Beef Marketing Funding Committee recommends retention of $5 levy
5/05/2009
The Beef Marketing Funding Committee announced its recommendation to retain the current $5 per head cattle transaction levy rate at Beef Australia in Rockhampton today.
Committee Chairman and Queensland beef producer Peter Hughes said the recommendations of the 14-person independent Committee were unanimous following an extensive and comprehensive review over six months from October last year.
"We have to invest in our future – the $5 levy is a modest but appropriate investment in the future of our industry," Mr Hughes said.
In its comprehensive Report released today at Beef Australia the Committee also made two additional recommendations:
That a minimum return on investment to producers be set at three times the overall marketing levy as the performance yardstick in future reviews; and
That future reviews of the levy be undertaken as a result of industry need, triggered by the peak councils, and not according to a pre-determined timeframe.
The independent review conducted for the Committee by Warwick Yates and Associates and The Centre for International Economics (CIE), concluded that the $1.50 increase to the cattle transaction levy for beef marketing since 2006 has been invested wisely and is returning significant financial benefits to the Australian beef industry.
Specifically, the Committee concluded the increase in beef marketing investment has made important contributions towards:
Helping Australia capitalise on the absence of our major beef competitor (the US) in Japan and Korea, and positioning us to compete with the US as they return;
Helping maintain very high levels of consumer expenditure on beef within the domestic market in the face of calls to reduce red meat consumption on environmental and health grounds;
Establishing offices and personnel in Russia and China to support and help position Australian beef within these emerging markets;
Strengthening Australia’s livestock export market position, particularly within Indonesia; and
Enhancing the evolution of the Australian industry from the status of a commodity supplier to that of a trusted source of quality beef products.
These additional contributions were found to have delivered five times the investment back to producers.
The Committee also found that the major impacts on livestock prices since 2006 have been high exchange rates and high grain prices until late 2008, and now credit restrictions on global trade and the collapse in demand for co-products.
"Without these impacts, livestock prices would be at or near record levels," Mr Hughes said.
"In the Committee’s view, based on the evidence we have accessed, cattle prices are stronger today than they would otherwise have been, and the marketing activities funded by the cattle transaction levy have been a significant contributor to this outcome.
"The industry must continue to invest in a broad range of programs to consolidate its position in beef markets and address the challenges and opportunities that lie before it."
Mr Hughes said that despite the many challenges faced by the Australian beef industry such as increased competition in Australia’s major markets and mounting attacks on industry’s environmental integrity, the Committee had decided not to recommend that the beef marketing levy be raised.
"The $5 levy today holds roughly the same values as the original $3.50 levy did in 1998, and assuming 2% inflation going forward, we’d need a levy of $5.63 in 2015 to maintain current purchasing power," he said.
"The Committee believes that MLA, like the industry it serves, need to be constantly looking for efficiencies and savings to maintain the level of marketing activities into the future."
The details of the review and proposed beef marketing programs will be presented for discussion at producer forums across Australia over the next six months culminating in a vote of levy payers in conjunction with MLA’s Annual General Meeting.
Details of the 2009 Beef Levy Review, as well as the full report of the Beef Marketing Funding Committee and related documents, are available at www.mla.com.au/beeflevyreview
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