Viv Forbes, Our Sacred Land & Other Essays (first published by Business Queensland and Common Sense in 1994), issue no. 102.About the Author»
The Australian meat industry has more bureaucrats per producer than any other industry. There are stock inspectors, meat inspectors, health inspectors, factory inspectors, “research” bureaucrats, state and federal departments of primary industries, health departments, quarantine inspectors, consumer affairs officials, levy collectors, state and federal meat and livestock authorities and hundreds of rules and regulations. All of this funded by fees on every beast that bellows or bleats.
I don’t know what it all costs us, but a US study found that a pound of hamburger meat costs eleven cents more because it was controlled by 41,000 regulations, 200 legal statuses and 161,000 precedent-setting court cases on behalf of consumers. (I do know that Darling Downs Bacon Co-op, once Australia’s largest pork exporter, abandoned pork exporting in 1993 because it was costing $1.7 million per year for export licences and red tape.)
Despite all this costly supervision, the meat industry is regularly hit by meat quality scandals. We’ve had the horse meat switch, the kangaroo caper, the pet meat swap, the cane tops contamination, the potato pesticide problem, and now the cotton trash scandal. Every meat producer, irrespective of the quality of his meat, is hurt by these national meat demotions. Maybe it is time to question whether producers or consumers get value from the costly and high risk nationalised beef brand.
The recent discovery of meat contamination through cotton trash sent a tidal wave of concern through every export market. Despite the extremely limited nature of the contamination, American, Canadian and Japanese meat producers (and their mates in the media both here and overseas) had a field day reporting the withdrawal of Aussie Beef from sale.
Every producer and exporter was punished for an innocent mistake by a few desperate drought stricken farmers and a slack government meat inspection service.
When a nationalised brand name is devalued, the cost is enormous because it devalues every kilo of meat in the country. Our beef industry can no longer afford the costs and risks of nationalised beef brands.
Private brand names have one great advantage — their costs and their benefits are confined to those who deserve to get them.
For example, ten years ago, British Airways served contaminated prawns to its first class passengers. 766 passengers and crew were hit by salmonella poisoning. One died and several became seriously ill. Within weeks the airline had paid out $1.5 million to victims and had been hit by four law suits claiming over $11 million in compensation.
British Airways suffered great damage to its brand name and balance sheet, but (and this is important) no other airline was damaged — only the offending brand. To restore the value of their brand name, British Airways immediately spent $8 million refurbishing their catering centre at Heathrow in London. (This was probably demanded by their insurer, who also had a vested interest in preventing a repeat of such payouts.)
Competing brands are not only shielded from the cost of scandals in competing products, they actually benefit when a competitor falters. Qantas, Pan Am and others were immediate beneficiaries of the prawn problem at British Airways.
However, with nationalised brands like “Aussie-Beef,” the only beneficiaries of its problems are foreign competitors.
The fatal problem of nationalised brands is that no individual or company sees specific benefit in protecting the brand name, and many see the supporting rules and regulations as a cost and an intrusion. What is available to everyone and charged to everyone, becomes of value to no one.
A more insidious problem concerns the tendency towards complacency, laziness, discrimination and corruption in any regulatory service. This alternates with demands for more cash and more power.
Way back in 1975 and 1977, complaints were made to Victorian and Federal meat inspectors about the illegal diversion of low quality domestic beef into the export market. Nothing was done “because of fears the impact of disclosures may have on Australia’s meat export trade.”
Three major Australian Meat exporters complained again in 1980, this time to Federal Police, about meat substitution (which by then included horse meat). Bert Kelly chaired an investigation which reported that abattoir managers were using gifts to induce meat inspectors to look the other way. Bert’s report was shelved.
Nothing happened to fix the problem until Aussie meat hit the mincer in San Diego in July 1981 — out of a shipment of 600 cartons of beef, 102 contained horse meat. The consequences were swift and devastating — trading in beef futures was suspended, Australian beef in the US was quarantined, newspapers headlined the story and the US Department of Agriculture (an arm of the US Beef producers) delegated 2,000 officials to investigate the problem. The price of US, Canadian and NZ beef rose 20c per pound. One of Australia’s largest meat exporters, Smorgon’s (who were not involved in the fraud), suspended their operations.
The subsequent Royal Commission reported administrative timidity, bureaucratic inefficiency, deliberate cover up, corruption among meat inspectors, and a black market in “Australia Approved” meat stamps. (Incidentally, when the Royal Commission was announced, there was an orgy of shredding of “sensitive” files in the Department of Primary Industries in Canberra.)
The scandals and the Royal Commission did cause a major clean up, but they can never solve the root problems. Cycles of excessive cost, complacency and corruption are inevitable in every bureaucratic accreditation scheme. There are too many incentives for cheating and slacking and not enough people with a direct vested interest in quality control and the value of the good name. Public property is no one’s property.
It may be useful for beef producers and bureaucrats to look at the quality controls which regulate the coal industry.
There are many similarities between beef and coal. There are a large number of producers selling a great variety of products into many markets with different preferences. Product specification is difficult, being a blend of measurement, art and tradition. In both, the quality of the product can deteriorate with age and can be degraded by contamination with foreign bodies or inferior products. But in quality control and brand identification, coal works without an army of inspectors and fees and there has never been a scandal to rival the procession of disasters produced by the government beef promotion and inspection services.
Every coal producer has his own brand name and he guarantees the specifications of his product. Every coal shipment is analysed by the producer, by an independent laboratory or by the consumer, usually all three. Every sales contract contains bonuses and penalties if contract specification are not met.
And if a shipment of “Norwich” Brand coal, for example, fails to meet the minimum acceptance standards, no damage is done to the reputation of “Curragh” coal, “South Blackwater” coal or “Burton” coal — in fact, they all would benefit. And you can be sure the next shipment of Norwich coal will meet agreed specifications.
Strong brand names cannot develop in an environment smothered in government regulations and inspections. If it appears to consumers that all beef is of equal quality, guaranteed by the government, why pay more for a particular brand? The possibility of poor quality and fraud is what gives a good brand its value. Bureaucratic quality control destroys the good brands, leaving everyone dependent on the nationalised brand. This faith will always be betrayed eventually because of the three C’s — cost, complacency and corruption.
Our beef market is too important to be left in the hands of bureaucrats. Governments should confine themselves to policing fraud, deceptive labelling, control of contagious diseases and breach of contract. All other quality control is best handled by those with the most to gain or lose.
Japan would not buy “Aussie-Coal”. Why should we expect them to buy “Aussie-Beef”?
- Lang Hancock's Five Point Plan to Cripple Australia
- Put Windmills in National Parks
- Magnifying National Disasters
- Please Don't Feed the Animals
- Buy Birdsville Made?
- The Economics of Flood Risk
- Touring Bureaucrats
- Why Wind Won't Work
- A Profusion of "Prices"
- R.I.P. Ron Kitching - pioneer, explorer, author, family man, entrepreneur, scholar
- The Carbon Pollution Lie
- Closing Down Australia
- The Anti-Industry
- The Pyramid Builders
- Carbon Tax Bribery
- Crown Monopolies
- Carbon Tax Job Losses
- What Next, a Tax on Water?
- Carbon Health Warnings Coming Soon
- Growth Mythology
- The Tax Collection Industry
- Propaganda Puts Paid to Proof
- The Milk of the Welfare Teat is Watered Down
- "Crops for Cars" as Bad as Everlasting Drought
- Poll speech sets record
- The Emissions Trading Casino
- The Contract Society
- A Model Ministry
- The Five Point Plan to kill the economy with High Cost Electricity
- Put a Sunset Clause in the Carbon Tax
- Stuck on Red
- Time to Butcher "Aussie Beef"
- Carbon Tax Lies and Bribes
- The Middle of the Road
- United against taxes
- Call for Govt administrator
- Property & Prosperity
- "The Science is Settled" BUT Durban Climate Summit Not Cancelled
- No End to Fuelish Policies?
- The Right to Discriminate
- Sell the CES
- Free Water Costs Too Dam Much
- Creating Unemployment
- Viv Forbes Wins 1986 Adam Smith Award
- 1985 news item on Tax Payers United, Centre 2000 and the Australian Adam Smith Club
- Having the numbers is not the same as having the truth
- Who's Who in the Workers Party
- David Russell Leads 1975 Workers Party Queensland Senate Team
- Caught in a welfare whirlpool
- Global Warming Season
- Mining in Queensland, Past, Present and Future
- Political branch formed
- Viv Forbes on Libertarian Strategy and the Myth of Constant Resources
- The New Brisbane Line?
- Carbon Lies
- We Mine to Live
- Save the taxpayer
- Solving Three Canberra Problems
- Vested Interests in the Climate Debate
- Carbon Tax Retrospective?
- Carbon Price Propaganda Taxes the Truth
- Don't Burn Food for Motor Spirit - Feed People not Cars
- Two Big Climate Taxes
- Greens Rediscover Hydrogen Car
- Atlas of Australia
- Shutting Out The Sun
- Safety Mania
- Coal - Sinking in the Swamps
- Hobbling the Competition
- Cubic Currency Coming
- "Dear Government"
- Viv Forbes mocks Flannery in 1988
- Smoking, Health and Freedom
- Privatise Now! while they are still worth something
- Bert Kelly on Journalism
- Move for a body of Modest Members
- Modest Members Association
- Bert Kelly's Maiden Parliamentary Speech
- Government Intervention
- 1976 Monday Conference transcript featuring Bert Kelly
- Petrol for Farmers
- Some Sacred Cows
- Experiences in Parliament
- Spending your Money
- Who needs literary licence?
- A touch of Fred's anarchy
- Supply and Demand
- Bert Kelly on Disaster Relief
- Bert Kelly Wants to Secede
- Under Labor, is working hard foolish?
- An Idiot's Guide to Interventionism
- Bert Kelly Destroys the Side Benefits Argument for Government
- Bert Kelly gets his head around big-headed bird-brained politics
- First Modest Member (Bert Kelly) AFR Column
- Second Modest Member (Bert Kelly) AFR Column
- Third Modest Member (Bert Kelly) AFR Column
- Fourth Modest Member (Bert Kelly) AFR Column
- Fifth Modest Member (Bert Kelly) AFR Column
- Sixth Modest Member (Bert Kelly) AFR Column
- Bert Kelly on the 2011 Budget and Australia's Pathetic Journalists and Politicians
- Bert Kelly, Bastard or Simple Sod?
- Liberal Backbencher Hits Govt. Over Import Restrictions
- Bert Kelly feels a dam coming on at each election
- Bert Kelly Enters Parliament
- Why take in one another's washing?
- Bert Kelly breaks the law, disrespects government and enjoys it
- Gillard's galley-powered waterskiing
- Can price control really work?
- Should we put up with socialism?
- We're quick to get sick of socialism
- Time the protection racket ended
- Can't pull the wool over Farmer Fred
- People not Politics
- Bert Kelly admits he should have had less faith in politicians
- Labor: a girl who couldn't say no
- Why leading businessmen carry black briefcases
- Ludwig von Mises on page 3 of AFR
- Mavis wants the Modest Member to dedicate his book to her
- Time to Butcher "Aussie Beef"
- Bert Kelly reviews The War Diaries of Weary Dunlop
- Bert Kelly reviews We Were There
- Tariffs get the fork-tongue treatment
- Bert Kelly reduces government to its absurdities
- Politician sacrifices his ... honesty
- It's all a matter of principle
- Bert Kelly Destroys the Infant Industry Argument
- Bert Kelly Untangles Tariff Torment
- Bert Kelly resorts to prayer
- Eccles keeps our nose hard down on the tariff grindstone
- "Don't you believe in protecting us against imports from cheap labour countries?"
- Even if lucky, we needn't be stupid
- Great "freedom of choice" mystery
- Small government's growth problem
- Tariffs Introduced
- More About Tariffs
- Sacred cow kicker into print
- Modest Member must not give up
- Traditional Wheat Farming is Our Birthright and Heritage and Must be Protected!
- Bert Kelly brilliantly defends "theoretical academics"
- The Society of Modest Members
- John Hyde's illogical, soft, complicated, unfocussed and unsuccessful attempt to communicate why he defends markets
- Modesty ablaze
- Case for ministers staying home
- The unusual self-evident simplicity of the Modest Members Society
- Animal lib the new scourge of the bush
- The Association for the Prevention of Cruelty to Krill
- Repeal economic laws, force people to buy new cars and enforce tariffs against overseas tennis players
- Thoughts on how to kill dinosaurs
- Let's try the chill winds
- Taking the Right's road
- Bert Kelly: "I did not try often or hard enough"
- Bert Kelly "lacked ... guts and wisdom"
- A look at life without tariffs
- The Gospel according to Bert
- Tiny note on Bert Kelly's column in The Bulletin in 1985
- Why costs can't be guaranteed
- Hitting out with a halo
- Paying farmers not to grow crops will save on subsidies, revenge tariffs, etc
- "The Modest Farmer joins us" | "How The Modest Farmer came to be"
- Bert Kelly Destroys the Freeloading Justifies Government Argument
- Government Intervention
vs
Government Interference - Bigger Cake = Bigger Slices
- Bert Kelly on the Political Process
- Charabanc: Part 1
- Charabanc: Part 2
- Charabanc: Part 3
- Relationships with the Liberal Party
- Tariffs = High Prices + World War
- Bert Kelly's Family History
- Bert Kelly's Pre-Parliament Life
- Why Bert Kelly was not even more publicly outspoken
- WEATHER IS USUALLY UNUSUAL
- How to stand aside when it's time to be counted
- How the Modest Member went back to being a Modest Farmer
- My pearls of wisdom were dull beyond belief
- Bert Kelly on Political Football
- Ross Gittins Wins Bert Kelly Award
- Interesting 1964 Bert Kelly speech: he says he is not a free trader and that he supports protection!
- This is the wall the Right built
- Has Santa socked it to car makers?
- Is the Budget a cargo cult?
- Will we end up subsidising one another?
- Do we want our money to fly?
- Can a bear be sure of a feed?
- How to impress your MP -
ambush him - The time for being nice to our MPs has gone ...
- Don't feel sorry for him -
hang on to his ear - Trade wars can easily end up on a battlefield
- Tariffs Create Unemployment
- Bert Kelly recommends Ayn Rand
- Bert Kelly's Satirical Prophecy: Minister for Meteorology (tick) and High Protectionist Policies to Result in War Yet Again (?)
- Bert Kelly in 1972 on Foreign Ownership of Australian Farmland and Warren Truss, Barnaby Joyce and Bill Heffernan in 2012
- Parliament a place for pragmatists
- Of Sugar Wells and Think-Tanks
- Bert Kelly: "I must take some of the blame"
- A Modest Farmer looks at the Problems of Structural Change
- Government Fails Spectacularly
- Know your proper place if you want the quiet life
- Bert Kelly on political speech writers
- Perish the thawed!
- Modest Farmer sees his ideas take hold
- Max Newton: Maverick in Exile
- Why no-one nails the Big Green Lie
- A case for ministerial inertia
- Why politicians don't like the truth
- Ominous dark clouds are gathering
- Better to be popular than right
- Crying in the wilderness
- Ivory tower needs thumping
- Bert Kelly asks, "How can you believe in free enterprise and government intervention at the same time?"
- Rural Problems
- Unholy state of taxation
