Earlier this year, the Productivity Commission highlighted how red tape was restricting agricultural development, however, in the processing sector, it appears this extends to survival.
The consequences of gradual cost shifting from government back onto processors needs a close look, as does the increasing pressure for checks and balances that society now requires.
The fall-out is that a lot of our industries have been forced offshore to destinations where compliance and labour costs are far less.
We therefore end up importing the same product, but with less assurances than we, as a society, insisted be provided when produced on our home turf.
And because its cheaper, we seem to buy it with few questions asked – hence issues like the hepatitis A contamination in berries from Asia.
At the retail end, we are also seeing the pressure from supermarket campaigns, such “Down, Down”.
In contrast to this is the findings from research by catering company, Caterwings, that Australia is way down the ladder at number 17 for global meat price rankings.
This included Australians having to work only a relatively short period to afford beef compared to other nations (see p22).
So while we have some of the highest processing costs in the world, we have supermarkets deliberately pushing down the retail value to a level that, when combined with consumer expectations around quality assurance, is not sustainable.
Consumers are price sensitive, but it seems there is room to move, which could help the situation with regards to margins back down the supply chain.
Meanwhile, we export the majority of our beef, and we’re having to compete against an increasingly productive, low cost South American region.
The cost of compliance is therefore probably the best point where government can step in and make a difference quickly.
As producers scratch their head wondering where the profits went from a couple of years ago, when processors were buying big numbers of cheap cattle and selling the beef onto to a record high global market, the industry now faces the question of how do we keep this sector onshore?
We don’t want to be shipping everything offshore as live exports, or chilled carcases, to be processed.
