Cattle and Sheep Meat Processing in Western Australia
Ministerial Taskforce Final Report November 2004
Table of Contents MEAT PROCESSING in WA – TASKFORCE REPORT............................................................... 2 Executive Summary .................................................................................................................... 2 1. BACKGROUND................................................................................................................. 6 2. INDUSTRY OVERVIEW................................................................................................... 8 2.1. Overview of the Meat Processing Sector in WA........................................................... 8 2.2. WA Beef Production, Processing, and Live Exports..................................................... 9 2.3. WA Sheep Production, Processing, and Live Exports................................................. 13 2.4. Seasonal Stock Supply Variability ............................................................................. 17 3. DISTORTIONS TO COMPETITIVE NEUTRALITY BETWEEN VALUE CHAINS ...... 20 3.1. Competition Between Value Chains........................................................................... 20 3.2. Sources of Growth in Live Exports ............................................................................ 22 3.3. Foreign Government Trade Distortions ...................................................................... 23 3.4. Domestic Policy Distortions....................................................................................... 23 3.5. Federal Government Policy Distortions...................................................................... 26 3.6. WA Government Policy Distortions........................................................................... 28 4. IMPROVING CONSISTENCY OF LIVESTOCK SUPPLY ............................................. 30 4.1. Possible Solutions for Cattle ...................................................................................... 30 4.2. Possible Solutions for Sheep ...................................................................................... 31 5. MAINTAINING CONSISTENT EMPLOYMENT ........................................................... 31 5.1. Labour Issues............................................................................................................. 31 5.2. Workers compensation............................................................................................... 32 5.3. Training ..................................................................................................................... 32 6. DEVELOPING NEW OPPORTUNITIES ......................................................................... 33 6.1. Enhancing Lamb Exports........................................................................................... 33 6.2. Developing New Markets .......................................................................................... 34 7. DRAFT CONCLUSIONS AND RECOMMENDATIONS ................................................ 35 7.1. Establishing a Level Playing Field ............................................................................. 35 7.2. Labour Issues............................................................................................................. 39 7.3. Stock Supply Issues ................................................................................................... 39 7.4. Developing New Markets .......................................................................................... 40 8. FINAL CONCLUSIONS................................................................................................... 41 BIBLIOGRAPHY ..................................................................................................................... 53 APPENDIX 1: SUBMISSIONS RECEIVED ............................................................................ 54 APPENDIX 2............................................................................................................................ 56 APPENDIX 3. Livestock Production Statistics ......................................................................... 57 APPENDIX 4: Training Issues for the WA Meat Industry......................................................... 59
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MEAT PROCESSING in WA – TASKFORCE REPORT Executive Summary The Hon Kim Chance MLC, Minister for Agriculture in Western Australia, on 9 December 2002 commissioned a Meat Processing Taskforce to examine and address the concerns of the cattle and sheep meat processing sectors in the state. The Taskforce was requested to report on the following broad Terms of Reference: ! ! ! !
develop a long-term plan for the viability of the meat processing industry; facilitate and establish new market opportunities and supply chains, without imposing on existing commercial relationships, in order to increase exports of processed meat; review Government policies and regulations in regards to the impacts of live exports on the processing sector, and on a competitively neutral marketing structure; improve the efficiency of Government regulation of the meat processing industry, including the overlap or duplication of regulatory functions and the provision of utilities.
The Taskforce reviewed the available evidence, substantiating the existence of direct competition between the local meat processing sector and the live animal export trade. The Taskforce concluded that at least some of the problems experienced by the processing sector in recent years were directly attributable to this competition from the live trade. The impact of the growth of the live export trade on Australian meat processors has been to exert a powerful pincer effect on domestic meat processing that: (a) increases prices that West Australian meat processors have to pay for livestock, and ceteris paribus reduces their profit margins, and (b) introduces a powerful competitor into the relevant export markets for West Australian meat products, namely meat processed from West Australian livestock in the live export market. The Taskforce believes the growth in live exports, at the expense of meat processing firms, is at least partly due to a lack of competitive neutrality that can be attributed to the policies of foreign governments, the Australian Federal Government, and the Western Australian State Government. The Taskforce suggests these policies undermine a “level playing field” (ie. competitive neutrality) between the sectors. The major areas of concern were identified as: ! Foreign governments’ trade distortions in the form of unequal tariffs that protect domestic processing in live animal importing countries ! Domestic policy distortions in the form of an apparent bias in Government support for the live trade while meat processing is disadvantaged by additional costs that are not imposed on live exporters ! Government taxes and charges that impact on the competitive position of the meat processing export chain and the live animal export chain: a. AQIS charges and compliance costs for processors in meeting stringent regulatory standards for food safety and public health, product specification, animal welfare, and compliance with importing countries’ protocols. b. direct and indirect costs in complying with occupational health & safety regulations. c. on-costs of labour employment, including payroll tax, superannuation guarantee, workers compensation insurance , plus applicable stamp duty, that increase with CPI each year. d. compliance costs for processors (particularly exporters) in meeting stringent environmental standards that are constantly rising, while live exporters have very few restrictions. e. charges for water and power utilities. 2
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Discrepancies between the regulatory requirements between the two sectors covering such matters as public health and product safety in both domestic and export markets, animal welfare, environmental standards, and grading and truth to label. ! Inequities in AQIS inspection charges and Federal Government Subsidies ! Western Australian Government policy distortions in the form of: • payroll tax imposts • taxes and charges for Government utilities • environmental levies and compliance costs • occupational health and safety policies and procedures • food safety and public health • duplication and costs of Government regulatory functions The Meat Processing Taskforce makes the following recommendations to mitigate these distortions: Recommendation 1: The Meat Processing Taskforce recommends that the West Australian Government determine and implement the best way to correct the distorting effect of the application and enforcement of its environmental policies on competitive neutrality between the meat processing sector and the live animal export sector. Recommendation 2: The Meat Processing Taskforce recommends that the West Australian Government determine and implement the best way to correct the distorting effect of the application and enforcement of its occupational health & safety policies on competitive neutrality between the meat processing sector and the live animal export sector. Inter alia, employees in the live export sector should be required to undertake vaccination against zoonotic diseases. The Meat Processing Taskforce also recommends that the West Australian Government lobby the
Federal Government to continue funding the cost of Q Fever testing and vaccination.
Recommendation 3. The Meat Processing Taskforce recommends that the West Australian Government determine and implement the best way to correct the distorting effect of the application and enforcement of its food safety and public health policies on competitive neutrality between the meat processing sector and the live animal export sector. Recommendation 4. The Meat Processing Taskforce recommends that the West Australian Government should abolish the WA Meat Industry Authority and devolve it’s responsibility for State Government policies relating to public health standards and food safety to the WA Department of Health, devolve it’s responsibility for licensing meat processing export plants to AQIS and devolve it’s responsibility for saleyards to the Department of Agriculture. Furthermore, the Western Australian Government should commission the Department of Consumer Protection to ensure that meat products are properly described and are true to description. The relevant Departments to which responsibilities are devolved must be given adequate skills, legislative back up and resources to enable their functions to be carried out effectively.
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Recommendation 5. The Meat Processing Taskforce recommends that the West Australian Government should either exempt meat processing from paying land tax, or it should apply it also to facilities that are used exclusively or predominantly for exporting livestock (e.g. holding yards, feedlots, etc.). Recommendation 6. The West Australian Government should vigorously lobby the Federal Government to actively pursue, as part of its trade negotiations, the elimination of policies of foreign governments that distort competitive neutrality between meat processing and live animal exports in Western Australia. Recommendation 7. The West Australian Government should vigorously lobby the Federal Government to change legislation so that independent AQIS officers audit the live export trade to ensure that it meets the same high standards for animal welfare, food safety, and for meeting importing country protocols, as are applied to processors. AQIS should determine the charges to be born by the live export sector on the same basis as it uses to determine charges for the processing sector, AND any Federal Government subsidies to reduce inspection, licensing, and audit costs should be equally available to both sectors. Recommendation 8. The West Australian Government should introduce payroll tax rebates for firms employing labour to process meat for export to compensate for foreign and Federal Government policies that distort competitive neutrality in Western Australia between meat processing and live animal export value chains. Recommendation 9. The West Australian Government should , through the Department of Education and Training, ensure that all workers in WA meat processing firms have equal access to training as their eastern states counterparts. Recommendation 10. The West Australian Government should , through the Insurance Commission of WA, explore options to alleviate the inconsistent and generally high costs of workers compensation in WA. Recommendation 11. The Department of Agriculture of Western Australia should invest more resources in cattle and sheep reproduction R&D to improve livestock turnoff, and to lessen competition between meat processors and live exporters for the supply of animals. Recommendation 12. The Department of Agriculture of Western Australia should invest more resources to assist farmers to develop profitable mechanisms to supply cattle and sheep throughout the year, via “out of season” calving and lambing regimes. Recommendation 13. The Department of Agriculture of Western Australia should invest more resources to assist industry to develop supply chains that take advantage of the seasonal and environmental attributes of each region in Western Australia.
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Recommendation 14. The Department of Agriculture of Western Australia should divert funds away from Trade and Development, and invest more resources in high priority areas to enhance livestock supply. Recommendation 15. The West Australian Government should, through relevant industry organisations and the Department of Agriculture of Western Australia, further explore options to extend the definition of lamb to enable farmers to export more lambs, and to meet the heavier carcass weights desired in the US market.
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1.
BACKGROUND
On 10 July 2002 Agriculture Minister Kim Chance tabled a report in Parliament outlining his concerns for the beef and sheep meat processing sector in Western Australia. His report followed the release of a 2001study by the Queensland Department of Primary Industry (QDPI) on the relative benefits of the beef processing and live cattle exports sectors in that state. The Minister concluded his report by suggesting a range of new measures to be implemented by the Department of Agriculture (DAWA) and various other industry bodies to assist the sector, and announced that he would establish a Meat Processing Taskforce (MPT) to investigate these matters. In October 2002 Minister Chance announced the following representatives had been appointed to the taskforce with the objective of examining options to increase the long term viability of the WA beef and sheep meat processing sectors. Professor Bob Lindner, (UWA), Independent Chairman Merv Darcy, Executive Director, National Meat Association (WA) Roger Fletcher, Managing Director, Fletcher International Des Griffiths, General Manager, WAMMCo International Graeme Haynes, Australasian Meat Industry Employees Union (WA) Garry Minton, Chief Executive Director, EG Green and Sons Renata Paliskis-Bessell, Manager Rangelands and Intensive Animal Industries, DAWA Peter Trefort, Principal, Hillside Meats Wim Burggraaf, Executive Officer, DAWA. The Terms of Reference for the taskforce were to: 1. develop a long-term plan for the viability of the meat processing industry, with particular attention to: • improving prospects for consistent throughput, full utilisation of capacity, and secure employment for workers for 52 weeks pa; • maintaining a stable base of well trained employees; • improving work practices in order to reduce the costs of workers compensation claims; • ensuring the processing industry is not disadvantaged against competing industries; and • maintaining a consistent supply of stock to achieve optimum plant utilisation and meeting market demand. 2. facilitate and establish new market opportunities and supply chains, without imposing on existing commercial relationships, in order to increase exports of processed meat; 3. review Government policies and regulations in regards to the impacts of live exports on the processing sector, and on a competitively neutral marketing structure; 4. improve the efficiency of Government regulation of the meat processing industry, including the overlap or duplication of regulatory functions and the provision of utilities.
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The MPT held it’s inaugural meeting on 9 December 2002, and has completed eight meetings. After agreeing on the above Terms of Reference for the taskforce, the MPT advertised for submissions to be received by 7 March 2003. In all, 25 responses were received from industry and the general community. Each submission was reviewed by the members and relevant issues were noted. In addition, the taskforce held consultations with members from the WA Farmers Federation and Pastoralists and Graziers Association and the WA Meat Industry Authority. Meetings also included specialist advice from the Department of Consumer and Employment Protection on workers compensation issues and the Department of Environmental Protection on issues regarding the regulatory environment and costs imposed on the processing sector. The MPT also sought advice from various State Government agencies in relation to the regulations and costs associated with the meat processing industry, relative to the live export sector. The submissions, together with the expert knowledge contributed by the members and the contributions from the consultative groups described above, provide the basis for the draft conclusions and draft recommendations reported below in Chapter 7. A list of submissions received is detailed in Appendix 1. A draft MPT report was presented to the Minister in December 2003. In May 2004 the Minister released an Interim Government Response to the MPT draft report and both the draft report and the Government response were published on the Department of Agriculture website. The Minister then requested further feedback from the relevant Government Departments, industry and the public. This resulted in an additional 18 submissions (see Appendix 1). The MPT convened its final meeting on 15 September 2004 to consider the contents and implications of the Interim Government Response to the MPT’s draft report and the second round of submissions received in response to the Minister’s request for further feedback after the release of the interim government response. The MPT reconsidered each of the draft recommendations in light of the Interim Government response and the additional submissions. In most instances the MPT draft recommendations were not modified in any way, however it should be noted that Recommendations 1 and 2 have been altered. Chapter 8 has been added to the original draft as a result of the Interim Government Response and the additional submissions received by the MPT. This chapter draws together the final conclusions and observations of the MPT in relation to the recommendations the taskforce has provided to the Minister.
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2. INDUSTRY OVERVIEW 2.1. Overview of the Meat Processing Sector in WA In financial year 1999-2000, the meat processing industry in Western Australia had a turnover of $521 million, employed 2,742 people with a wages and salaries bill of $89 million, and was estimated to have contributed $131 million in “value added” to the Western Australian economy (Australian Food Statistics 2003, p. 51). However, the previous decade or so has been a difficult period for the meat processing sector involving significant rationalisation. Firm and plant numbers, employment and annual slaughtering capacity, stock numbers processed, and capacity utilisation have all declined dramatically over the past ten years. Abattoir numbers were relatively stable in the 80’s, and 57 abattoirs existed in WA in 1990. Since then, many domestic (local/code abattoirs) have closed, and there are now only 29 commercial abattoirs, which is a long way short of previous numbers in the sector. In the same period, the number of export plants has increased from 9 to 13, including those processing exotic species. Of the 29 commercial plants, 23 (79%) are involved in the processing of cattle and/or sheep. Ten supply the export market, and most of these also supply beef and sheep products to the domestic market. The balance (13) supply only for domestic consumption. Details below of WA abattoirs (as at November 2002) were provided by the WA Meat Industry Authority (MIA): WA Abattoirs (as at November 2002). Export EG Green and Sons, Harvey Nebru Exports, North Dandalup V& V Walsh, Bunbury Fletcher International, Narrikup WAMMCo, Katanning Hillside Meats, Narrogin Geraldton Meat Exports, Geraldton Beaufort River Meats, Woodanilling Gascoyne Abattoirs, Carnarvon Exotic Meat Processors, Margaret River Watsons Foods, Spearwood Derby Industries, Woorooloo Gold Medal Holdings, Baldivis
Species cattle cattle cattle, sheep sheep sheep, goats sheep, cattle sheep, goats sheep, goats sheep, goats sheep, cattle, deer, ostrich, camel pigs pigs ostrich
Domestic Dardanup Butchering Co., Dardanup Red Meats, Capel Gingin Abattoirs, Gingin Goodchilds, Australind Hagan Bros, Greenough Kununurra Abattoirs, Kununurra PR Hepple & Sons, Northam Shark Lake, Esperance Eastern Districts, Merredin WW Forbes & Co, Corrigin BJ & JA Haslam, Hyden Manjimup Abattoirs, Manjimup TE Cullen & Son, Coolgardie Kellerberrin Abattoir, Kellerberrin Freegro, Oakford Koonyen Farms, Baldivis
sheep, cattle, pigs, deer sheep, cattle cattle sheep, cattle sheep, cattle, pigs cattle cattle, pigs sheep, cattle, pigs sheep, pigs sheep, cattle, pigs sheep, cattle, pigs not operating sheep sheep, pigs rabbits rabbits
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The growth of the live export trade in both cattle and sheep clearly has had an impact on West Australian meat processors. While there is no single reason for the rationalisation of the processing sector in recent years, the growth of the live export trade has been one of the more significant reasons for excess capacity in the processing sector. Competition by live exporters for the available supply of livestock at the farm gate has resulted in higher livestock prices, as well as diminished export markets for Australian processed meat products by enabling a substitute product, namely meat processed in the export market from Australian livestock. Consequently the West Australian processing sector has experienced lower levels of throughput and capacity utilisation than it would have in the absence of live exports. Selected evidence for recent years on trends in stock numbers, turnoff, and numbers and value of livestock processed vis-à-vis exported live are illustrated by charts in the following two sections for cattle and sheep respectively. Tables containing the data used to derive these charts are included in Appendix 3. 2.2. WA Beef Production, Processing, and Live Exports The beef processing sector in WA has seen a substantial restructuring over the past decade or so to the point where there is now only one relatively large, state of the art export abattoir. There are no significant active processing plants north of Geraldton. Despite this run down in processing capacity, the industry continues to suffer from under utilisation of capacity. This is despite the fact that cattle numbers have steadily increased over the past decade from some 1.5 million to 2.0 million. One of the key reasons for the reduction in slaughtered cattle has been a lack of supply of cattle to meet the combined demands of the rapidly growing live export trade, and the domestic beef market, and an export processing sector that is striving to compete on world markets. Clearly, farm gate supply has not grown fast enough to accommodate the rapid increase in live exports during the decade of the 1990’s depicted in the following chart. Factors contributing to growth of live cattle exports include: the Brucellosis and Tuberculosis Eradication Campaign program that has brought cattle herds under control in the pastoral regions, and resulted in higher turn-off. The introduction of Bos indicus breeds that are suitable for live export to developing, large SE Asian markets. As well as a switch to Bos indicus breeds, the introduction of strategic supplementation programs, herd control, etc. that has led to improved productivity in pastoral regions; especially in weaning rates, from 45/50% to 80%+. The consequent demise of all major abattoirs in the north west. Pastoralists purchasing farms in the northern agricultural region, most of which run Bos indicus types suitable for live export, to improve productivity. a break down of the live trade in cattle from Europe to the Middle East. As a result, live export cattle are now also sourced from the traditional SW slaughter region. Constraints on returns to SW cattle producers due to inflating costs of land and associated costs such as rates, environmental factors, transport restrictions, etc. Competition from other enterprises in agricultural regions, with improved returns from sheep (wool and meat) and cropping, is likely to generate a further shift of the industry towards the northern agricultural region.
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Chart 1: WA Live Cattle Exports
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0 1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Source: Livecorp Chart 2 below portrays changes in herd numbers for the past nine years, as well as annual turnoff, which governs the supply of cattle to the processing and/or live export sectors. The WA beef herd has grown by some 20% (2.6% pa), or 355,000 head to an estimated 2.1 million. During this period, the proportion of pastoral cattle has remained steady at around 42%. Turnoff numbers have also been growing modestly. Furthermore, the recent increase in herd numbers suggests that there is potential for some further increase in turnoff in future years.
Chart 2: WA Cattle Numbers and Turnoff 2500
2000
'000 hd
1500
Total Cattle Turnoff 1000
500
0 94/95
95/96
96/97
97/98
98/99
99/00
00/01
01/02
02/03(e)
Source: ABS, DAWA 10
However, although the population of beef cattle has been growing gradually over the past nine years, the total number of cattle processed for domestic and export markets has remained relatively static. Slaughter of cattle and calves declined from a high of 454K in 97/98 to 402K in 01/02. Meanwhile, live export numbers more than trebled. This is evident in Chart 3 showing the total number of cattle slaughtered vis-à-vis numbers exported live. As a percentage of total turnoff, slaughterings fell from 65% to 53% in 01/02 before recovering slightly last year to 58%. Back in 94/95 this figure was 80%.
Chart 3: WA Cattle Turnoff: Total Slaughter vs Live Exports 800.0
'000 hd
600.0
slaughter live exports Turnoff
400.0
200.0
0.0 94/95
95/96
96/97
97/98
98/99
99/00
00/01
01/02
02/03(e)
Source: ABS, DAWA At the same time, the value of production and exports has been improving significantly. However it is clear that the largest growth has occurred in the live export sector. The value of live cattle exports as a percentage of total export income has increased from 20% in 94/95 to a peak of 59% in 00/01, declining to 52% in 02/03. Traditionally the value of cattle slaughtered (average $/hd) is higher than that of cattle exported live, except in the 3 year period 96/97-98/99. The relative value of live exported cattle has tended to decline over the past few years due to the increasing proportion of female cattle in export consignments. Given a general trend for female cattle to comprise the majority of cattle slaughtered in WA, around 60% in the last two years, the overall turnoff of females from WA is very high. Continuing high levels of turnoff of potential breeder cattle, if maintained, could inhibit future herd growth and further exacerbate the already serious deficiency of cattle available to supply the demand from our domestic and overseas markets.
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Chart 4: WA Cattle Production Values: Total Slaughter vs Live Exports 400
$Mill
300
slaughter live exports
200
100
0 94/95
95/96
96/97
97/98
98/99
99/00
00/01
01/02
02/03(e)
Source: ABS, DAWA Live exports are in direct competition with exports of processed meat products. The impact of live cattle and calves exports on the value of exports of beef and veal, offal, hides, leather, and tallow vis-à-vis is clearly illustrated in Chart 5 below.
Chart 5: WA Cattle Export Values: Total Slaughter vs Live Exports 300
200
$Mill
slaughter live exports
100
0 94/95
95/96
96/97
97/98
98/99
99/00
00/01
01/02
02/03(e)
Source: ABS, DAWA Chart 6 shows the trend of values of cattle products clearly demonstrating the dominance of live exports, although the past two years are showing a decline as live export prices have reduced, probably due to the higher proportion of lower priced females in the trade and drought affected stock in the past two years. 12
Chart 6: WA Cattle Products: % of Export Value 60.0 50.0
%
40.0 30.0 20.0 10.0
beef/veal
live cattle
offal
hides/leather
02 /0 3( p)
01 /0 2
00 /0 1
99 /0 0
98 /9 9
97 /9 8
96 /9 7
95 /9 6
94 /9 5
0.0
tallow
Source: ABS, DAWA 2.3. WA Sheep Production, Processing, and Live Exports The strong growth in live sheep exports from WA preceded that for cattle. In the 1980’s, the market for live sheep exports was almost entirely to the Middle East region, where a significant trade in live animals had existed for many years. A traditional demand for freshly killed sheep to supply pervasive wet markets because of a lack of refrigeration and modern distribution systems was reinforced by demand for live animals to slaughter for religious festivals. In 1989 this trade received a setback when an embargo was imposed on the export of Australian live sheep to Saudi Arabia. Despite the fact that this embargo lasted for about a decade, it can be seen from Chart 7 below that the export of substantial numbers of live sheep from WA continued to other Middle East markets throughout the 1990’s.
Chart 7: WA Live Sheep Exports
5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Source: Livecorp 13
While some of the problems that plagued the sheep sector were similar to those faced by the cattle industry, there were other important differences that affected the available supply of sheep to meet the twin demands for livestock for processing and live export. In particular, the downturn in the wool industry as a result of the large stock pile that accumulated during the 90’s saw sheep and lamb numbers steadily decline from 37 million in 1989 to 23 million in 2003 during a time of lower prices for wool and sheep. Lower sheep numbers generally, as well as the impact of a series of dry years, and competition from cropping and other enterprises in traditional sheep areas has seen the supply of stock stifled.
Chart 8: WA Sheep Numbers and Turnoff 30000
25000
'000 hd
20000
Total Turnoff
15000
10000
5000
0 97/98
98/99
99/00
00/01
01/02
02/03(e)
Source: ABS, DAWA The continuing decline in flock size over the past 6 years by some 17%, from 28 to 23 million, as well as the temporary increase in turnoff in 99/00 and 00/01 due to dry seasons can be seen in Chart 8 above. Unlike the cattle sector, the size of the sheep flock in WA has fallen to a level that some would suggest is critically low for a viable future. Recently, ewe flock numbers have been relatively static; and increased from 11.6M in 2001 to an estimated 12.2M in June 2002. At June 2001, the ewe flock consisted of 8.6M merinos, and 3M crossbreds. Recent evidence suggests that there have been more matings to non-merino rams, and the average age of ewe flock is increasing. The proportion of ewes has increased from 41% (1990) through 50% (2000) to a current estimate of 60%+, with a resulting substantial decline in wether numbers. Factors contributing to the decline in the sheep industry include: 1. 2. 3. 4. 5.
The historical decline in wool prices, that have been depressed due to the wool stockpile. A lack of competition amongst buyers, as WA is not competitive with Eastern States. A run of poor seasons has led to poor lambing rates and sell-off of “underdone” stock. A fragmented industry, with poor dissemination of information (cf cropping). Lack of labour availability, and difficulty in recruiting permanent staff (cf casual cropping staff). 6. Lifestyle considerations by young farmers, who try to avoid the year-round workload of sheep management. It also is easier for wives to work off-farm in the cropping industry.
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7. Cropping has been more financially attractive due to crop yields becoming more predictable, and involving less risk. This has been exacerbated by a lack of market intelligence on profitability of sheep enterprises. 8. growth of other competing industries, such as high rainfall crops, timber, grapes, olives, legumes etc. Significant effort is currently being exerted across the nation by various industry bodies to encourage increased production. Ratio of lambs turned off per ewe is increasing, as is the proportion of ewe hoggets for slaughter. The irony is that any restocking to rebuild sheep numbers is likely to further reduce turnoff and available supply in the short run. As can be seen from Chart 9 below, this reduced turnoff is already impacting on numbers processed as well as on numbers exported live. Chart 9 below shows that live export numbers have been increasing until two years ago. Since then, both slaughter numbers and live exports have declined as total turn-off dropped to an estimated 7.4M in 2002/03 compared with 8.7M in 2001/02 and 10.2M in 2000/01. Slaughter weights are rising, while live export weights declining.
Chart 9: WA Sheep Numbers: Total Slaughter vs Live Exports 10000
9000
8000
7000
'00 0 hd
6000
Slaughter Live Exports Turnoff
5000
4000
3000
2000
1000
0 97/98
98/99
99/00
00/01
01/02
02/03(e)
Source: ABS, DAWA Chart 10 illustrates how competition from live exports has continued to erode the share of turnoff that is processed.
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Chart 10: WA Sheep Production Values: Total Slaughter vs Live Exports 300
200
$Mill
Slaughter Live Exports
100
0 97/98
98/99
99/00
00/01
01/02
02/03(e)
Source: ABS, DAWA However, when relative shares are expressed in terms of value of production, the live trade stands out as the larger sector. Over the six years 97/98-02/03 the value for both sectors more than doubled. Slaughtered stock improved to $197 million while live sheep advanced to $264 million. This is clearly reflected in the prices paid in $/hd terms for slaughtered versus live sheep and lambs. In each year up till 00/01 the average live sheep price was around double that for slaughter stock. The high slaughter lamb prices in the past two years has seen this gap reduce.
Chart 11: WA Sheep Export Values: Total Slaughter vs Live Exports 300
200
$Mill
Slaughter Live Exports
100
0 97/98
98/99
99/00
00/01
01/02
02/03(e)
Source: ABS, DAWA
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The value of exports depicted in Chart 11 show a similar pattern for live exports, but exports of processed sheep products have been relatively stable. In 02/03 live sheep exports contributed about 63% of all sheep export income (including meat, offal and skins) up from 48% in 97/98. However there was a dramatic rise in the value of slaughtered stock in 02/03 to $197 million (up 70% on previous year) due to record lamb prices. A substantial decline in the value of skins, from some $35 million to $7 million in five years, has reduced the value of exports from processed stock. Chart 12 shows the trend in export values of sheep products. The growth of live exports is not as significant as in the cattle industry as the sheep live export sector has been active for a longer time and is now relatively stable. However the dominance of live exports, being greater than 50% of the total export value over the past five years, is obvious.
Chart 12: WA Sheep Products: % of Export Value 7 0 .0 6 0 .0 5 0 .0
%
4 0 .0 3 0 .0 2 0 .0 1 0 .0 0 .0 9 7 /9 8
9 8 /9 9 m u tto n
la m b
9 9 /0 0
0 0 /0 1
liv e e x p o rt
0 1 /0 2
o ffa l
0 2 /0 3
s k in s
Source: ABS, DAWA 2.4. Seasonal Stock Supply Variability A further constraint is the lack of consistency of supply of livestock due to seasonal climatic variability. As shown in Chart 13, the majority of cattle in WA are slaughtered in the spring and early summer leaving processors with less than viable numbers over the autumn/winter seasons.
Chart 13: WA Monthly Cattle Slaughter Variations(a) 30.00% 20.00% 10.00% 0.00%
cattle
-10.00%
calves
-20.00%
Ju ne
ay M
Ap ril
ar ch M
Ju ly
Au g Se ust pt em be r O ct ob er No ve m be D r ec em be r Ja nu ar y Fe br ua ry
-30.00%
Source: WA Meat Industry Authority, DAWA (97/98-01/02) (a) % variation by month from an average month (ie. total annual slaughter/12) 17
Sheep and lamb processors similarly suffer a severe skew in supply with shortages occurring especially during the winter months June and July (see Chart 14).
Chart 14: WA Monthly Sheep Slaughter Variations (a) 30.00% 20.00% 10.00% 0.00% -10.00% sheep
-20.00%
lambs
-30.00% -40.00% -50.00%
Ju ne
ay M
Ap ril
h ar c M
Au gu st Se pt em be r O ct ob er N ov em be r D ec em be r Ja nu ar y Fe br ua ry
Ju ly
-60.00%
Source: WA Meat Industry Authority, DAWA (97/98-01/02) (a) % variation by month from an average month (ie. total annual slaughter/12) As shown in previous charts both cattle and sheep processors find it difficult to source adequate stock numbers in the autumn/winter period each year. This circumstance is now exacerbated by the fact that cattle and to a lesser extent sheep, in good condition after the northern wet, are now being exported live direct from the northern pastoral regions. In the past many of these animals would have made their way south to top up the short supply from the agricultural region. These seasonal deficiencies make it difficult for meat exporters to provide product of consistent quality and quantity throughout the year, placing in jeopardy markets that they have established. The Taskforce identified this issue as a key constraint to industry development and profitability. Table 1 demonstrates that overall utilisation of processing plants in WA is well below optimum. In 2002 utilisation was only 69% and 45% for cattle and sheep plants respectively.
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Table 1: Monthly Utilisation of Slaughtering Capacity in Western Australia during 2002. Cattle 2002
Slaughterings (a)
Estimated Capacity (b)
Utilisation %
Underutilisation %
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
34 318 32 798 29 845 29 948 35 048 26 990 30 318 32 005 34 674 46 572 40 637 38 477 411 630
49 800 49 800 49 800 49 800 49 800 49 800 49 800 49 800 49 800 49 800 49 800 49 800 597 600
69 66 60 60 70 54 61 64 70 94 82 77 69
31 34 40 40 30 46 39 36 30 6 18 23 31
Sheep 2002 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (a) (b)
Slaughterings (a) '000
Estimated Capacity (b) '000
Utilisation %
Underutilisation %
335 317 307 315 294 188 179 296 356 407 360 277 3 631
676 676 676 676 676 676 676 676 676 676 676 676 8 112
50 47 45 47 43 28 26 44 53 60 53 41 45
50 53 55 53 57 72 74 56 47 40 47 59 55
ABS Estimates provided by abattoir managements, Ed O’Loughlin (DAWA)
19
3.
DISTORTIONS TO COMPETITIVE NEUTRALITY BETWEEN VALUE CHAINS
3.1. Competition Between Value Chains Based on the evidence presented above, it was clear to taskforce members that the processing sector is in direct competition with the live export sector. Because the two sectors compete for the limited supply of animals at the farm gate, growth of live animal exports has had a major impact on the supply of animals for processing. In turn, this has resulted in under utilisation of excess slaughtering capacity and consequent rationalisation of the meat processing sector. In an early study that recognised competition in Australia for supply of livestock, the BAE stated that: “Competition between live sheep exporters and meat processors should ensure that sheep of comparable quality fetch similar prices irrespective of the final destination of those sheep. ” (BAE 1983, page 6). The BAE study also noted that this competition results in significant net benefits to livestock producers. “The additional demand by live sheep exporters effectively raises the price which meat processors have to pay to secure sheep for slaughter in Australia. ” (BAE 1983, page 6). Not only does the live animal export trade provide benefits in the form of higher farm gate prices for livestock producers, it also provides more marketing options, although such benefits are partly offset by higher risks. Moreover, the development of the live export trade has had negative impacts on other industry sectors, including in particular the processing sector. The two sectors often also compete to meet consumer demand for meat products in overseas importing countries. For instance, Heilbron (2000) notes that during the closure of the Saudi market, Australian sheepmeat exports to that market increased strongly, and more than trebled from 7.9 kt in 1989 to 25.7 kt in 1993 before settling at around 20 kt. By the late 1990’s, Heilbron (2000) reports that Saudi Arabia took around 25% of Australia's lamb and 50% of Australia's mutton exports to the Middle East. However, this direct substitution of meat imports when live animal imports were banned appears to have been a short term response to meet the growing demand for meat in Saudi Arabia. An ABARE study found that during the Saudi embargo, Australian live sheep exported to the UAE were processed there and re-exported to Saudi Arabia as chilled and frozen product (ABARE 1995). In some years, indirect imports of live animals occurred via third countries. The initial substitution of live imports by direct meat imports, followed by a switch to third country processing is evident from Table 2 below.
Table 2: Australian Sheep Meat Exports to Saudi Arabia, and Live Sheep Exports to Saudi Arabia and the UAE. Mutton and Lamb Exports to (tonnes) Saudi Arabia
91/92
92/93
93/94
94/95
95/96
96/97
97/98
98/99
99/00
00/01
01/02
02/03
25,122
26,678
29,170
20,747
18,909
18,351
21,493
21,055
22,776
23,722
32,707
28,859
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
75
34
641
2,141
1,873
1,261
1,663
1,611
1,638
1,751
1,705
1,279
976
817
682
466
Source: ABS Live Sheep Exports to (‘000’s.) Saudi Arabia UAE
1990 792
103
508
1,539
Source: Livecorp
20
Since live exports recommenced in earnest in 2000/01, meat imports have actually trended upwards as well. The decline in 2002/03 is most likely due to high prices driven by the restricted supply in Australia. The key point is that the market for sheepmeat has continued to grow strongly throughout this period, but there has been a degree of substitutability between supply chains, apparently largely on the basis of cost. Data for total Australian exports of beef and live cattle is presented in Chart 15 below. The evident inverse relationship between live and meat exports reinforces the conclusion that there is perhaps a higher degree of substitutability between these two export chains. The large decline in live cattle exports in 97/98 and 98/99 reflect the economic downturn in South East Asia at the time, particularly Indonesia where numbers dropped from 428,000 to 41,000 from one year to the next.
1100
1100
1050
1050
1000
1000
950
950
900
900
850
850
800
800
750
750
700
000 hd
000 t
Chart 15: Australian Exports of Beef and Live Cattle
700 96/97 97/98 98/99 99/00 00/01 01/02 02/03 Cattle Meat
Cattle No's
Chart 16 below provides a diagrammatic representation of the basic elements of the two competing value chains. As depicted in the chart, regardless whether the pathway is to export live animals and process them off-shore, or to first process in Western Australia and then export the meat, the end point is the same, the consumers’ plate. Hence, as Heilbron notes, the impact of the growth of the live export trade on Australian meat processors has been to exert a powerful pincer effect on domestic meat processing that: (a) increases prices that West Australian meat processors have to pay for livestock, and ceteris paribus reduces their profit margins, and (b) introduces a powerful competitor into the relevant export markets for West Australian meat products, namely meat processed from West Australian livestock in the export market. Given this outcome it seems incongruous that a government would invest directly into promoting the live export trade, from which there is very little benefit in terms of revenue(taxes and charges). Yet, at the same time, government charges constrain processing industries that generate additional revenue (on top of taxes and charges) by value adding and fostering employment and regional development. No commercial business would promote a trade that doesn’t deliver a return.
21
Chart 16: Meat Processing and Live Animal Export Supply Chains FARM GATE SALE
Local Transport, etc.
Local Transport, etc.
Local Processing
Export of Meat
Export of Live Animals
Foreign Processing
END PRODUCT MARKET
3.2. Sources of Growth in Live Exports The live export trade has grown because it has been profitable for producers to supply livestock to it, and with some exceptions profitable for exporters/importers as well as shippers and overseas processors. Clearly the principal source of comparative advantage for live exports is the much lower cost of livestock processing in importing countries. Conversely, the high cost of transporting live animals to distant export markets is the principal source of comparative advantage for the local processing sector. The Meat Processing Taskforce did not have sufficient information on all costs in both value chains to accurately determine the degree of any net comparative advantage for the live animal export chain. Where one value chain is more profitable than another solely due to comparative advantage, and there is free and open competition, growth of the more profitable supply chain will generate net benefits for the domestic community even though there may be individual winners and losers. However, it is essential that there be competitive neutrality between and within the supply chains, so that competition it is not distorted or impaired in some manner. If competition between sectors, or between firms within a sector, is distorted by government policies, or is otherwise not fair and equal, then the benefits of competition will not be fully realised. The concern of the Taskforce is that growth of the live export trade cannot be attributed solely to comparative advantage. Although the end point for both pathways is the same, the competitive ability of the pathway involving local processing prior to export is impeded by significant distortions. As a result, there is a lack of competitive neutrality between the two sectors.
22
Distortion of competition can occur at a number of levels in the value chain from producers to consumers. The specific distortions to competitive neutrality between the processing and live export chains will be discussed in more detail below, but broadly they fall into one of the following categories: i) foreign government trade distortions (e.g. tariff and non-tariff barriers), and ii) federal government domestic policy distortions (e.g. incentives biased towards live trade rather than processing), and iii) WA government policy domestic distortions (e.g. regulations biased in favour of live trade vis-à-vis processing). 3.3. Foreign Government Trade Distortions Trade distortions can take many forms, including tariff and non-tariff barriers. Importing countries introduce such measures in order to protect domestic meat processing and distribution industries from international competition, and to achieve self-sufficiency. Nevertheless, they also distort Australian exports in favour of live animals, and are a formidable barrier to processed exports. Historically, the level of tariff applied to imports of live animals has been lower than that applied to imports of carcasses or meat cuts in a number of export markets for Australia. Such escalating tariffs have been one of the more common, as well as more transparent forms of trade distortion. In some markets, import tariffs on further processed meat products can involve an even higher discrepancy vis-à-vis live animal imports (Trewin 1996), and even greater protection for foreign processing, and for live exports. Under pressure from multilateral trade negotiations and international agencies, such as the WTO, many of the more obvious of these tariff escalation barriers have, or are being eliminated by equalising tariffs rates on livestock and meat. However, there are still numerous instances of more subtle forms of protection, such as where equalisation has not extended to out of quota imports. Other less obvious forms of trade barrier include restrictions by foreign Governments on the ability of frozen product to be sold in wet' markets, controls on distribution and marketing channels used for meat, differential application of licensing and trading regulations, and restrictions on time from unloading to slaughter, etc. (Heilbron 2000). Members of the taskforce cited examples of markets that do not allow import of offals and other coproducts from Australian processors, but will accept these highly sought after foods within the live animal. Some markets (e.g. Philippines) directly protect their feedlot industry by placing limits on the maximum weight of live cattle that may be imported, and consequently indirectly also protect their processing industry. All of these market manipulations enhance the opportunity for importing countries to derive significant added value from imported live animals, while at the same time constraining Australian processors ability to compete financially for supply. 3.4. Domestic Policy Distortions As noted above, livestock producers have been significant beneficiaries of the growth in live export, and have been strong supporters of the sector. The Federal Government also has encouraged the live export trade, both verbally and financially. Some observers have argued that there is an apparent bias in Government support for the live trade. For instance, a now dated study by Booz, Hamilton and Allen (1993) identified Government charges and inspection costs as a source of disadvantage for Australian processors. Heilbron (2000) also argued that meat processing is disadvantaged by the large number of additional costs imposed on meat processors that are not imposed on live exporters, although he acknowledged that many of these costs are intrinsic to the different nature of the activities involved in processing and live exporting respectively. 23
There are a range of ways in which domestic government policies can distort competitive neutrality between competing value chains. Inter alia, direct distortions arise from differences between sectors in the rate of application of taxes or subsidies, in the stringency of application of regulatory standards, and/or in the mechanisms for monitoring and auditing compliance with regulations. Indirect distortions arise when a particular policy has a differential impact on competing sectors even though there are no overt differences in the application of the policy to each sector. An example is a tax applied at an uniform rate to a factor of production used by one sector, but not by the other sector. Where both chains supply product to the domestic market, any differential impacts may be consistent with domestic government policy objectives. However, if the indirect distortion differentially affects the competitive strength of one export supply chain vis-à-vis another, the consequences may not be in the public interest . Indirect distortions also may have unintended consequences for government revenue, and/or for the realisation of government policy objectives. For instance, if direct government promotion of the live export trade destroys domestic processing, it also will harm employment, rural and regional development, and government revenue raising. By its very nature the processing sector has higher cost structures than those for the live export sector. Both sectors incur the normal supply chain costs of procurement, transport, insurance, veterinary treatments, stevedoring, shipping, marketing, etc. However, the biggest imposts for processors are capital infrastructure and employment. Although many live exporting firms have expensive ships of their own, most are owned off-shore and manned by foreign nationals, so their capital maintenance and labour costs are generally far less than for WA processors. At the same time, live exporters employ very few staff while processors employ hundreds. Government taxes and charges identified by the Taskforce that impact on the competitive position of the meat processing export chain and the live animal export chain include: a. AQIS charges and compliance costs for processors in meeting stringent regulatory standards for food safety and public health, product specification, animal welfare, and compliance with importing countries’ protocols. b. Direct and indirect costs in complying with occupational health & safety regulations. c. On-costs of labour employment, including payroll tax, superannuation guarantee, workers compensation insurance , plus applicable stamp duty, that increase with CPI each year. d. Compliance costs for processors (particularly exporters) in meeting stringent environmental standards that are constantly rising, while live exporters have very few restrictions. e. Charges for water and power utilities. Table 3 and Chart 17 below provides estimates of the costs incurred by meat processors that are minimal in the live export sector. These costs currently represent some 10% of livestock costs, implying processors have a 10% competitive disadvantage when seeking to source livestock.
Table 3: Estimates of Government Taxes & Charges on Processors ($/head) Payroll Tax Super Guarantee Workers Comp. AQIS Charges Government Utilities Plant Insurance TOTAL
Cattle 11 12 8 4 13 6 $54
Sheep 0.80 1.20 1.50 0.60 1.70 0.40 $6.20
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Chart 17: Domestic Governments Distortions in Competing Export Supply Chains
FARMS cattle/sheep production
MARKET direct or via intermediaries LIVE EXPORT
PROCESSING
GOVERNMENT REGULATIONS
minimal intervention feedlot licencing, $2,100 pa charges minimal regulation self regulated high loss rates, public disatisfaction lower costs staff not vaccinated low levels of employment low workers compensation costs
ENVIRONMENTAL (Dept of Environment) PUBLIC HEALTH (AQIS)
EXPORT
significant intervention waste/effluent control, $79,000 pa charges capital costs/depn on environmental compliance high standards, high costs
ANIMAL WELFARE (AQIS/RSPCA)
very high standard, inspection/audit very low loss rate high cost of compliance
OH & S
staff vaccinated for zoonotic diseases high levels of employment high workers compensation costs
small payroll ($4.95 million) TAXES & CHARGES negligible payroll tax ($0.20 million) payroll tax rate (4.0%) no land tax on feedlot sites minimal utilities costs
high payroll ($45.69 million) high payroll tax ($2.64 million) average payroll tax rate (5.8%) land tax charged on abattoir sites very high utilities costs (electricity, gas, water)
PROCESSING
MEAT MARKET
MEAT MARKET CONSUMER
Domestic policies identified by the Taskforce as currently contributing to a less than level playing field between meat processing and live animal exports are discussed in more detail in the following two sections.
25
3.5. Federal Government Policy Distortions 3.5.1. Regulatory Processes Taskforce members identified discrepancies between the government regulations that meat processors need to comply with compared to the live trade as a major distortion affecting competitive neutrality. Regulatory requirements cover such matters as public health and product safety in both domestic and export markets, animal welfare, environmental standards, and grading and truth to label. The processing sector is regulated under strict government legislation with costly independent audit processes applied to it. Export meat processing is audited by independent bodies such as AQIS and AUS Meat. At the processing plant each animal is inspected by AQIS staff prior to and during processing. AUS Meat also audit plants on a regular basis to ensure grading and truth to label specifications are maintained. Failure to meet regulatory requirements can lead to loss of licence and prosecution. Other bodies may audit for environmental, laboratory and market/customer reasons. By contrast, although it is now a substantial industry, the live trade successfully lobbied as a fledgling industry for self regulation with no independent audit. Exporters themselves are largely responsible for formulating the Australian Livestock Export Standards that set the framework for self regulation. Moreover, compliance with these standards and the rules for their application are largely policed by members of the Australian Livestock Exporters Council and by Livecorp. Part of the distortion is illustrated by differences in the services that AQIS provides to each sector. AQIS has a meat inspection program that provides the following services to the processing sector: • The provision of export certificates acceptable to Australia’s trading partners • A scientifically-based inspection system which is designed to ensure the production of wholesome meat and meat products • A capacity for ongoing scientific review of that system • The supply of on-plant inspection services and veterinary oversight where necessary at all establishments registered for export with AQIS • An audit function to ensure compliance with the Program’s system. AQIS also has a live animal exports program that provides the following services to the live exports sector: • The provision of export certificates and health certification acceptable to Australia’s trading partners. • Auditing of the preparation and inspection procedures undertaken by third party providers to ensure that these procedures meet importing country and animal welfare standards. • Undertaking export inspection services in cases where third party providers are unable to provide the service. • Registration of premises for the preparation of animals for export. Whether self regulation of the live export trade is one of the reasons for periodic quality assurance failures experienced over many years is source of some speculation. The taskforce heard allegations of abuse of protocols, and that live exporters too often don’t meet their own quality control standards. The fact that the live trade engage commercial vets who rely on live exporters for their business can give rise to a perception that they are subjected to pressures from trading agents to show leniency on the implementation of regulations, even though they have a duty of care under their professional code of practice. 26
It is a fact that the resulting negative publicity which not only jeopardises the long term future of the live trade, but also harms both livestock producers and meat processors as consumers are turned away from eating meat. This poses a risk to the whole industry, since any negative market reactions resulting from misuse of protocol in the live trade will also impact on the meat processors and on the producers who supply stock to both sectors. It is clear from a recent report on an action plan for the Livestock Export Industry (see Joint Government Industry Working Group, (2002, pp.20-21) that current arrangements are still unsatisfactory. A number of ongoing problems were identified, including: • Apparent duplication of procedures and functions; • Compliance, investigations, sanctions; • Lack of outcomes-based legislation and industry standards (LEAP); • AQIS audit of both export preparation, and its own inspection practices is undeveloped. • AQIS standard operating procedures and work instructions are underdeveloped. • Inconsistency in national standards and practice • Lack of commitment by livestock exporters to the spirit of quality management and procedures. Furthermore, the standards that meat processors must satisfy to meet the various necessary registration, certification and inspection requirements are more stringent than those applying to live exporters. The higher compliance costs of meeting the more stringent standards are a further hidden tax on meat exports. 3.5.2. AQIS Inspection Charges and Federal Government Subsidies According to AQIS policy, user charges for registration, inspection, and audit services to ensure compliance with requirements for product safety by domestic and export market customers are set on a "full cost recovery” basis. However, because the AQIS Live Animal Exports Program that is responsible for providing health certificates and export permits delegates virtually all of the task of animal inspections to private veterinarians who invoice exporters direct, there is a concern that such services are not provided in the same rigorous and costly manner as AQIS inspections. A further concern is that AQIS does not perform inspections at processor plants in the most efficient manner possible. In both cases, there is a further disguised tax imposed on Australian meat exporters because user charges exceed the cost to live exporters and/or the lowest possible marginal costs. Apart from the issue of regulatory standards and independent audits, there is evidence that the cost of inspection services for live animal exports are directly subsidised by the Federal government. In August 2001, the Federal government made a contribution to the Live Animal Export Program equivalent to 40% of AQIS fees for live animal exports. The net effect has been to reduce charges to the live export sector by about 40% while maintaining AQIS policy that fees be set on a 100% cost recovery basis. Since the introduction of this subsidy in August 2001, it is estimated that inspection charges for all animal live exports from WA have been subsidised by an annual amount of about $400,000. By contrast, the larger abattoirs in WA each pay more than $400,000pa for AQIS meat inspection services. Another more recent instance is the Cormo Express disaster, where the industry was reportedly rescued by a Federal government payment of about $10 million, which may or may not be recovered from industry.
27
A further form of indirect subsidy to live exports originates from the small part of Australia’s foreign aid program that provides funds and Australian expertise to foreign feed lotting, processing, and packaging operations. This has the effect of developing processing capability and employment in offshore markets at the expense of WA workers and firms, and thereby improving the competitive position of the live animal export chain vis-à-vis the meat export chain. However, apart from the potential contribution to alleviating poverty, it also needs to be stated that enhancing the development of third world economies will potentially open up higher quality and price markets for Australian meat in the future, and/or that Australian consumers may benefit by importing meat products from these countries at cheaper prices, on account of the lower cost structures in these regions. 3.6. WA Government Policy Distortions 3.6.1. Payroll Tax The processor members on the taskforce felt strongly that some State Government taxes and charges were substantial barriers to competitiveness. In particular, the State Government payroll tax regime was viewed as a tax on employment that creates a competitive advantage for live exports vis-à-vis meat processing. The processing industry employs large numbers of staff in Western Australia. For instance, larger export plants can employ up to 400 staff. By contrast, exporters of live animals employ relatively small numbers of staff, and further reduce their exposure to payroll tax by contracting out the provision of some services to independent contractors. The main consequence of a payroll tax on meat processing for export is to substitute foreign employment for rural and regional employment in Western Australia. 3.6.2. Other Taxes and Charges for Government Utilities Land Tax is also collected by the Department of Treasury and Finance. The Department advises that this tax would have a greater impact on processors than live exporters as property used principally for primary production (e.g. feedlots) is exempt of land tax. This exemption does not apply to land used in the processing/packaging stages of production. In addition, many government taxes and charges paid by processing firms, including in particular payroll tax, are linked to the CPI or some other inflationary factor which generally lead to annual upward increments. In essence each rise in these costs further stretches the competitive advantage of live exporters over processors, and makes it ever more difficult for labour intensive meat processing firms to compete against less labour intensive live exporters. Other government charges apply to utilities such as electricity, gas and water which are high use commodities in an abattoir environment. Electricity and water costs are high in WA compared to other states. Taskforce members highlighted the deteriorating infrastructure in regional areas which leads to excessive power failures that are enormously costly to processors. They suggest the state needs to establish gas supplies in the south west, where most abattoirs are located, to provide competition for alternative energy sources. 3.6.3. Environment Levies and Compliance Costs The Department of Environment levies charges in the form of licence and discharge fees. In 2002/03 relevant fees were $79,175 for abattoirs (processing sector) and $2,100 for feedlots (live sector). Although the overall costs are minimal in comparison to those above, again the relativity is in favour of the live exporters. It is noted that these fees, for firms involved in meat export activities, will increase by 20 to 50% over the next three years. 28
Of greater concern for processors are the compliance costs of conforming to stringent environmental standards, especially as long as live animal exporters do not have to comply with the same high standards. For instance, processors are subject to significant costs to satisfy stringent licensing requirements for effluent treatment and disposal of animal wastes to prevent or at least minimise environmental degradation and/or disagreeable impacts on third parties. By contrast, there are minimal regulations on the transport and loading of live animals in urban areas that creates significant pollution problems for adjacent residences. The taskforce was not able to quantify the magnitude of this distortion. 3.6.4. Occupational Health & Safety Occupational Health & Safety policies and procedures are a significant source of cost differences between the two sectors. While OH&S policies are equally applicable to all employees, the regulations are far more stringent for meat processors than for those who work in the live export trade. For instance, processors need to vaccinate their staff against various diseases, but live exporters are not required to provide any such protection. There is no logic for this distortion, as the risk of diseases such as brucellosis, leptospirosis and Q-fever are at least as high in the live export trade because they are carried in urine and faeces, and vaccination is necessary for all workers to develop immunity. The above diseases also are a particular public health risk when stock trucks move through highly populous residential areas. 3.6.5. Food Safety and Public Health The processing sector, particularly meat exporters, are bound by stringent and costly regulations. These are mainly in relation to health and food safety issues. The cost of complying with these regulations is substantial. Live exporters being highly mobile don’t require significant infrastructure, and have relatively low overheads, although some do maintain a stockpiling feedlot. A submission from the Department of Health noted that it was responsible for policies relating to health standards and food safety, and that meat safety should remain the sole the responsibility of the Department of Health. Any involvement of the WA Meat Industry Authority in its areas of policy responsibility would introduce unnecessary overlap. 3.6.6. The WA Meat Industry Authority and Duplication of Government Regulatory Functions The domestic processing sector is currently regulated by the WA Meat Industry Authority. However, the Authority monitors both domestic and export processing plants, and they all pay fees to support it. Of the 38 abattoirs monitored by the MIA, the 4 large export processing plants contribute about 50% of total revenue even though meat exporters also have to be registered with the Australian Quarantine and Inspection Service. It does not control the live export trade, nor does it levy live exporters to meet any of its costs. The standards required by AQIS for plants to supply export markets are far higher than those required to supply the domestic market. So not only do export processing plants pay charges to the MIA for “services” that are of little or no benefit to them, it is another example of costs born by meat processors but not by live exporters. More than one submission expressed the opinion that the role of WA Meat Industry Authority in licensing and regulation of meat processing for export was redundant, and that AQIS should be solely responsible for licensing export processing works.
29
4.
IMPROVING CONSISTENCY OF LIVESTOCK SUPPLY
Profitability of meat processing depends on many factors, but some of the more important are high levels of utilisation of the substantial investment in slaughtering capacity, and controlling labour costs while maintaining a skilled and productive labour force. The Industry Commission report on Meat Processing (1994) identified both inter-seasonal and intra-seasonal variability in livestock turn-off as an important factor in under-utilisation of capacity and higher industry costs. They noted that relative prices of other broad-acre commodities is an important determinant of interseasonal variability, and that slaughter rates increase during periods of flock or herd size reductions because of expectations of declining wool or beef prices, or due to drought. However, the primary cause of seasonality in livestock production is climatic conditions. Primary production in WA is governed by strongly seasonal climatic conditions. In the south, the Mediterranean climate is characterised by hot dry summers, cool wet winters and a short spring with favourable growing conditions for plant production. In the north, a tropical monsoonal climate is characterised by very hot wet summers and warm dry winters. As a result, in both regions the cost of producing livestock in the “off” season is much greater than in the “on” season, and traditionally livestock turnoff has been strongly seasonal. In the absence of financial incentives for “off” season production, most livestock will continue to be turned off in the “on” season. As a result of seasonality, abattoir capacity can be under-utilised during significant parts of the year. This intrinsic variability of livestock turnoff rates creates management and consequent economic problems for downstream industries that use livestock as an input to production. Such problems are greater for downstream industries that require substantial capital investment, and/or are labour intensive. Relative to live exports, meat processing is more capital intensive, and more labour intensive. Consequently, anything that could improve consistency of livestock supply would assist the processing sector to compete on more favourable terms with the live export trade. 4.1. Possible Solutions for Cattle The key issue is for the cattle herd to continue to grow numerically and for the industry to achieve ongoing profitability in all sectors. In order to achieve these goals the taskforce agreed the following industry aspects needed to be pursued: 1. Enhanced on-farm management- maximising calf production, pro-active marketing relationships/alliances, forecasting/hedging, financial management, dealing with dry seasons 2. Alliances- foster relationship between grain producers (with surplus feed) and specialist cattle producers (seeking more land to run stock), ensuring the utilisation of stubbles and other crop residues is optimised 3. Cattle producer/processor alliances and/or cooperatives- to enable quality and supply consistency, to build economies of scale and minimise finishing and marketing costs 4. Enhanced breeding programs- breeding to meet market specifications 5. Advanced feeding regimes for more rapid turnoff- lot feeding using economical high growth rations, must achieve economies of scale, grains/legumes/roughage readily available 6. Strategic international alliances- growers, processors, distributors and retailers in higher value (non commodity) products; meat quality performance based payments, MSA, NLIS monitoring 7. Improved productivity, especially in pastoral regions ! enhanced grazing regimes- cell/rotation grazing, also reduces operating costs ! enhanced management of weaners- move, to ensure optimum growth rates throughout lifetime 8. Strive for higher carcass weights (300kg+)- promotes better abattoir efficiencies 30
DAWA needs to take a lead role in fostering these opportunities. It will be important to provide relevant information and particularly financial models that demonstrate to farmers the benefits of further value adding their stock by targeting high value export markets. 4.2. Possible Solutions for Sheep Similarly for the sheep sector, the key issue is for the flock to grow numerically, and for the industry to achieve ongoing profitability in all sectors. Many of the issues noted in the cattle sector are equally relevant to sheep producers. However the taskforce noted some particular research projects that are currently in progress that may lead to significant improvement in the sheep industry. These include studies on the following topics: ! ! ! ! !
lamb production- increase litter size and lamb survival (using nutritional rather than hormonal means), thereby reducing the unit cost of lamb production out of season breeding- advancing the ‘ram effect’, also to non-merino breeds selecting sires for higher growth rates strive for younger joining weights, target 7 months use of “guardian” dogs to reduce predators
DAWA is working with the Universities to pursue these opportunities. 5.
MAINTAINING CONSISTENT EMPLOYMENT
5.1. Labour Issues Following procurement of livestock, labour costs are the next most significant expense in an abattoir, incorporating some 50-60% of the balance. Many of these are beyond the managers’ control, such as payroll tax, superannuation guarantee, workers compensation and training. The rising costs of employment constrain the ability of processors to undertake further value adding opportunities. At the same time it is unreasonable to contemplate a lowering of wages in an industry that already has very low pay scales for many of their staff. These circumstances make it difficult for WA processors to compete with very low cost processing plants in SE Asia and hence the advantage enjoyed by the live export sector. Employment standards and work practices in the processing sector have advanced significantly in the past decade. However, as identified earlier, the major constraint to consistent employment is the seasonality of the industry and the severe supply shortages that occur in the “off” season. These can only be alleviated as processors develop longer term relationships with producers to establish mutually beneficial supply contracts to deliver ‘out of season’ stock to fill the traditional gaps. Implementation of the possible supply solutions listed above need to be pursued by all industry participants with particular support from the Department of Agriculture and the consulting industry in WA. Inconsistency of supply of stock has a very deleterious impact on employees. In times of stock shortage, abattoir managers have little option than to reduce staffing levels to control costs, commensurate with the level of production being achieved. This is highly unsatisfactory for staff. Work satisfaction is based very strongly on a sense of security of employment. To attract quality staff in the long term a firm must be able to offer their employees worthwhile work for 52 weeks pa.
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Overcoming this problem is often tackled by employing casual staff. In the longer term this is difficult to sustain as it is inconsistent with a philosophy of on going training and up-skilling. Given the nature of work in a processing plant, breaks in the work schedule tend to enhance the probability of lost time injuries, particularly soft tissue complaints. These injuries encompass the greatest percentage of workers compensation claims. 5.2. Workers compensation Workers compensation payments are a major issue for some processors, as payments appear exorbitant and could run up to 4-10% of wages costs in some instances. Premiums charged relative to claims made can only be justified by very high risk factors, despite the significant progress in overall awareness of the issues and specific training targeted at injury minimisation, in recent years. Data from the Department of Consumer and Employment Protection demonstrate the progress made over the years. Short term injuries have dramatically reduced while medium term injuries have been pegged back, but long term injuries are continuing to increase steadily. It is claimed that these long term injuries “explain” the rising costs of workers compensation insurance along with the fact that there is only one insurer in WA. The lack of competition is a source of concern, and denies processors any bargaining power. Information provided by Taskforce members suggest premium to claim ratios range from 10 ($300K/$30K) to 20 ($500K/$25K). It was reported that some large processors have resorted to self-insurance to control the costs of compensation payments. Charts presented in Appendix 2 show the changes in LTIDs (Lost Time Injury Days) over five years and demonstrate that the meat processing sector generally has higher injury rates than other industries. WA’s meat processing performance ranks midway, in relation to other states. 5.3. Training Training of processing plant workers has had a substantial impact on the efficiency and quality of work practices over the years. The Meat Industry Training Advisory Council (MINTRAC) has had a significant impact in promoting these advances. Unfortunately in WA training has not been as well coordinated as in the Eastern States where MINTRAC is based. The Taskforce, through MINTRAC, commissioned a committee to review the training platforms in WA and the following key issues were identified: ! a dedicated meat industry training facility should be developed with funding from the WA Department of Education and Training ! the Department’s case by case approach to the approval of “existing worker traineeships” is denying WA companies access to Commonwealth funding ! WA only has one private Registered Training Organisation delivering to the processing sector and TAFE has been slow to build capacity to service this sector ! the group identified the following training priorities: existing workers, supervisors, preemployment candidates and school based programs. A full copy of the report is attached as Appendix 4. The Department’s response was that it will continue to adopt a managed approach to traineeships for existing workers and consider applications based on demonstration of a genuine training need, to ensure quality outcomes.
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6.
DEVELOPING NEW OPPORTUNITIES
The Taskforce considered that development of new market opportunities should be left mainly to individual firms, rather than undertaken as a cooperative venture. Each processor member represented was pursuing various opportunities and targeting various markets, and in the main did not feel the need to develop them as joint projects. However the Taskforce did agree that there are some exceptions to this preferred approach. For instance, the industry needs to re-visit the issue of lamb definition in an attempt to enhance opportunities for additional lamb exports. 6.1. Enhancing Lamb Exports In principle, producer groups in WA generally support a review of the definition of lamb. However, to date the Sheep Meat Council has been reluctant to propose any changes to the Ausmeat Advisory Committee which administer meat definitions. It was noted that lamb definition varies across markets (from Ausmeat, 2002): • Australia: a lamb carcass shall be derived from a female, castrate male or entire male that shows no evidence of eruption of permanent incisor teeth. • New Zealand: a young sheep under 12 months of age or one which does not have any permanent incisors in wear. • USA: definition is determined by the degree of ossification of the “break joint” in the fore-leg. Clearly there is variation in the objectivity, transparency, and ease of substantiation of the above definitions. The Australian standard would seem to be the least open to conjecture while the US relies on a trained operator who makes a subjective assessment of ossification. Some advantages of the US system are: • animals which are physiologically young but chronologically old can still be described as lamb. • assessments can be made on a carcass after the head (dentition) is removed. The disadvantages are: • subjectivity, extensive training and on-going monitoring required to ensure consistency across processors and assessors; • more open to potential abuse and biased assessments; • subjective assessment would hardly form a solid base for prosecution in the event of suspected misdescription. The NZ system has some merit as it overcomes exclusion of those animals “on the margin”. That is, an animal that is mouthed at draft with no permanent incisors but cuts one prior to slaughter can still be described as lamb. Recent research concluded that: • timing of teeth eruption is highly variable, and can range from 10 – 18 months; • partial teeth eruption had no effect on the eating quality of lamb; • the reputation of lamb depends on the quality systems that deliver it to market, not its age per se • an extension to 18 months age doesn’t significantly alter the quality of loin cuts but may affect lesser cuts. In addition, there are issues peculiar to WA, including: • extended dry periods can cause lambs to cut teeth earlier than in other states, thus losing their lamb status despite being the same age; • generally lighter soils inhibit growth which extends the time required to reach market weights; 33
• •
the increasing trend to feedlot lambs for growth and finish can trigger earlier cutting of teeth; any re-definition could damage the established very good reputation of lamb in local markets.
The WA Meat Processing Taskforce (MPT) believes that any “extension” of the age of lamb should be held to a minimum level and must be subject to an absolute standard • a definition of “one erupted tooth” has been suggested, it is assumed this would add some 1 to 3 weeks to the lambs’ age at slaughter • a matrix of empirical measures, along the lines of Meat Standards Australia (MSA) could also be considered • differentiation (in lamb definition) between domestic and export markets could be helpful, i.e. not disrupting the current positive status of existing domestic definition, while developing market specific definitions to suit respective off-shore markets, • the implementation of the National Livestock Identification Scheme (NLIS), which incorporates electronic data capture, storage and retrieval, could in the longer term enable actual ageing, from birth date to slaughter date. There remains a reluctance across the nation to tackle the issue of lamb definition. Any changes that could occur in the short term would incorporate a voluntary, self-regulated code of practice. Legal advice received by Ausmeat suggests a change to a mandatory system is unlikely to be successful. During consultations at the Taskforce the WA Meat Industry Authority, which controls the application of lamb brands in WA, suggested they would be prepared to take up the case for redefinition (on the basis that the quality of the product will not suffer and that it was supported by industry). There seems to be adequate justification to pursue a case for an extension of the definition of lamb to assist WA farmers to more readily supply lamb to various world markets. 6.2. Developing New Markets The taskforce was quite critical of the role of government and quasi-government organisations involvement in market development. There are various trade offices representing Australian exporters in many countries throughout the world. Their purpose is to assist Australian firms to establish and maintain profitable trading relations. These organisations include Meat & Livestock Australia, Austrade, Agriculture Forestry and Fisheries Australia and various State Trade & Development offices. Taskforce members questioned the efficiency and efficacy of these offices and the following issues were identified: 1. government to government trade is history, under globalisation trade is company to company. 2. government agencies don’t generate any new customers, even though they may facilitate opportunities through Memoranda of Understanding, etc, only firms generate customers. 3. the various trade offices do introduce potential customers but this only opens up competition between Australian entities. 4. competition generated by government agencies reduces prices to Australian suppliers. 5. many deputations from overseas customers, generated by government agencies, are a waste of resources: time, lunches, guided tours, etc that don’t generate any additional sales. 6. trade development should be left to industry. 7. according to the processor members, the DAWA Trade & Development investment has no impact on their business and regard the investment as wasted expenditure. It was suggested DAWA should focus on industry development, assisting farmers to increase production of livestock, particularly through feedlotting, and researching other means to increase supply volume and consistency, through manipulation of calving/lambing times.
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7.
DRAFT CONCLUSIONS AND RECOMMENDATIONS
7.1. Establishing a Level Playing Field There is compelling evidence that competition from a rapidly growing live export sector for the limited supply of animals at the farm gate, as well as for foreign markets for animal products, has damaged the processing sector. This has resulted in reduced throughput, under-utilisation of slaughtering capacity, and consequent rationalisation of the meat processing sector to shed excess capacity. Equally, it is clear that this enhanced competition has generated significant net benefits for livestock producers. Consequently, the Meat Processing Taskforce recognised that it would not be in the national or West Australian community interest to recommend that live exports be banned, or even subject to quotas, even though this trade has had a negative economic impact on meat processing employment and profitability. Despite these impediments, the meat processing industry has made significant progress in improving its operating procedures and labour relations. However, there is still a gap between the competitiveness of the live animal and meat export sectors that can be attributed to policy distortions. Moreover, taskforce members feel strongly that increases in tariffs and taxes continue to widen the gap in competitiveness between these two sectors. Ultimately, farmers will be the losers if this trend continues and the processing sector is further disadvantaged. It is in the long term interest of the cattle and sheep industries, as well as in the national interest, that there be competitive neutrality between the meat export value chain and the live export value chain. In other words, it is in the future interest of the cattle and sheep industries for there to be a level playing field between meat processors and live exporters . Dominance by either sector due to policy distortions rather than comparative advantage would restrict competition for stock, and undermining prices paid to farmers, who ultimately would suffer the consequences from any distortion of healthy competition for stock. There is a strong prima facie case that current trade and other policies of some of the countries that import Australian meat products and/or livestock significantly distort the neutrality of competition within Australia between the meat export value chain and the live export value chain. In addition, some policies of the Australian Federal Government, as well as of the West Australian State Government, further distort competitive neutrality between the value chains of the live and processing sectors. Information on these issues has been analysed and presented to demonstrate that both foreign and domestic policies confer a competitive advantage on the live export trade that is neither efficient nor in the public interest. The first best solution to direct policy distortions is to correct the distorting policy, and/or its associated regulations and regulatory processes. For the West Australian Government, this is the appropriate action to take with respect to those of its own policies that directly distort competitive neutrality between the meat export and livestock export supply chains. The Meat Processing Taskforce has identified that in the areas of environmental policy, occupational health & safety, food safety and public health, certain regulations, and/or enforcement thereof do result in such direct distortions to competitive neutrality. It is outside of the expertise base of the Meat Processing Taskforce to make specific recommendations about how best to correct such distortions. Instead, and in accord with its Terms of Reference, the Meat Processing Taskforce makes the following recommendations.
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7.1.1. Draft Recommendation 1. The Meat Processing Taskforce recommends that the West Australian Government determine and implement the best way to correct the distorting effect of the application and enforcement of its environmental policies on competitive neutrality between the meat processing sector and the live animal export sector. Inter alia, the Environmental Protection Authority should monitor all part loaded cattle and sheep ships landing at WA ports, to ensure they comply with local quarantine standards. Livestock exporting firms should pay fees based on full cost recovery to fund this service. 7.1.2. Draft Recommendation 2. The Meat Processing Taskforce recommends that the West Australian Government determine and implement the best way to correct the distorting effect of the application and enforcement of its occupational health & safety policies on competitive neutrality between the meat processing sector and the live animal export sector. Inter alia, employees in the live export sector should be required to undertake vaccination against zoonotic diseases. As is standard practice in the processing sector, the cost should be funded by their employers. 7.1.3. Draft Recommendation 3. The Meat Processing Taskforce recommends that the West Australian Government determine and implement the best way to correct the distorting effect of the application and enforcement of its food safety and public health policies on competitive neutrality between the meat processing sector and the live animal export sector. Several submissions to the Taskforce claimed that there is duplication in the provision of, and/or inadequacy of inspection services. Some of these allegations relate to national organisations such as AQIS, or AUS-Meat, which are not accountable to the West Australian Government. However, several involved the WA Meat Industry Authority (MIA), and one concerned the Department of Agriculture. More than one submission argued for abolition of the WA Meat Industry Authority. In the opinion of the Meat Processing Taskforce, there is clear evidence that most of the functions that the WA Meat Industry Authority performs duplicate the functions of other government and industry bodies. For instance in the area of public health standards and food safety the WA Department of Health is in the best position to implement State Government policies. This is acknowledged by both parties, who noted that they were discussing ways to resolve the matter. Such distortions need to be corrected as soon as possible. AQIS is the most appropriate body to issue licenses for meat processing export plants. It would seem undesirable as well as impracticable to remove responsibility for licensing meat processing export plants from AQIS. Nor would it make any sense to remove responsibility for state government policies relating to public health standards and food safety from the WA Department of Health. Furthermore, the Taskforce was convinced that the WAMIA had not only duplicated other functions, but also that it was ineffective in implementing the functions it had. Consequently, the Meat Processing Taskforce concluded that the only realistic solution was to abolish the WA Meat Industry Authority and where appropriate, to devolve it’s responsibilities to relevant existing agencies. The Taskforce also identified a lack of performance in inspection of product marketing and description, particularly the aspect of ‘truth to label’. In addition the industry believes there is a need for regulatory organisations to be given additional powers and relevant resources to adequately administer the regulations in order to minimise corruption.
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7.1.4. Draft Recommendation 4. The Meat Processing Taskforce recommends that the West Australian Government should abolish the WA Meat Industry Authority and devolve it’s responsibility for State Government policies relating to public health standards and food safety to the WA Department of Health, devolve it’s responsibility for licensing meat processing export plants to AQIS and devolve it’s responsibility for saleyards to the Department of Agriculture. Furthermore, the Western Australian Government should commission the Department of Consumer Protection to ensure that meat products are properly described and are true to description. The relevant Departments to which responsibilities are devolved must be given adequate skills, legislative back up and resources to enable their functions to be carried out effectively. Land Tax is a state government tax that is levied on meat processing plants, but not on feedlots used by the live export trade to assemble stock prior to loading on ships. This is another example of a direct distortion to competitive neutrality between processors and live exporters. Even though it is a minor distortion, it should be corrected. 7.1.5. Draft Recommendation 5. The Meat Processing Taskforce recommends that the West Australian Government should either exempt meat processing from paying land tax, or it should apply it also to facilities that are used exclusively or predominantly for exporting livestock (e.g. holding yards, feedlots, etc.). The other sources of direct distortions to competitive neutrality between meat export and livestock export chains are foreign government or Federal Government policies. The first best solution of correcting these distorting policies is not an option for the West Australian Government. Second best options that involve adoption of some form of compensating policy instrument by the West Australian government will be discussed later in this section. The Meat Processing Taskforce was convinced that current trade and other policies of some of the countries that import Australian meat products and/or livestock significantly distort the neutrality of competition within Australia between the meat export value chain and the live export value chain. As neither the state nor federal Australian governments have any direct control over foreign government policies, the only other solution is for the federal government to persuade foreign governments to remove such trade barriers and distortions during trade negotiations with these foreign governments. From a West Australian perspective, the best that can be expected is for the State Government to vigorously lobby the Federal Government to actively seek to reduce such distortions as part of its trade negotiations. 7.1.6. Draft Recommendation 6. The West Australian Government should vigorously lobby the Federal Government to actively pursue, as part of its trade negotiations, the elimination of policies of foreign governments that distort competitive neutrality between meat processing and live animal exports in Western Australia. In principle, the situation is the same for those federal government policies that were identified above as distortionary. Again, apart from second best policies to be discussed below, all that the West Australian Government can do is to lobby the Australian Government to change those policies that distort competitive neutrality between meat processing and live animal exports.
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Among the Federal Government policy distortions identified by the Meat Processing Taskforce, the area of greatest concern is the differences in the regulatory processes between the two sectors. History has shown that independent inspection is the only method that has been successful in preventing companies abusing the rules when pressure from costs, profits and timing are applied. The Taskforce concluded that for the security of future trade and the benefit of the sheep and cattle industries as a whole, the live trade should also be independently regulated. The Taskforce strongly recommends that AQIS, or some similarly independent replacement, be given responsibility for the independent regulation and audit of the live export sector as well as the meat export and domestic processing sectors. Areas of responsibility should include food safety and public health matters, product specification (e.g. age, weight, pregnancy status, HGP status, horn status etc), animal welfare issues, and compliance with importing countries’ protocols. The Taskforce considers it totally unacceptable that the regulating body of the live trade deems 2% a reasonable mortality rate. If a similar rate occurred in the processing sector AQIS, RSPCA, Australian Veterinary Association and other parties would likely impose stringent penalties on the perpetrators. Live exporters should pay fees set on equal cost recovery principles to those used to set inspection and audit fees for the meat processing sector. Only in this way can both sectors contribute in a commensurate manner to the cost of ensuring that AQIS has the resources to ensure the integrity of trade in all sectors. 7.1.7. Draft Recommendation 7. The West Australian Government should vigorously lobby the Federal Government to change legislation so that independent AQIS officers audit the live export trade to ensure that it meets the same high standards for animal welfare, food safety, and for meeting importing country protocols, as are applied to processors. AQIS should determine the charges to be born by the live export sector on the same basis as it uses to determine charges for the processing sector, AND any Federal Government subsidies to reduce inspection, licensing, and audit costs should be equally available to both sectors. In the meantime, and until such time as recommendations seven and eight result in the removal of distorting foreign and Federal Government policies, the West Australian Government should introduce second best compensating policies that restore competitive neutrality between meat processing and live animal export value chains. The mechanism for doing so favoured by the Meat Processing Taskforce is for the West Australian Government to provide payroll tax rebates to meat processors for the part of their production that is exported. As a second best correction to external policy distortions, a payroll tax rebate is a relatively efficient and non-distorting policy instrument for restoring competitive neutrality between the competing export chains. More importantly, a rebate for export meat will tend to offset the indirect distorting effect of the payroll tax per se on the two competing export chains due to the much more labour intensive nature of meat processing vis-à-vis live animal exports. A further advantage is that this would contribute to greater achievement of the government’s rural employment and regional development policy objectives.
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The WA Department of Treasury and Finance has indicated that it considers payroll tax to be one of the broader and more efficient taxes available to government. The Department also suggests the final economic incidence of payroll tax is little different to that of a personal income tax or broad based consumption tax because businesses paying payroll tax can pass it on to consumers. The Meat Processing Taskforce does not accept these arguments, and is not persuaded that they warrant rejection of its recommendation. In the context of competitive neutrality between competing export supply chains, the argument about final economic incidence of payroll tax is simply irrelevant. On the more substantive issue of economic efficiency, payroll tax is a selective tax on just one factor of production, namely labour, so it penalises meat processors for employing people in meat processing. Consequently, this tax distorts input choice by firms as it provides an incentive for firms to substitute other inputs (e.g. machinery) for labour to process meat, and provides a competitive advantage for less labour intensive livestock exporters vis-à-vis more labour intensive meat processors. Not only does payroll tax result in an indirect distortion to one export supply path (meat processed in WA) against the other path (export of live animals for foreign processing), but a tax rebate also is the most effective policy instrument available to the state government to compensate for distortions to competitive neutrality due to policies of other governments. 7.1.8. Draft Recommendation 8. The West Australian Government should introduce payroll tax rebates for firms employing labour to process meat for export to compensate for foreign and Federal Government policies that distort competitive neutrality in Western Australia between meat processing and live animal export value chains. 7.2. Labour Issues Meat industry training in WA falls behind what is being achieved in other states. Two major impediments are the WA Dept of Education and Training opposition to Commonwealth funded existing worker traineeships and the lack of training providers in the state. 7.2.1. Draft Recommendation 9. The West Australian Government should , through the Department of Education and Training, ensure that all workers in WA meat processing firms have equal access to training as their eastern states counterparts. Despite significant progress in overall awareness of the issues and specific training targeted at injury minimisation, resulting in improving standards in recent years, workers compensation premiums appear exorbitant. WA firms also suffer from a lack of competition in this insurance market, denying them any bargaining power. 7.2.2. Draft Recommendation 10. The West Australian Government should , through the Insurance Commission of WA, explore options to alleviate the inconsistent and generally high costs of workers compensation in WA. 7.3. Stock Supply Issues Livestock supply is a critical issue for both meat processors and live exporters. If there is greater availability of supply at the farm gate, there will be less competition between the two sectors for livestock, which should allow both sectors to compete more effectively for a greater share of world markets. Greater livestock supply is the best long term solution for low levels of utilisation of processing capacity and greater security of employment opportunities. 39
7.3.1. Draft Recommendation 11. The Department of Agriculture of Western Australia should invest more resources in cattle and sheep reproduction R&D to improve livestock turnoff, and to lessen competition between meat processors and live exporters for the supply of animals. Reducing the seasonality of livestock supply is another critical issue for the industry. A more even supply of stock throughout the year would enable processors to offer more reliable and secure employment to their workforce. 7.3.2. Draft Recommendation 12. The Department of Agriculture of Western Australia should invest more resources to assist farmers to develop profitable mechanisms to supply cattle and sheep throughout the year, via “out of season” calving and lambing regimes. For the cattle industry, there would be greater value adding in Western Australia if, instead of exporting northern born cattle as live animals in store condition, they could be moved south to the agricultural regions for further backgrounding, feedlotting and ultimately slaughter for high quality/value export markets. 7.3.3. Draft Recommendation 13. The Department of Agriculture of Western Australia should invest more resources to assist industry to develop supply chains that take advantage of the seasonal and environmental attributes of each region in Western Australia. 7.4. Developing New Markets As noted above, the Taskforce believes that Government agencies should have a minimal role in developing customer relationships in importing countries, as all that they tend to achieve is to create competition between exporters. Consequently, their role should be confined to high level government to government negotiation for such things as establishing Memorandum of Understanding, trade protocols, etc. 7.4.1. Draft Recommendation 14. The Department of Agriculture of Western Australia should divert funds away from Trade and Development, and invest more resources in high priority areas to enhance livestock supply. The Meat Processing Taskforce identified the definition of lamb currently used in Australia as a limiting factor reducing returns to the industry. 7.4.2. Draft Recommendation 15. The West Australian Government should, through relevant industry organisations and the Department of Agriculture of Western Australia, further explore options to extend the definition of lamb to enable farmers to export more lambs, and to meet the heavier carcass weights desired in the US market.
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8. FINAL CONCLUSIONS The Meat Processing Taskforce (MPT) convened its final meeting on 15 September 2004 to consider the contents and implications of the Interim Government Response to the MPT’s draft report and the second round of submissions received in response to the Minister’s request for further feedback after the release of the interim government response. This chapter is organised around the draft recommendations. Each draft recommendation is followed by the Interim Government Response, and where relevant, by Meat Processing Taskforce Observations. Unless stated otherwise, the final recommendation is the same as the draft recommendation. The MPT notes its disappointment that several of the submissions from Government Departments did not address the issues raised in the recommendations, but simply indicated that the specific issue was not in their particular area of responsibility. Some Departments simply reiterated current policies and practices, rather than suggesting possible innovative options that might help to enhance competitive neutrality between meat and live exports. MPT members acknowledge that in some cases, the draft recommendation may have nominated the incorrect agency within Government to implement the recommendation, but in such cases they would have expected that Department to refer the recommendation to the responsible agency. In light of this recent feedback, the Taskforce has reconsidered each of its original recommendations and makes the following observations: Draft Recommendation 1: The Meat Processing Taskforce recommends that the West Australian Government determine and implement the best way to correct the distorting effect of the application and enforcement of its environmental policies on competitive neutrality between the meat processing sector and the live animal export sector. Inter alia, the Environmental Protection Authority should monitor all part loaded cattle and sheep ships landing at WA ports, to ensure they comply with local quarantine standards. Livestock exporting firms should pay fees based on full cost recovery to fund this service. Interim Government Response: •
The Environmental Protection Authority is responsible for environmental matters but it is not responsible for ensuring compliance with “local quarantine standards” as stated in the recommendation.
•
There have been concerns about smell from partly-loaded livestock vessels in Fremantle Port. Comment will be sought from the Fremantle Port Authority and the Department of Environmental Protection.
•
Compliance with Western Australia's quarantine standards does not arise unless the animals originating from other States are required to be unloaded and moved away from the port area.
•
Compliance with export quarantine standards is a matter for the Australian Government and is subject to full cost recovery.
•
The costs of environmental licences across the sectors will be further assessed.
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Meat Processing Taskforce Observations: This MPT draft recommendation did not require the Environmental Protection Authority to be responsible for ensuring compliance with “local (i.e. state) quarantine standards”. Rather it requested that they (or the relevant authority) monitor part loaded cattle and sheep ships to ensure that they comply with local quarantine standards. The Department of Environment suggests this is not the responsibility of EPA. This may be the case, but the point is that someone in the West Australian Government should be responsible to ensure that any breaches are reported to the relevant authorities. Any costs associated with this should be carried by livestock exporting firms. Governments’ response that quarantine standards do not arise unless animals are unloaded is alarming given the risk that vectors such as flies, fleas, mosquitoes etc., might transmit diseases. Such concerns were raised when consideration was being given to bringing the animals on the Cormo Express back to Australia, and the Cormo Express had to be thoroughly disinfected before it was allowed into Australian Ports empty. This response also is inconsistent with long established processes to prevent interstate visitors introducing plant or animal material into Western Australia from other parts of Australia. MPT accepts that compliance with export quarantine standards is a Federal Government issue but we would have expected that the response would have included vigorous lobbying of the Australian Government by this State Government. The more substantive issue though, is the discrepancy in the requirements for compliance with West Australian government environmental standards between the meat processing sector and the live animal export sector. For instance, in relation to the smell from partly-loaded livestock vessels, the Fremantle Port Authority and/or the Department of Environment have failed to address these odour problems at the same time as the Department of Environment strictly regulates the Meat Processing and Rendering industries in relation to effluent and odour control, to the extent that their ongoing viability is threatened. For instance, the Watsonia plant in Spearwood has just recently ceased slaughtering and by products production, due at least in part to environmental concerns. Poor planning and Local Government decisions also have allowed residential development to encroach on buffer zones around meat processing plants. The Department of Environment needs to pursue the Live Export sector with the same level of rigour to solve the odour control problem in the Port of Fremantle. MPT is disappointed that the State Government has not responded to the concerns of processors in regards to the compliance costs of conforming to stringent environmental standards, especially as long as live animal exporters do not have to comply with the same high standards. For instance, processors are subject to significant costs to satisfy stringent licensing requirements for effluent treatment and disposal of animal wastes to prevent or at least minimise environmental degradation and/or disagreeable impacts on third parties. By contrast, there are minimal regulations on the transport and loading of live animals in urban areas that creates significant pollution problems for adjacent residences. MPT accepts the updated Department of Environment figures for licence fees, being: $92,036 for 20 abattoirs (average $4,602 per facility) $12,636 for 15 livestock holdings (average $842 per facility)
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However, the MPT believes that most of the “15 livestock holdings” were not in fact part of the live animal export sector. Even so, these figures clearly demonstrate the concerns raised about the substantial discrepancy between the sectors, with abattoirs fees being 7.3 times higher on a gross basis, or 5.5 times higher on an average basis if all 15 livestock holdings are used for live animal exports. The quantum in dollar terms may not be significant, but it is disappointing that the Department has not acknowledged that these matters do impinge on the competitive neutrality of the two sectors. Nor have they considered any options to redress this bias. It is noted also that previous correspondence from the Department suggested that over the next three years discharge fees will be increased by 90% and for companies involved in meat export activities this will result in overall fee increases of between 20 and 50% over the three years. Final Recommendation 1: The Meat Processing Taskforce recommends that the West Australian Government determine and implement the best way to correct the distorting effect of the application and enforcement of its environmental policies on competitive neutrality between the meat processing sector and the live animal export sector. Draft Recommendation 2: The Meat Processing Taskforce recommends that the West Australian Government determine and implement the best way to correct the distorting effect of the application and enforcement of its occupational health & safety policies on competitive neutrality between the meat processing sector and the live animal export sector. Inter alia, employees in the live export sector should be required to undertake vaccination against zoonotic diseases. As is standard practice in the processing sector, the cost should be funded by their employers. Interim Government Response: •
The Department of Agriculture will develop with the Department of Health ways of encouraging wider understanding of zoonotic disease risk management, including vaccination awareness in risk groups.
•
Employees involved in the livestock export industry within Western Australia’s jurisdiction are not treated differently to other personnel handling live animals within the State.
•
It is not a requirement that personnel handling live animals (whether involved in livestock exports or not) are vaccinated against zoonotic diseases, except that there should be compliance with occupational health and safety requirements. In some circumstances, this may involve vaccination against diseases such as Q fever (eg workers who are dealing with open carcasses - abattoir workers, vets, etc). Compliance with occupational health and safety is a matter for individual businesses/agencies.
Meat Processing Taskforce Observations: MPT suggests this response does not address the recommendation. Encouraging wider understanding of zoonotic disease risk management and including vaccination awareness in risk groups is not a solution to the problem. There is no shortage of material on Zoonotic diseases in either literature or educative videos. The problem is that there is currently no requirement to vaccinate workers in the live animal export sector, so employers do not vaccinate their workers, while the recommendation is that they should.
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The suggestion that employees involved in the livestock export industry are not treated differently to other personnel handling live animals is not true. Export abattoir workers who handle livestock are required to be vaccinated against Q fever. The government response ignores the reality that the risk of infection for most Zoonotic diseases, such as brucellosis, leptospirosis and Q-fever, are at least as high in the live export trade as in meat processing, because they are carried in urine and faeces. Hence, vaccination is necessary for all workers to develop immunity. The above diseases also are a particular public health risk when stock trucks move through highly populous residential areas. MPT notes that a subsidy supplied by the Western Australian Department of Health, funded by the Australian Government, to eligible employers and workers for the cost of Q Fever testing and vaccination would be extended to 30th June 2005 or until funds are expired. MPT hopes that the Minister would lobby the Federal Government to ensure this funding is continued. Removal of the subsidy would add further costs for the meat processing sector and further compound the distortions of competitive neutrality between the two industries. Final Recommendation 2: The Meat Processing Taskforce recommends that the West Australian Government determine and implement the best way to correct the distorting effect of the application and enforcement of its occupational health & safety policies on competitive neutrality between the meat processing sector and the live animal export sector. Inter alia, employees in the live export sector should be required to undertake vaccination against zoonotic diseases. The Meat Processing Taskforce also recommends that the West Australian Government lobby the
Federal Government to continue funding the cost of Q Fever testing and vaccination.
Draft Recommendation 3: The Meat Processing Taskforce recommends that the West Australian Government determine and implement the best way to correct the distorting effect of the application and enforcement of its food safety and public health policies on competitive neutrality between the meat processing sector and the live animal export sector. Interim Government Response: • •
Comment will be sought from the Department of Health The intent of this draft recommendation is addressed in comments on other recommendations in the draft report. In general, the Department of Agriculture's responsibilities in this area relate to R&D for the cattle and sheep industries.
Meat Processing Taskforce Observations: The Governments’ response fails to indicate support or otherwise for the recommendation. The Department of Health suggests it is unable to apply domestic food safety and public health policy to the live animal sector because no processing of animals for human consumption occurs prior to export. This is obvious, and yet it would seem prudent for Government to be concerned about the potential public health issues that might arise from transporting of live animals through residential areas. Again, the relevant agency has not addressed the issues, nor provided any rationale for not considering some form of monitoring of health issues associated with the live trade. On the contrary, a further submission from the Department of Health suggests public health issues are not relevant to the live export sector. Again this highlights the differentiation in standards applied to these competing sectors, which is of concern to the MPT.
44
Draft Recommendation 4: The Meat Processing Taskforce recommends that the West Australian Government should abolish the WA Meat Industry Authority and devolve its responsibility for State Government policies relating to public health standards and food safety to the WA Department of Health, devolve its responsibility for licensing meat processing export plants to AQIS and devolve its responsibility for saleyards to the Department of Agriculture. Furthermore, the Western Australian Government should commission the Department of Consumer Protection to ensure that meat products are properly described and are true to description. The relevant Departments to which responsibilities are devolved must be given adequate skills, legislative back up and resources to enable their functions to be carried out effectively. Interim Government Response: •
The recommendation on the abolition of the Western Australian Meat Industry Authority is not supported.
•
The Western Australian Meat Industry Authority (MIA) is responsible for the key initiative of closing the Midland Saleyard and establishing a new saleyard at Muchea. This is a major project and the MIA is the lead agent in this process. In respect to other saleyards, the MIA’s role is minimal and is confined to some advisory aspects.
•
The Department of Health is the agency responsible for public health and food safety in meat processing plants.
•
The Department of Health and the MIA are discussing ways to resolve areas of duplication in their roles in meat processing. In relation to this initiative to delineate roles, the MIA will provide a report to the Minister in the light of responses to the Taskforce’s recommendations. This report could address MIA’s fee structure for export and domestic abattoirs.
•
The Taskforce expressed concerns about “truth in labelling” issues, but it did not indicate the nature or extent of this problem. Specific issues will be addressed by the Department of Consumer and Employment Protection.
Meat Processing Taskforce Observations: MPT acknowledges the role of WAMIA in establishing the proposed new saleyard at Muchea. However, WAMIA’s original submission to the MPT clearly stated that it also had a wider regulatory role in the industry, including to coordinate regulation of the meat industry, ensure abattoir operators are fit and proper, monitor AQIS and Health food safety programs, regulate branding schemes through to retail, investigate and prosecute corrupt activities including illegal abattoirs and be an independent watchdog free of political or local interests. MPT believes that many of these roles clearly duplicate those of other agencies. The Department of Health has acknowledged that there is duplication. Four major export abattoirs (of the 38 abattoirs monitored by WAMIA) contribute some 50% of the total WAMIA revenue for a service that is of little benefit to them given they are closely monitored, at significant cost, by AQIS. In the wider industry context, and given WAMIA’s role in saleyards, it would seem appropriate that the live export sector, who also use these facilities, should contribute to WAMIA funding. The fact that they do not contributes further to the distortions to competitive neutrality between the sectors.
45
WAMIA’s most recent submission (30/6/04) recommended a cost benefit analysis of the Australian Meat Industry regulatory arrangements in order to develop the optimum model for Western Australia. MPT would support this proposal provided the analysis clearly demonstrated an intent to optimise competitive neutrality across all sectors of the industry. MPT is disappointed that there has been no clear indication from Government that the issue of “truth to label” in meat products is being addressed. The Department of Consumer Protection has not provided any advice on how and by whom these matters may be progressed. Draft Recommendation 5: The Meat Processing Taskforce recommends that the West Australian Government should either exempt meat processing from paying land tax, or it should apply it also to facilities that are used exclusively or predominantly for exporting livestock (e.g. holding yards, feedlots, etc.). Interim Government Response: •
The Government supports the Taskforce position that this is “a minor distortion” vis-àvis meat processors.
•
The Department of Treasury and Finance has advised that feedlots and holding yards are classified as “primary production” and, as such, do not attract land tax.
•
Further the Department of Treasury and Finance advice will be sought on the issue of competitive neutrality between the processing and live export sectors concerning land tax.
Meat Processing Taskforce Observations: MPT believes the Governments response misrepresents what was actually said in the draft Report. The report argued that Land Tax is a state government tax that is levied on meat processing plants, but not on feedlots/holding yards used by the live export trade to assemble stock prior to loading on ships. This is another example of a direct distortion to competitive neutrality between processors and live exporters. Even though it is a minor distortion, it should be corrected. The Government’s response is simply a statement of the current position, of which the MPT was critical. The Department of Treasury and Finance advises that ‘penalising’ the live export sector through the land tax system would have undesirable impacts on the tax system. This statement patently ignores the MPT view that both sectors should compete on a level playing field. The MPT is disappointed that apparently the Department is content to preside over the status quo. Draft Recommendation 6: The West Australian Government should vigorously lobby the Federal Government to actively pursue, as part of its trade negotiations, the elimination of policies of foreign governments that distort competitive neutrality between meat processing and live animal exports in Western Australia. Interim Government Response: •
The Government recognises the national objectives of importing countries in imposing trade barriers on meat products, and Australia’s interest in negotiating reductions in these barriers. A detailed report on the trade barriers of concern will be prepared by the Department of Agriculture.
•
The report will quantify the main trade barriers of specific concern to Western Australian meat exporters. This paper could form the basis of an approach to the Australian Government.
46
Meat Processing Taskforce Observations: MPT is pleased to see the Government response recognises that the trade barriers on meat products are real and that the Australian Government has an interest in reducing these barriers. It is interesting to note that trade barriers on chilled and frozen offal products do not apply to the same products when exported within a live animal. These aberrations still need to be addressed. Draft Recommendation 7: The West Australian Government should vigorously lobby the Federal Government to change legislation so that independent AQIS officers audit the live export trade to ensure that it meets the same high standards for animal welfare, food safety, and for meeting importing country protocols, as are applied to processors. AQIS should determine the charges to be borne by the live export sector on the same basis as it uses to determine charges for the processing sector, AND any Federal Government subsidies to reduce inspection, licensing, and audit costs should be equally available to both sectors. Interim Government Response: •
The intent of this recommendation is currently being addressed by the Australian Government in its response to the recommendations of the recent review into the livestock export industry (the Keniry Report).
•
The expenses in relation to resolving the Cormo Express incident in 2003 are being recovered from the live export industry by a compulsory levy on future exports of livestock from Australia.
•
The Government will provide a copy of the draft Taskforce report to the Australian Government for its consideration of the issues raised by the Taskforce.
Meat Processing Taskforce Observations: MPT notes that it has not received any feedback from Federal Government agencies on its draft report. Given there was bi-partisan support from the Federal Government in relation to the Keniry Report, it is disappointing that the Australian Government has not implemented all of the recommendations of the Keniry Report. The recommendations to have independent vets on all voyages of 10 days duration or more, and to randomly place vets on 10% of all others, seem to have been ignored. It appears there is a lack of will to bring competitive neutrality in the form of independent audit of compliance with animal welfare standards. MPT is disappointed the State Government has neglected to indicate support or otherwise for the recommendation. Draft Recommendation 8: The West Australian Government should introduce payroll tax rebates for firms employing labour to process meat for export to compensate for foreign and Federal Government policies that distort competitive neutrality in Western Australia between meat processing and live animal export value chains. Interim Government Response: •
The Government notes the reasons advanced by the Taskforce for the introduction of payroll tax rebates in Western Australia for export meat processors.
•
The Department of Treasury and Finance has advised that current policy does not provide for payroll tax rebates.
•
Further consideration by the Department of Treasury and Finance on this matter will occur. 47
Meat Processing Taskforce Observations: MPT is disappointed the Government has neglected to indicate support or otherwise for the recommendation and simply refers it to the agency that presides over the status quo. This response shows a lack of recognition of the case for compensation vis-à-vis the competitive neutrality in the chain. The Department of Treasury and Finance does not support the use of the tax system to provide industry support. It concludes that providing assistance to the processing sector through the payroll tax system would increase the complexity and administrative costs of the tax system as this would require the Office of State Revenue to obtain information from each firm regarding the proportion of income derived from exports and domestic consumption. This would also provide greater scope for tax avoidance and would set a precedence for extending tax assistance to other industries where there are perceived inequities between different modes of production. The State has a relatively limited tax base which could potentially be eroded if it is used as a tool to compensate for policies of the Federal Government or foreign governments. The Department also claims that the impact of payroll tax on the relative price of labour does not necessarily imply substitution of capital for labour because the production process limits substitution opportunities in the short term. The MPT does not accept this assertion is correct in the long run. MPT recognizes that these are major issues and was encouraged by the Minister for Agriculture’s comments that these matters have now been placed on the Government agenda. Draft Recommendation 9: The West Australian Government should, through the Department of Education and Training, ensure that all workers in WA meat processing firms have equal access to training as their Eastern States counterparts. Interim Government Response: •
The Department of Agriculture will liaise with meat exporters and the National Meat Association (NMA WA) in further addressing the issues outlined in the Action Plan, having regard to other responses to the Taskforce’s report.
Meat Processing Taskforce Observations: Despite various meetings and discussions between industry representatives and the Department of Education and Training, the MPT is convinced that WA meat processors do not receive the same training support as their eastern states counterparts. The Department of Agriculture will liaise with meat processors and the AMIC to facilitate a training agreement with the Department of Training. Draft Recommendation 10: The West Australian Government should, through the Insurance Commission of WA, explore options to alleviate the inconsistent and generally high costs of workers compensation in WA. Interim Government Response: •
The Government notes the Taskforce’s observation that short term and medium term injuries in meat processing have declined, however, long term injuries are increasing and may account for the rising costs of workers compensation insurance.
•
Workers Compensation costs, and work related injuries in the industry, remain an unresolved issue. It is apparent that significant potential exists to reduce both costs and injuries. The Government will continue to work with industry to identify areas of improvement. 48
•
The increase in long-term injuries is a matter which could be addressed by the meat processing industry on a national basis. Aspects that are identified which are specific to Western Australia could then be considered.
Meat Processing Taskforce Observations: MPT acknowledges a recent submission from WorkCover WA showing that there are in fact ten firms that could provide workers compensation insurance in WA. However industry experience suggests only two or three of these are actively involved in the meat processing sector, and as such competition is still limited. MPT further acknowledges the complexity of this issue and recognizes that the costs of insurance are largely related to the management of injuries by individual firms. MPT applauds the Government’s decision to remove stamp duty from workers compensation premiums. Draft Recommendation 11: The Department of Agriculture of Western Australia should invest more resources in cattle and sheep reproduction research and development (R&D) to improve livestock turnoff, and to lessen competition between meat processors and live exporters for the supply of animals. Interim Government Response: •
The Government supports the general thrust of this recommendation, noting industry's responsibility to fund relevant R&D in this area.
•
The Department of Agriculture has developed a major project on maternal efficiency as part of the Cooperative Research Centre for Cattle and Beef Quality. This project will commence this year at Badgingarra Research Station. However, it will also have components throughout the south west.
•
Reproductive performance will be measured in animals with different genetic characteristics (high muscle, high intramuscular fat) under different planes of nutrition. The project is in collaboration with Murdoch University and University of WA and is linked with related research being conducted in other States.
•
In collaboration with Meat and Livestock Australia, the Department of Agriculture has released “Beef Pack” containing comprehensive information on beef production in Farm Note format. The package includes economics and marketing, grazing management, nutrition and animal health.
•
The Department is investing in R&D over a range of projects to improve the on-farm profitability of breeding flocks. Higher profitability should increase the supply of lambs and sheep. - Increasing the number of lambs weaned per ewe joined, including the use of Ovastim. - Minimising lamb losses in pregnancy and lactation, including increasing lamb survival through ewe colostrum, improved pregnancy diagnosis, and differential feeding strategies for twin and single-bearing ewes. - Utilisation of pasture for ewe flocks including better assessment of feed on offer (“Pastures from Space”). - More efficient use of pasture by optimisation of stocking rates and ewe condition through pregnancy. - Minimising productivity losses in sheep through holistic parasite control measures. 49
Draft Recommendation 12: The Department of Agriculture of Western Australia should invest more resources to assist farmers to develop profitable mechanisms to supply cattle and sheep throughout the year, via “out of season” calving and lambing regimes. Interim Government Response: •
The Government generally supports this responsibility to fund relevant R&D in this area.
•
The Department of Agriculture directs substantial resources in R&D aimed at spreading cattle and sheep turnoff, including:
recommendation,
noting
industry's
- spreading livestock turnoff over the year by better utilisation of the feed base throughout the year, including the development of farming systems that use perennial grasses. - maximising feed production on farm through improved pasture species and pasture management. •
A main emphasis of the Department of Agriculture’s beef research is focussed on the “Year Round Supply” of cattle. Many activities are aimed at achieving this goal.
•
For the last three years the Department of Agriculture has been undertaking a project investigating alternative calving strategies. One of the major benefits of extending calving time is that a wider range of weights of store cattle will be produced for finishing which favours out of season turnoff.
•
The project is investigating a number of different finishing regimes that will result in a wider range of turnoff times. The project site is also being used as an extension tool to encourage the adoption of out of season production systems.
•
A number of activities in the Northern Agricultural Region are aimed at increasing the use of perennial pastures. These pastures will extend the growing season in this environment and, in conjunction with lot feeding and supplementary feeding strategies, enable out of season finishing of cattle.
•
In the Esperance Region, R&D has commenced on feed management strategies and the economics of carrying light weight weaners through summer/autumn to meet a target market in late winter and early spring.
Draft Recommendation 13: The Department of Agriculture of Western Australia should invest more resources to assist industry to develop supply chains that take advantage of the seasonal and environmental attributes of each region in Western Australia. Interim Government Response: •
The Government generally supports this recommendation, noting industry coresponsibility in this area.
•
The Department is developing a project that will focus on increasing the supply of cattle by utilising cattle bred in the rangelands for growing and finishing in the agricultural areas. A key part of this project is to encourage the development of supply chains as a means of ensuring consistent production systems and year round supply.
•
In recent years the Department of Agriculture has made considerable investment in improving supply chains for cattle and sheep. To be effective, these initiatives require the cooperation of all participants in the supply chain. The Department of Agriculture will consider facilitation of such initiatives when a demand is apparent. 50
•
Industry projects may be supported with training and funding through the National Food Industry Strategy’s Food Chain Program, with the WA representative of the Strategy working in the Department of Agriculture.
Meat Processing Taskforce Observations: In regards to recommendations 11, 12 and 13 above, the MPT is pleased the Government supports these recommendations. MPT appreciates the involvement of the Department of Agriculture in fostering cattle and sheep production to improve turn-off and establish year round supply by facilitating supply chains that would enhance industry profitability. Draft Recommendation 14: The Department of Agriculture of Western Australia should divert funds away from Trade and Development, and invest more resources in high priority areas to enhance livestock supply. Interim Government Response: •
The Government does not support this recommendation.
•
A key role of the Trade and Development Program is to assist the opening of new markets and expansion of existing markets for Western Australian meat. By working closely with supermarket chains and food traders the program allows WA meat processors to compete more actively with the live animal trade and overseas suppliers.
•
In 2002/03, Trade and Development staff were involved in the facilitation of exports to new buyers valued in excess of $35 million, as verified in writing by importers and exporters. Benefits resulting for export beef products were valued at $12 million.
•
The key role of the Department’s Trade and Development Program is to assist the agrifood sector to increase profitability by increasing the uptake of export opportunities. Trade and Development works with industry to identify and develop new export markets, attract overseas investment to WA, guide research and development and assist with industry development.
•
A major activity focuses on Government to Government business and relationship development resulting in Memorandum of Understanding's (MOUs) and preferential technical cooperation and trading arrangements.
•
In 2001 a survey was conducted of 150 Trade and Development clients. Of those responding, 91 per cent stated that the services of Trade and Development were of value to their business.
•
Trade and Development staff are available to meet with members of the Taskforce to discuss the concerns raised in the draft report.
•
Funding of Trade and Development is reviewed on an annual basis in the Department of Agriculture's budget process.
Meat Processing Taskforce Observations: MPT acknowledges the role of Government in supporting the opening of closed markets through MOU’s and overcoming foreign government impediments to trade, however the MPT firmly believes trade negotiation should be left to individual firms. Draft Recommendation 15: The West Australian Government should, through relevant industry organisations and the Department of Agriculture of Western Australia, further explore options to extend the definition of lamb to enable farmers to export more lambs, and to meet the heavier carcass weights desired in the US market. 51
Interim Government Response: •
The Government supports this recommendation.
•
The Department of Agriculture has conducted R&D into the effects of sheep dentition and age on the eating quality of different cuts of meat. This research was in collaboration with Meat and Livestock Australia’s Sheep Meat Eating Quality Project and the Sheep Industries Cooperative Research Centre.
•
The Department of Agriculture agrees with the review of this matter in the Taskforce’s report. A change in the export definition of lamb requires agreement at the national level, and this has not been reached. While this is primarily a matter for industry, the Department will assist in progressing the initiative where possible.
•
While extending the definition of lamb is one way of increasing the supply of lambs, the Department of Agriculture is conducting research into other means of increasing lamb production. The following projects are designed to improve the on-farm profitability and reliability of lamb production: - improved management systems that allow lambs to be more efficiently targeted towards a heavier weight range at an earlier age; - improving pasture utilisation through pasture monitoring and feed budgeting tools; - improved efficiency of sheep feedlot design and better feeding systems in feedlots; and - genetic investigations into carcass quality and growth rates of sheep.
Meat Processing Taskforce Observations: MPT appreciates the Government’s full support of this recommendation.
52
BIBLIOGRAPHY ABARE Australian Commodity Statistics 1999 ABARE 1999a Australian Beef Industry ABARE 1999b, Australian Commodities - December Quarter ABARE 1999c, Meat Outlook to 2003-4, Outlook 1999 ABARE 1999d, Outlook for Beef and Sheepmeat, Outlook 1995 -, ABARE 2003, Australian Food Statistics 2003, Department of Agriculture, Fisheries and Forestry – Australia. AMLC 1998, Live Cattle Exports and the Asian Currency Crisis, A report to Industry for the Australian Meat & LiveStock Corporation, March 1998. BAE 1983, Australian Live Sheep Exports, Occasional paper No. 81 Booz, Hamilton and Allen1993, International Comparisons in the Beef' Processing Industry FAPRI (Food and Agriculture Policy Research Institute), "The Impacts of Live Cattle Trade Growth in Southeast Asia", Bulletin, October 1998. Hassall & Associates 1999, NSW Meat processing Industry Restructuring Program Hassell & Assoc. (2000) "Economic contribution of the live exporting industry" MLA and Livecorp JL433I Heilbron S.C. Pty Ltd (2000) "Impact of live animal export sector on the Australian meat processing industry" Aust. Meat Processor Corporation Ltd. Industry Commission (1994) Meat Processing Report No.38 MLA Meat and Livestock Review, various editions Morrison, C 1997, Economic Performance, Cost Economies and Pricing Behaviour in the US and Australian Meat Products Industries, Australian Journal of Agricultural and Resource Economics, 41:3, pp. 361-83 Productivity Commission 1998, Work Arrangements in the Australian Meat Processing Industry Queensland DPIE The Economic and Social/Community Impacts of the Live Cattle and Processed Beef Export Supply Chains in Queensland Riethmuller, P, and Smith, D 1993, The Asian Pacific Live Cattle Trade, Australian Agribusiness Review, December RlRDC 1999, Infrastructure Pricing Provision and Process: Implications for Rural Australia, RIRDC, Canberra Rutherford, A 1995, Australian Beef Exports: Dead or Alive?, Review of Agricultural and Resource Economics, August Trewin, R 1996, Linkages Among Indonesian Grains, Livestock and Value Adding Sectors: Implications for Australian Agribusiness, Australian Agribusiness Review, June Young, David (May 1991) The Value Chain for Meat and Livestock Products, Research and Development Investment Study (RADIS), The Australian Meat and Live-stock Research and Development Corporation, 53
APPENDIX 1: SUBMISSIONS RECEIVED FIRST ROUND SUBMISSIONS 1. 1. Fletcher International Exports: 2 Dec 02, (Roger Fletcher) 2. WA Live Exports Assoc.: 30 Jan 03, (Alastair Moore, Ed O'Loughlin) 3. City of Bunbury: 31 Jan 03, meat safety issues, (Neville Moriarty) 4. Wanna Station: 3 Feb 03, producer, (Bill Radford) 5. Brian McAuliffe: 7 Feb 03, AQIS inspector 6. Insight Marketing & Management: 28 Feb 03, meat marketing, (Ray Wilson) 7. John Lucey: 4 Mar 03, performance based meat payments 8. Stud Merino Breeders Assn. :5 Mar 03, (Susie Lindley) 9. People Against Cruelty in Animal Transport: 5 Mar 03, (Heather Wood, R Nicholson) 10. Toquero: 6 Mar 03, processing technology, (Napoleon Toquero) 11. Darkan Farm Management Advisory Service: 6 Mar 03, sheep, (Bob Hall, AD South) 12. Patricia Brown: 6 Mar 03, meat by-products, live exports 13. Charolais Society of Aust. : 6 Mar 03, (Paul Lubout, Agnes Baird) 14. Aust Meat Processors Corp. : 6 Mar 03, (Ross Graham) 15. Pastoralists & Graziers Assn. : 6 Mar 03, (Barry Court, Daniel Wood) 16. WAMMCo International: 6 Mar 03, (Dawson Bradford, Des Griffiths) 17. Colin Dent: 7 Mar 03, Shire of Capel, regulation issues 18. Southern Yabby Farms: 7 Mar 03, processing/marketing, (Steve Kolb) 19. WA Farmers: 7 Mar 03, (Mike Norton, Andrew White, Bill Radford) 20. Business-Today: 7 Mar 03, WA Q Lamb, (John Cole) 21. Organic Growers Assn. : 10 Mar 03, (Colleen Yates) 22. Beef Improvement Assn. : 12 Mar 03, (Simon Combes) 23. Department of Health: 13 Mar 03. (Stan Goodchild) 24. WA Meat Industry Authority: 14 Mar 03, Mike Donnelly 25. National Meat Association: 17 Mar 03, Brian Boyes, Merv Darcy SECOND ROUND SUBMISSIONS 1. John Lucey, Dept of Agriculture, 17 May 04 2. Michael Jackson, Dept of Health, 19 May 04 3. Alan Carpenter, Dept of Education & Training, 9 Jun 04 4. Jenny Hodges, RSPCA, 10 Jun 04 5. Judy Edwards, Dept of Environment, 10 Jun 04 6. Joseph Carrello, WorkCover, 15 Jun 04 7. Philip Gooding, Stud Merino Breeders Assn of WA, 28 Jun 04 8. Graeme Haynes, WA AMIEU, (includes Tom Hannan, Fed AMIEU), 29 Jun 04 54
9. Hugh Wirth & Eric Ball, RSPCA, 29 Jun 04 10. Carole de Fraga, Compassion in World Farming, 30 Jun 04 11. Paul Lubout, Charolais Society of Aust (WA), 1 Jul 04 12. Mike Donnelly, WAMIA, 1 Jul 04 13. Andrew White, WA Farmers, 30 Jun 04 14. Garry Minton, EG Green & Sons, 30 Jun 04 15. Glenys Oogjes, Animals Australia, 5 Jul 04 16. Stephanie Mayman, UNIONS WA, 6 Jul 04 17. Jim Dodds, Dept of Health, 13 Jul 04 18. David Christmas, Dept of Treasury & Finance, 14 Jul 04
55
APPENDIX 2.
WA Meat Processing: No. of LTIDs
1000 900 800 700 No's
600
All LTIDs
500
LTIDs 5+ days
400
LTIDs 60+ days
300 200 100 0 96/97
97/98
98/99
99/00
00/01
WA Meat Processing: Premium Rate
11.3 11.2 11.1 11
Premium Rate
%
10.9 10.8 10.7 10.6 10.5 10.4 99/00
Injuries per Million Hours Worked
120
00/01
01/02
02/03
Meat Products Manufacturing: National Frequency Rates of Injury (LTIDs 5+ days)
100
WA NSW QLD SA WA All Injury WA Construction
80 60 40 20 0 95/96
96/97
97/98
98/99
99/00
Source: Department of Employment and Consumer Protection
56
APPENDIX 3. Livestock Production Statistics
WA Cattle Industry Statistics and Ratios 94/95
95/96
96/97
97/98
98/99
99/00
00/01
01/02
02/03(e)
Estimated No's @ 1 July Agricultural Area Pastoral Area Total Beef cattle
'000 hd '000 hd '000 hd
944.3 738.2 1682.5
972.4 800.7 1773.1
1007.4 795.4 1802.8
987.3 799.5 1786.8
942.9 905.4 1848.3
973.4 843.9 1817.3
1076.3 982.7 2059.0
1028.7 972.3 2001.0
1980.4
Milk Cattle Total Cattle
'000 hd '000 hd
123 1805.5
125 1898.1
120.9 1923.7
121.9 1908.7
123.8 1972.1
114.1 1931.4
106.4 2165.4
125.9 2126.9
124.4 2104.8
Meat Production Cattle Processed- males Cattle Processed- females Calves Processed Total
'000 hd '000 hd '000 hd '000 hd
244.0 186.4 4.4 434.8
218.0 181.9 3.8 403.7
192.3 214.5 5.6 412.4
196.0 252.1 5.5 453.6
197.9 240.8 6.4 445.1
181.5 212.4 10.5 404.4
187.0 228.4 5.6 421.0
137.7 230.6 6.0 374.3
173.4 255.9 5.3 434.6
'000 tonnes '000 tonnes '000 tonnes
101.5 0.3 101.8
97.1 0.3 97.4
91.4 0.32 91.7
102.5 0.3 102.8
105.0 0.4 105.4
95.0 0.9 95.9
100.5 0.4 100.9
88.6 0.4 89.0
105.1 0.3 105.4
$Mill $Mill $Mill
189.6 28 217.6
232.9 62.8 295.7
192.9 93.6 286.5
185.0 118.1 303.1
204.0 146.9 350.9
216.6 141.1 357.7
263.6 196.6 460.2
279.0 216.0 495.0
337.0 173.0 510.0
23,326 3,634 242.4
21,181 3,600 306.2
17,417 3,685 277.4
22,761 3,715 358.5
22,966 4,063 331.1
26,710 4,224 317.5
Beef Produced Veal Produced Total Value of Production Cattle/Calves Slaughtered Live Cattle Exports Total Quantity of Exports Beef and Veal Offal Live Cattle Value of Exports Beef and veal Live Cattle and Calves Offal Hides and Leather Tallow Total Ratios Turnoff Turnoff Cattle/Calves Slaughtered Females Slaughtered Beef Produced Veal Produced Cattle/Calves Slaughtered Cattle/Calves Slaughtered Live Cattle Exports Value of total exports Beef and veal exported Beef and veal Live Cattle and Calves Offal Hides and Leather Tallow
tonnes tonnes '000 hd
111.6
157.7
19,838 3,658 193.7
$Mill $Mill $Mill $Mill $Mill $Mill
84.8 30.4 6 12.4 15.8 149.4
67.1 66.4 6 16.2 13 168.7
55.6 95.6 5.9 26.9 15 199.0
66.1 118.4 6.2 33.7 16.1 240.5
64.7 148.6 6.0 36.9 20.8 277.0
59.6 142.8 6.4 25.6 13.5 247.9
85.3 200.4 8.2 31.0 13.1 338.0
98.1 207.4 9.7 27.3 13.1 355.6
101.9 177.3 7.53 33.8 14.4 334.9
'000 hd % of total cattle % of Slaughter % of Turnoff kg/hd DWt kg/hd DWt $/kg DWt $/hd $/hd % of prodn $ % of meat $'s % of export $'s % of export $'s % of export $'s % of export $'s % of export $'s
546.4 30.3 79.6 43.3 236 68 1.86 436 251 68.7 44.7 56.8 20.3 4.0 8.3 10.6
561.4 29.6 71.9 45.5 243 79 2.39 577 398 57.1 28.8 39.8 39.4 3.6 9.6 7.7
606.1 31.5 68.0 52.7 225 57 2.10 468 483 69.5 28.8 27.9 48.0 3.0 13.5 7.5
696.0 36.5 65.2 56.3 229 55 1.80 408 487 79.3 35.7 27.5 49.2 2.6 14.0 6.7
751.3 38.1 59.2 54.9 239 63 1.94 458 480 78.9 31.7 23.4 53.6 2.2 13.3 7.5
681.8 35.3 59.3 53.9 241 82 2.26 536 509 69.3 27.5 24.0 57.6 2.6 10.3 5.4
779.5 36.0 54.0 55.0 242 68 2.61 626 548 73.4 32.4 25.2 59.3 2.4 9.2 3.9
705.4 33.2 53.1 62.6 241 63 3.14 745 652 71.8 35.2 27.6 58.3 2.7 7.7 3.7
752.1 35.7 57.8 59.6 245 57 3.20 775 545 65.7 30.2 30.4 52.9 2.2 10.1 4.3
Source: ABS, DAWA
57
WA Sheep Industry Statistics and Ratios SHEEP 97/98
98/99
99/00
00/01
01/02
02/03(e)
Estimated Numbers @ 1 July Sheep Lambs Total
'000 '000 '000
20,682 7,139 27,821
20,058 7,419 27,477
18,977 7,401 26,378
19,214 6,895 26,109
17,254 5,875 23,129
Agricultural Area Pastoral area
'000 '000
25,440 2,381
24,794 2,682
24,330 2,048
24,110 1,999
21,337 1,792
Meat Production Sheep Processed Lambs Processed Total
'000 '000 '000
2,717 1,857 4,574
2,672 2,076 4,748
3,418 2,345 5,763
3,235 2,020 5,255
1,961 1,856 3,817
1,772 2,021 3,793
Mutton Produced Lamb Produced Total
'000t '000t '000t
56.4 33.6 90.0
54.8 39.0 93.8
69.1 44.1 113.2
64.9 37.1 102.0
39.5 35.6 75.1
35.4 39.6 75.0
$M $M
92.6 128.1 220.7
88.6 148.5 237.1
106.8 144.4 251.2
116.0 191.0 307.0
181.0 223.0 404.0
197.0 264.0 461.0
tonnes tonnes tonnes '000
23,796 14,403 3,172 3,266
22,535 12,942 2,617 4,106
31,255 16,257 3,479 3,851
30,896 15,464 5,524 4,372
17,127 13,323 4,033 3,689
16,456 14,891 3,985 3,718
$M $M $M $M $M $M
54.6 54.5 2.9 137.6 35.2 284.8
41.0 45.9 5.9 152.0 15.5 260.3
56.6 55.7 8.6 149.9 10.9 281.7
67.6 55.5 16.4 194.8 7.7 342.0
56.4 63.7 14.9 227.2 6.8 369.0
51.0 78.3 13.8 267.6 11.8 422.5
% of total sheep % of Turnoff kg/hd DWt kg/hd DWt $/hd $/hd % of meat wt % of export $'s % of export $'s % of export $'s % of export $'s % of export $'s
28.2 58.3 20.8 18.1 20 39 42.4 19.2 19.1 48.3 1.0 12.4
32.2 53.6 20.5 18.8 19 36 37.8 15.8 17.6 58.4 2.3 6.0
36.4 59.9 20.2 18.8 19 37 42.0 20.1 19.8 53.2 3.1 3.9
36.9 54.6 20.1 18.4 22 44 45.5 19.8 16.2 57.0 4.8 2.3
32.5 50.9 20.1 19.2 47 60 40.5 15.3 17.3 61.6 4.0 1.8
31.8 50.5 20.0 19.6 52 71 41.8 12.1 18.5 63.3 3.3 2.8
Value of Production Sheep/Lambs Slaughtered Live Sheep Exports Total Quantity of Exports Mutton Lamb Offal Live Sheep Value of Exports Mutton Lamb Offal Live Export Skins and Hides Total Ratios Turnoff No's Sheep/Lambs Slaughtered Mutton Produced Lamb Produced Sheep/Lamb Slaughtered Live Sheep Exports Mutton and Lamb export Mutton Lamb Live Export Offal Skins Source: ABS, DAWA
23,624
Source: ABS, DAWA
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APPENDIX 4: Training Issues for the WA Meat Industry Introduction This paper was prepared for the WA Meat Industry Task Force by a group convened by Wim Burggraaf from the WA Department of Agriculture and compromised of the following meat industry training representatives • • • •
Clive Richardson (MINTRAC) Greg Cross (Fletchers International) Terry Richards (WA Food and Beverage Industry Training Council) Tony Bandera (Harvey Beef/EG Greens).
The group was asked to comment on the following three issues and has made the following observations. Continued Independence of MINTRAC Despite strenuous representations to both Australian National Training Authority (ANTA) and the Federal Minister, Brendan Nelson MINTRAC will loose its role as a recognised Industry Training Advisory Body The role currently undertaken by MINTRAC in terms of providing advice to ANTA on Meat Training will pass to a new Agri-Food Industry Training Advisory Board The Meat Industry will have representation on the Board of the new body MINTRAC will continue to exist and support meat industry training and the industry. Dedicated Meat Industry Training Facility The group agrees that there is merit in the development of a dedicated meat industry training facility and that the WA Department of Education should be approached to provide funding for the training facility A substantial amount of work has already been done on a submission for a dedicated beef training facility by Harvey Beef and this could be built on to make an industry submission. Improving Meat Industry Training in WA The Task Force identified that meat industry training in WA in some ways falls behind what is being achieved in other States. The group identified that there were two major impediments to meat industry training in WA the ongoing opposition by the WA DET to industry wide access to Commonwealth funded “existing worker traineeships”. At the moment a case by case approach to the approval of these traineeships is denying WA companies ready access to funding which Eastern State companies are using for: existing worker training for slaughtermen, boners, slicers and renderers training of QA officers (at Cert IV level). supervisor training (at Cert IV level) WA currently has only one (private) RTO delivering training to the processing industry and TAFE to date has been slow to build any capacity to service a major regional industry. Substantial industry lobbying has not resulted in one additional staff member (to date) being appointed to meet this demand. In fact the Meat Inspector course has not taken enrollments for 18 months, despite 80 people being on the waiting list. The group identified the following priority issues for the meat industry to address: training for existing workers (Certificate III and IV levels) training for supervisors pre-employment training school based programs. Addressing these training issues will bring WA meat industry training up to par with that being delivered in the Eastern States.
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