Contributed by Tom Copley and Ian McLean
A good livestock agent, like many service providers, can be invaluable to a livestock business, but a bad one can be very expensive. The agency game has seen a lot of changes over the last 20 years, and there are many more options available to producers than there used to be.
Some agents have addressed these challenges by continuously striving to deliver a superior service, understanding their clients, their business and ensuring their needs are met and expectations exceeded. This ensures these agents are a valued part of the business and producers are happy to continue to the relationship.
Another strategy being pursued by agents to address this challenge is less savoury, where producers are effectively being coerced into putting all of their business through an agent. We have heard a number of examples of this being done by:
• refusing to help source cattle for producers unless they agree to sell all cattle through them;
• threatening to not find bull buyers for seedstock producers unless the agent gets all of the commercial sales, and;
• contacting cattle buyers and telling them not to deal with particular clients and that all sales must be put through them.
This behaviour, albeit from a minority of agents, raises serious ethical and legal issues. It also has the broader implication of undermining those agents who seek to have positive and productive working relationships with producers.
The Australian Livestock and Property Agents Association (ALPA) represent livestock agency businesses in Australia. Many national and local agencies are members of ALPA. The ALPA Constitution includes a Code of Conduct for Members, containing clauses requiring agents ‘respect and uphold a client’s right to a competitive market’, and also to ‘refrain from anti-competitive behaviour’.
The above behaviour immediately suggests a breach of both of these clauses in the Code of Conduct. Moreover, any anti-competitive conduct or failure to respect a producer’s right to a competitive market could give rise to breaches of the Commonwealth Competition and Consumer Act.
Primary producers are typically very patient and in some cases, they will put up with inadequate service for decades. This could be for several reasons, including because producers do not want to upset the agent or firm who their parents or grandparents worked with, or the producers are too busy to seek out the competition, or perhaps they wish to ensure they will receive an invite to the Christmas party.
It is good business practise to periodically review all of your service providers, including banks, accountants, lawyers, business consultants and agents. Are they adding value to your business and are their values aligned to yours? If so, fantastic! If not, can you improve the relationship or do you need to start looking for an alternative?
Tom Copley (Jnr) has a Bachelor of Laws and Journalism from QUT. His family run a commercial and seedstock Brahman herd in south east Queensland. Ian McLean is the principal of Bush AgriBusiness Pty Ltd and works with pastoral businesses across northern Australia.
This article was first published on Beef Central on October 17, 2019.