Sale pricing ‘flawed’ Senate inquiry into told

By Country News on December 02, 2015

The Wangaratta VFF branch believes beef prices are being artificially suppressed.

In a submission to the Senate inquiry into market consolidation of the red meat sector, the branch said the current pricing mechanism which ‘sets’ farm gate prices for 70 per cent of all cattle sales via the direct channel, being based on contemporary auction prices at saleyards, is, in theory at least, seriously flawed.

‘‘This is because the same buyers are operating in both channels. If collusion between buyers exists at saleyards, resulting in lower prices, then the flow-on effect is significant to the other 70 per cent of the market,’’ the VFF branch said.

‘‘We propose that the producer sector take more control over its own marketing within its own channel. This would involve the producer sector using some share of its own levy money within its own channels.

‘‘We believe that the primary target of such marketing expenditure be investment in improved auction systems which enhance true competition, by making collusion difficult.’’

The Senate inquiry was triggered by the ‘Barnawartha boycott’ in February when a group of buyers failed to participate in a sale day and insisted on the introduction of post-sale weighing.

Some Wangaratta VFF members were affected by what occurred at Barnawartha.

The Wangaratta VFF submission said between 2000-13, the average per kilogram price achieved by producers at saleyard auctions grew 20 per cent, compared to the retail price increase of 45 per cent, and the CPI increase of 49 per cent.

Over the four years to 2013, processor margins grew 400 per cent, the submission said.

By Country News on December 02, 2015
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