust to Brexit and to consider our position going forward'. So across various sectors we have people saying, 'Get on with it' and others saying, 'No, be one of the last in and see how it all works out.' Then there is your comment that delays with Brexit will give us time to sort out our position. Can you help us with that cross-section of advice? This committee will obviously be providing reports to the minister, and ultimately to the parliament.

Mr Rizzo : Perspectives are important. Given people's different personalities, they will express different views about how to go about something as delicate as a free trade agreement with a country. It is incredibly complex because they have not quite extracted themselves from the current circumstances they have lived in. One of the more fascinating things is that the expertise for the UK to understand free trade agreements, as we have learnt and read in the papers, will have to be re-established. I will defer to Alan on it. My perspective is that we have provided some research that suggests that being prudent and commercial in our thinking is always in our best interest. We don't have the first mover advantage, in the sense that New Zealand has had a very strong marketing position as an alternative supplier of, particularly, lamb meat in competition with the UK's own production.

We often forget that, as an agricultural producing country, UK is significant in the production of grain and meats in its own right. So the sensitivity of trade, particularly when you are bringing in potentially red meat products that are cheaper than their own production, will take time. The idea that we get on with it is consistent with the idea that we consider the various issues for us. It could be an industry for us, given the quota that is not being used now for New Zealand. They are not filling that quota. The question is: is that demand there? We think it is there. Could Australia fill that demand? What would that be worth to us? It means probably the potential of at least double the numbers we referred to in the chilled and processing plant.

So that is an economic driver for us. But the political landscape has dramatically changed since you guys even sat down to consider this as an idea. I think that is the reality that you guys live in, more than us in the commercial world. What is the right time to step into that? It is a bit trite for us to suggest, as a research and development body, that we should all get on with it, or delay it in this context. We should do it, but the timing is going to be dictated more by them than by us. That was a long-winded answer. I think we should be ready to negotiate with them should they want to consider us as an alternative. We should be providing the economic value that that provides to them as much as for us. Can they get cheaper food for their people? Is there a market demand that is not being filled to feed the people in the UK that may be replaced by perhaps arrangements that they have had with the French lamb meat industry or the German one or otherwise?

But I think it is probably a good entree for Alan, as a trade expert and being involved in these conversations more than me, because he makes some pertinent remarks in his report that might be more helpful to understand the context of those two matters.

Mr Oxley : I assume you have been through the report. I was going to give you a summary of the key factors which will affect the structure of negotiations. I am happy to pass that by if you have already digested the content of the report.

Dr McVEIGH: I have, yes.

Mr Oxley : I was an ambassador to the GATT and I have, if you like, an insider's perspective of how this process is going to run. My view is that it is important for us to be seen to be available and around. I am also, just for reference, a member of what is called the Legatum Institute Special Trade Commission, which is a free market group set up in the UK. It is working closely with the Conservative Party. They have been doing analysis for the Conservative Party to argue the case for the improvements that can be achieved by the UK as a consequence of Brexit. What is clear, if you have looked through the analysis, is the timing of restructuring, how the UK is going to participate in the negotiations with the EU and enter into its own trade agreement. That is really important. And anybody who has got an interest in this process should be at least observing it or ensuring that the interest is reflected in it.

There is considerable uncertainty about which way the UK will run. At moment what we are seeing is something of a pushback in the Conservative Party because of the poor result for the Conservatives in the last election. But the original plan, in my view, is the only one that will work. Negotiating with the EU is never easy. And plainly the attitude from the May government was that we will do this in the two years; we will pay whatever we have to pay; and we will look for opportunities to open markets which will improve our economy. All of those things I think are right.

On the agricultural side, of course what we are dealing here with is the classical problem we have faced for years: getting access to the EU market because they in fact dictate British policies. There is opportunity with the beef market. I do wonder in fact whether the Northern Irish group now who support the British government, who have got very close relationships with Ireland, would not want to see the free movement of cattle and meat across the border altered. That is something that just will have to come in time.

CHAIR: On that point, Dairy Australia told us yesterday that they obviously had some very strong views around Ireland's and Northern Ireland's and indeed the UK's view on their milk supply and their dairy goods and the free flow of that across those borders. Could you give us some more detail around red meat from Ireland to Northern Ireland or across the Channel?

Mr Oxley : It is one of the largest suppliers of meat to the UK. That is a function of the UK being obliged to apply the EU trade policies on agriculture, which basically are designed to keep the rest of us out of the markets.

CHAIR: I appreciate that.

Mr Oxley : One would have to assume this is an opportunity to increase Australia's ability to enter those markets as a consequence. My reference to the Northern Irish being involved is off the top of the head. I do not know much about UK politics. I have always followed the dictum that you do not try to understand other people's politics unless you are there. I think that is for all countries. But very plainly, there is no question that the framework that currently shapes the way in which the UK imports red meat is up for grabs. And for Australia it has been a matter of chagrin for a long time that we have not been able to export more into the EU.

The complication of all this is that alongside the Brexit process there is going to be a reconfiguring by the EU of its policies on imports of red meat. That is really guesswork. One really cannot tell how that would run but I am confident that all our institutions will be watching very closely to see the opportunities that may arise from that and the restructuring of access to the market. I might leave it at that point.

There is a lot of loose talk in the UK about a slow Brexit or doing something else. I just make one observation, which you touched on briefly. When the UK went into the EU what happened over time was that all Australian officials ended up in Brussels. When Brexit was announced and the vote was adopted on the referendum, the UK had no trade expertise in London. And most of their officials in Brussels in fact decided to stay there. They are very lucrative conditions. But the UK now is on a crash course of rebuilding its trade expertise. That is really very important.

What they clearly want to try to do is: at the same time as they are negotiating the exit from the EU, in fact alongside that, build new opportunities for access to the market, which I think is another reason why it would be very wise for the Australian meat industry to be engaged in watching that very closely.

CHAIR: Dr McVeigh, any further questions?

Dr McVEIGH: No, that is all.

Mr LITTLEPROUD: I would like to get some perspective from you. We have heard from a number of your processors around the cost of EU accreditation in their processing plants. I think you just gave evidence that you believe that everything is up for grabs with respect to the UK. Would you envisage that they would continue on with those protocols across into any new agreement as a way of course? If there were elements of the current arrangements, the standards, being imposedsome of which our processors are saying are really unnecessary, and I would suggest some of our competitor nations that export into the UK and into Europe would also suggest the same thinghave you got any recommendations on specific elements of those standards that could be addressed in an agreement for our processors and even ones that you think competitor nations would also come on that journey too, which may alleviate some of the costs that are burdened onto our processing sector?

Mr Rizzo : It is something that we will actually go and do some detailed research on now, as we move towards that opportunity. In relation to the complexity of non-technical trade barriers, we had the team that Alan works with do some research really looking at our cost competitiveness. You can imagine that a very high level fee came up, to the tune of something like, for the 86 countries that we export to and the ones that we may not, $3.4 billion worth of opportunities available to us that just sit in the non-technical trade barrier.

In the context of setting up a free trade agreement with the UK or the possibility of that, we will go and do some forensic study, if you will, about the current technical requirements for approval of an Australian plant, for argument's sake. We cope with those well within Australia but it comes at a cost. We had Alan's team do some research for us just to get an industry figure of what the regulatory burden to the industry was. You will appreciate that the number we used, $23 billion worth of revenue generated from the red meat sectorI think we suggestis a very difficult number to come to terms with. I am happy to share the report. It is to the tune of $2.4 billion of cost, regulatory cost to the sector. It would be considered regulatory cost, if you will. That is everything from licensing the plant, from EPA controls and all manner of different things that a processing work has to get to for it to be considered an AUS-MEAT accredited export work.

The technicalities are partly the reason that the MLA will be addressing these issues with its office in the UK, and I suspect why they have moved there will be to deal with that. Of course they do that also with the support of the Sheep Council and the Cattle Council. But the exact nature needs some more forensic study because I think they were not tied up with negotiations for barriers to large agricultural producing countries in Europe like France and Germany as well. So we won't know how to pull those apart or how they may even provide potential new barriers that we do not imagine because of the Irish context that Alan talked about or even the domestic UK production in sheep meat and beef meat production as well.

In relation to the full process through the whole EU, you often hear from a farmer's perspective that a UK farmer or a EU farmer gets paid tremendously more in value terms for his red meat equivalent to Australia. Why is that? It is around the idea of the protections, that benefit there.

Clearly for us, we will try and look at that whole cost benefit opportunity and in providing the right support to encourage the UK to think about why Australia would be a deserved quota, if you would, as a supplier for Tesco and the appropriate supermarket chains, as well as the restaurant aspect and the likes.

From what research I have seen that we have done, and from my understanding and even from some of the great work that the MLA has done, I think it needs a real effort to understand what the current barriers are, are they likely to stay, are they necessary. They are all really good questions for us to concentrate on.

Mr Oxley : There is one interesting thing I might mention in this respect. Under WTO rules you have the right to protect product on health and safety grounds, which are specified. The EU does not use that model. The EU uses what is called the precautionary principle, or the worst version of the precautionary principle, in which case the regulators will determine whether or not the product complies. The UK currently applies that practice. Not only Australia but the other members of the WTO who want to trade with the UK would like to see them swing across to this other, less costly means of regulating health and safety factors in food imports. That would be quite interesting.

CHAIR: What is the likelihood of that occurring, given that the UK will have to negotiate an EU free trade agreement before it negotiates anything with anybody else?

Mr Oxley : I am not sure that is necessarily the case.

CHAIR: That is interesting, because most people have assumed that is the case.

Mr Oxley : They have got an option. What was actually missed in all of this, and what was actually even not known in the UK, was that the UK is actually a member of the WTO in its own right, as are all members of the EU. And if nothing happens then the UK would just default to the existing arrangements. Whether the UK decides to rush into an agreement with the EU sooner or later, I think, is a relatively open question.

This particular question of quarantine, if you like the health and safety aspect, would be an interesting one because there is a significant clash. You may recall that recently the effort by the Americans and the Europeans on a negotiated bilateral free trade agreement has stalled. One of the unresolved questions in that was differences of opinion on this question of how you assess health and safety factors for traded product. It was pretty clear to me that was always going to be a significant stumbling block because the Americans, like the Australians and like other agricultural exporters, apart from the EU, much prefer the regulated, clearer principles in the WTO rather than this EU system which allows all the discretion to rest with the regulator without any guidelines.

Mr Rizzo : We have a clever history, I guess, of actually resolving those issues. I think knowing what we want to negotiate will be the key issue, or knowing what the specifics are will be the key for us as an industry to move forward.

Ms Lee : If I can also add, I think that when we do our negotiations we should be mindful of that regulatory cost burden to our processors as we are now going to be competing on an international scale with other countries which are going to be a lot cheaper in terms of processing costs. When we are looking at the UK's accredited suppliers and the fact that our processors need to be accredited to be able to export to the likes of the UK for example, we need to be mindful of the fact that the regulatory cost burden, while it has been great for us to be able to protect our product going outside and exported, does not mean we do not add more costs to that and we do not add more compliance work for the processing plants because it adds time, it adds inefficient processes, and you could potentially be duplicating efforts already. Is there another way, when we do our negotiations, that we can potentially almost avoid some of those compliances that other countries are expecting of us, because we do not even comply, for example, with FMD or something like that? It does not affect us at all because our biosecurity protection is so strong.

We need to be mindful of that. It has been great to protect our product in terms of driving the True Aussie brand, for example, but when we do our negotiations we need to think of the processes and what our capabilities are and promote that. Our processing of offal, for example, is at a high-quality standard already, so it does not need to be raised as a protocol.

Mr Rizzo : We have two great advantages, I think, at the moment. The hormone issuecompared to the US, we have that opportunity, which sets us in a really strong position for the UK. Also, the emerging branding value around organic red meat products as well is intrinsically valuable. It almost doubles the value of red meat for us. We have seen clever companies being able to capitalise on that. Of course, the biosecurity controls that we live under with no foot-and-mouth and BSE also add another layer if you want to understand the cost or benefit, if you like, of the regulatory environment, and we are able to keep those aspects as really strong marketing and positioning for a high-value meat product in those markets.

The fascinating thingand I do not want to over-talkis that if you imagine Australia's 23 to 24 million people today and that we export 70 per cent of our meat, you can extrapolate quite quickly that we are really looking for another 45 million Australians to consume our meat. It is not a lot in the sense, though, of the higher quality red meat products. The UK offers us an opportunity to deal with a marketplace that has a similar demand metric like ours.

CHAIR: Thank you. I have a couple of questions. One is about the quota assignment. I want to understand that. I know there are issues around it. I would appreciate getting your view on it, given that you represent a variety of processors. I am sure your new entrants have a view and your old players have a view. I think you are in a unique position to give us all views.

Mr Rizzo : It is a unique and rather complex position to be in because we represent

CHAIR: Multiple constituencies, Mr Rizzo.

Mr Rizzo : Yes, and I am

CHAIR: That is why you get paid the big bucks!

Mr LITTLEPROUD: That is a novel concept for a senator.

CHAIR: Please walk us through. We are on restricted time.

Mr Rizzo : It is one that I think could take the rest of the afternoon to pull apart.

CHAIR: Yes, I know.

Mr Rizzo : I do not think there is a short answer. At the risk at being glib, we try to act as a research organisation and provide research for the whole of our membership now. Aside from this issue alone, it is really difficult because we have an industry which

CHAIR: Mr Rizzo, I am not asking you for an opinion.

Mr Rizzo : No.

CHAIR: I am asking you to give us information that we do not currently have.

Mr Rizzo : I think

CHAIR: We have got JBS's view. Other than the big playersand we have got Larkin's viewwe would appreciate an understanding of the view of other people that you represent of the quota assignment process that we go through.

Mr Rizzo : It is a complex one. I am not trying to avoid the answer. I am trying to more position the idea that the more meat that the big guys sell to a high-value market like the UK, the more opportunity the smaller guys have to meet even traditional markets.

CHAIR: We understand market economics.

Mr Rizzo : I think the aspect for us is the current quota system, as it exists, will change. It will obviously change because of the new perspective. I do not quite know how that will work or how that will benefit our membership as a whole because, for our 87 plants, it is an answer that I probably do not have for you.

CHAIR: Do you want to take it on notice and get back to us?

Mr Rizzo : And provide some information around thatyes, that would be something we can concentrate on.

CHAIR: Great; I appreciate it. It was my understanding that WTO recently made a decisionwe heard about it yesterdaythat actually reflected that there was going to be a change in that the EU could not use some of those direct subsidies that they had been using under the cap to get rid of surplus product. Will that affect the red meat industry?

Mr Rizzo : I do not have an understanding of that to give you a solid reply. I will find out for you.

CHAIR: Thank you.

Mr Rizzo : I will find that for you.

CHAIR: I appreciate that. I really want to understand the Irish issue, so I guess you will get back to us with the quota. We will be seeing the department on 7 August. If you could please get back to us with a neat perspective

Mr Rizzo : That would be a pleasure.

CHAIR: and a range. I am not expecting you to have an opinion, but if you could outline your various constituents' issues with the system as it stands.

Mr Rizzo : Okay.

CHAIR: There has been commentary at the table, including from industry, around the point of negotiation and how important that is. Do you believe the processing industry has been adequately represented in the past negotiations around free trade agreements? If so, that is great. But what can the federal government do to improve this? Given the number of direct and indirect jobs and that you are actually dealing with the quota, not the growers, are you included in those negotiations in an appropriate way and at an appropriate time?

Mr Rizzo : I am a new boy, so the answer is, I think, rather than 'have we not been?' as distinct from 'would we like to be?' I think we will very much be there to support those negotiations. That will be a joint effort, obviously, with RMAC, which is the peak council that should be thinking of that. It should collate the support from the other peak industry councils.

CHAIR: Could you then, on notice, Mr Rizzo, talk to some colleagues that have been involved in past negotiations

Mr Rizzo : Yes, and give you an opinion.

CHAIR: to ascertain whether it is an appropriate model having RMAC at the table and whether it actually gives you the voice you need as an industry?

Mr Rizzo : Or potentially our AMIC guys.

CHAIR: Yes. I want to understand how successful that has been and if it needs to be more focused.

Ms Lee : I will take that on notice.

CHAIR: Thanks, Ms Lee; I appreciate it. Thank you for your evidence here today. It has been very helpful. I look forward to staying in touch.

Mr Rizzo : Thank you.