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AustraliaCattle and Beef market study


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About this Market Study

Following the release of a White Paper discussing competition in the Agriculture sector in July 2015, the ACCC set up a specialist Agriculture Engagement and Enforcement Unit (Agriculture Unit) and an ACCC Commissioner was appointed with specific responsibility for agriculture.

On 5 April 2016 the ACCC announced it would conduct a market study on the cattle and beef market.

On 7 April 2016 the ACCC released an issues paper for comment. Key issues include:

The Issues Paper indicates that the purpose of the study is to:

  • 'examine competition and transparency in the supply chain, and
  • consider whether there are impediments to competition and efficiency at various stages of the supply chain in cattle and beef markets. '

The final report was released on 7 March 2017

Focus of market study and potential outcomes

Focus of study

The Issues Paper states:

The study will review and consider:

Markets for the sale and acquisition of cattle, including:

the operation of different sales methods, including the allocation of commercial risk between participants

the ability of farmers to access certain sales methods

transparency of carcase pricing and grading methods o geographic or transport limitations on competition

the role of livestock and buyers’ agents

the competitive impact of horizontal concentration and vertical integration of processors

certainty of key contract terms for direct cattle sales

differences in bargaining strength, and the viability of collective bargaining arrangements.

The processing sector, including:

the factors influencing the strength of competition between processors

access to value add products from abattoirs, such as service kills

barriers to entry and expansion in processing markets.

Markets for the sale of processed meat (including by-products), including:

information on margins, costs, prices and the profitability of the production, processing and retailing sectors.

Potential outcomes

The Issues Paper notes that information collected as part of the study may result in a range of outcomes, including:

improved transparency about competition and trading practices in the supply chain

assistance for industry participants from the ACCC about rights, obligations, and options to encourage effective competition

opportunities for the ACCC to make recommendations and / or to work collaboratively with the Government and industry to develop solutions to any competition or other trading problems

further action undertaken by the ACCC to address any behaviour in the industry that raises concerns under the Competition and Consumer Act 2010.


Issues paper

The Issues Paper provides an overview of the Australian cattle industry and then identifies anumber of issues for consideration:

Issue 1 - Markets for the sale and purchase of cattle

In relation to this issue the ACCC set out a number of specific questions about which it would appreciate submissions:

Sales channels - the ACCC would appreciate submissions on:

1. The operation of sales methods available to farmers, including:
(a) the different types of methods available to farmers e.g. saleyards, direct consignment, online sales
(b) the costs involved with selling cattle through each sales method (for example, saleyard fees, agents’ fees and commissions, transport)
(c) whether there are any impediments to farmers accessing particular sales methods
(d) the advantages and disadvantages of each sales method
(e) what types of cattle (fat cattle, feeder cattle, live export) are sold through each sales method, and
(f) the total proportion of cattle sold through each sales method within different production regions.

2. The extent to which different types and breeds of cattle are seen as substitutable by processors, live exporters and consumers.

3. The horizontal and vertical integration of processors and whether this has had an effect on competition and efficiency in the market for the acquisition of cattle.

4. Legal title for the ownership of cattle and when this title changes throughout the various sales processes.

5. Differences in bargaining strength between buyers and sellers and the effect of this on bargaining outcomes.

6. Whether there are opportunities for farmers with weak bargaining power to use cooperatives or collective bargaining arrangements, similar to those used in other agricultural industries, in order to improve bargaining outcomes or access to certain sales channels.

7. Whether there are particular geographic locations where farmers have limited sales options and what this has impact on prices compared to other areas where farmers have more options (please provide supporting data if available).

8. The role and commercial significance of livestock agents for the trading of cattle, for producers and buyers.

9. How livestock agents are paid for their role as intermediaries between buyers and sellers of cattle (e.g. commissions, fixed fees, et cetera.).

Saleyards - the ACCC would appreciate submissions on:

10. How buyers at saleyards determine their bid offers.

11. How buyers’ agents affect the competitive operation of saleyards.

12.Potential collusive behaviour at saleyards, noting that the ACCC has recently investigated an allegation of collusion amongst buyers at the Barnawartha saleyard.

13. The consolidation of ownership of saleyards, and whether this has had an effect on the number and location of saleyards, and fees or services provided by the saleyards.

Contract based sales - the ACCC would appreciate submissions on:

14. The major buyers in this sales channel, including volumes purchased and any recent entry or expansion.

15. The negotiation and sale process, including an outline of the timeline, stages, the role of agents and the methods by which prices are determined.

16. The effect of bargaining power of the buyer and seller on the negotiation and sale process, and the outcomes that are achieved, including price.

17. The certainty of contracts, particularly whether key terms such as delivery times, price and size can be relied on.

Pricing grids and grading - the ACCC would appreciate submissions on:

18. The grid pricing system, including when grid prices are provided to farmers, whether price grids and quality factors vary between producers, and whether there are avenues for farmers to dispute grading.

19. The transparency of the pricing levels and structures implemented by abattoirs, including details of revenue received for by-products such as offal, trim and calf foetal blood and whether the value of these products is passed back to producers.

20. The transparency, independence and accuracy of grading techniques used by processors and how this affects returns to producers.

Transport – the ACCC would appreciate submissions on:

21. The effect of a seller’s geographic location on access to particular sales channels and the effect of this on localised competition and competition and efficiency more broadly. For instance how far can cattle travel efficiently (this may vary across regions) and how does this affect producers’ and buyers’ options for trading cattle?

Issue 2 - Processing Sector

In relation to this issue the ACCC has posed the following questions

Closeness of processing competition – the ACCC would appreciate submissions on:

22. The strength of competition between processors for the acquisition of cattle and the wholesale supply of processed meat

23. The key elements which make some processors closer competitors than others, such as similarities in:
(a) processing capacity, including any capacity constraints (whether within or across geographic regions)
(b) products – the extent to which there is differentiation in the products and services provided by processors
(c) the costs of production
(d) the geographic proximity of abattoirs to producers and downstream customers.

24.Whether there is any difference in level of competition between processors who have operations in multiple locations and geographic regions, versus those who do not.

Availability of services – the ACCC would appreciate submissions on:

25. How has the reduction in the number of abattoirs affected producers’ and third parties’ access to value add products from abattoirs, such as service kills?

Barriers to entry – the ACCC would appreciate submissions on:

26. The cost of setting up a new processing plant or retrofitting an existing mothballed plant. This includes information on the scale and market conditions required for sustainable entry and the lead time for a processing plant to be operational.

27. The ongoing costs incurred in operating a processing plant and a detailed explanation of the margins required to operate efficiently. How do these compare to similar economies overseas?

28.Any regulatory requirements and standards that must be met and the difficulty or ease of obtaining these requirements.

29. The history of regulatory requirements and the role that incumbent organisations or representative groups have had in developing these requirements.

30.Any difficulties encountered in acquiring or training appropriately qualified staff to operate the abattoir.

Issue 3 - Markets for the sale of processed beef (export and domestic)

In relation to this issue the ACCC has posed the following questions:

Markets for the sale of processed beef – the ACCC would appreciate submissions on:

31. Margins, costs, prices and profitability within the industry and how this has changed over time. This includes information on margins, costs, prices and the profitability of the production, processing and retailing sectors. Does this differ when compared to other countries? Please provide any available data.

32. The relationship between the price farmers receive for cattle in Australia and the prices farmers receive in other countries. If there are differences, what are the reasons for this and have these relationships changed over time?

33. The profitability of beef farms in Australia and how this varies across time and across regions.

34. How export prices and domestic retail prices affect the price received by producers for cattle.


Interim Report

Released 31 October 2016. View Interim Report.


Final Report

Released 7 March 2017. View Final Report.


Submissions and consultation

Submissions on the Issues Paper were due by 6 March 2016.

Consultation forums were held in June and July 2016

Submissions on Interim Report are due by 23 November 2016.


Media and commentary