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ABA Call For Beef Industry Review

25 May 2011

AUSTRALIA – The Australian Beef Association (ABA) has requested that the government halt meat processing and feedlot mergers until an inquiry into the the cause and effects of the dominance of a few companies within the beef industry is completed.

Chairman of the ABA, Brad Bellinger, has announced that “the consolidation of the red meat processing and feedlot sector is happening at an alarming rate in Australia. Over the last five years in particular, mergers and acquisitions of companies has concentrated meat processing and feedlot capacity into the hands of a few companies”.

Following the purchase of Australia Meat Holdings by JBS in 2007, JBS has gone to purchase Tasman Group, Rockdale Beef and Tatiara Meat Co. JBS/Swift Australia has now the capacity to kill 1.9 million cattle.

The merger of Teys Brothers and Cargill will give the new parent company the capacity to kill 1.5 million cattle.

Mr Bellinger said: "industry representatives are naive to think that two companies processing close to 50 per cent of Australia’s cattle and two companies Coles and Woolworths retailing 50 per cent of Australia’s domestic beef will not reduce competition”.

In the past bodies such as the ACCC had proven ineffective in countering the commercial interests of the major supermarkets. The ABA is therefore calling for an independent review, specific to the beef industry. The review will include:

  • Effect of lack of competition on the price of livestock
  • Concentration of feedlot ownership on grain prices
  • Contribution of Government imposed charges (possible the highest in the world) on the profitability of abattoirs
  • Competition in relation to geographic spread of processing facilities
  • Ability of large multinational processors to control votes within Meat and Livestock Australia (MLA)
  • Equity levels of large processors and the risk this poses to the long term stability and viability of the red meat industry

“The outcomes of the Inquiry will be aimed to give Governments a better understanding when evaluating market power and merges and acquisitions within the Beef Industry”, Mr Bellinger said.

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