From the CEO’s Desk Why is the red meat industry talking about levy reviews?

It’s a fair question - particularly when producers are managing volatility from every direction, from seasonal pressures to the impact of rising fuel and fertiliser costs. But the sheep industry is also evolving - structurally, technologically, and in response to changing markets and expectations.  The reality is there’s rarely a ‘good’ time. What matters is whether the timing is necessary.

Prescribed industry bodies, such as Sheep Producers Australia, have a legislative role in establishing and adjusting levies for the commodities they represent. With that comes a responsibility to periodically assess whether current levy settings remain fit for purpose.

Australia’s agricultural levy system has a long and deliberate history, dating back to 1929. It remains a cornerstone of how our industry invests in its future - enabling producers to collectively fund critical areas like research and development, biosecurity and, in some cases, marketing. Importantly, eligible R&D contributions are matched dollar-for-dollar by the Australian Government. 

The rationale for levies is still highly relevant today. Our industry is made up of many individual businesses that are not always able to capture the full benefit of investing in research and development on their own. Levies help overcome this by pooling investment, limiting free-riding, and supporting activities that deliver shared benefits on-farm, across the economy, and throughout Australian society.

Importantly, many of the benefits from these investments are realised over the long term and are not easily captured by individual businesses or commercial investors. Provision of R&D activities and biosecurity helps producers achieve productive efficiency, product quality, sustainability and innovation, and helps producers respond to both domestic and global market demands.   

While industry reviews over time have pointed to complexity in how the levy system is structured, these reviews consistently reaffirmed the value of levies in supporting a strong, productive and globally competitive agricultural sector. 

For sheepmeat producers, there are two transaction levies — one for lamb and one for sheep. Sheep Producers Australia has legislative responsibility for these levies under the Australian Meat and Livestock Industry Act 1997. These levies are also just one part of a broader levy system across the sheep value chain, which also includes wool, live export and slaughter levies administered by other industry bodies.

Table 1: Rates: Sheep and lambs transaction levy

Product	Levy rate
Lambs Sale price $5 to $75 per head	2% of the sale price
Lambs Sale price over $75 per head	$1.50 per head
Lambs With no sale price	80 cents per head
Sheep Sale price $5 to $10 per head	2% of the sale price
Sheep Sale price over $10 per head	20 cents per head
Sheep With no sale price	20 cents per head

The sheep and lamb transaction levies are collected by point-of-sale agents and transferred to the Department of Agriculture, Fisheries and Forestry. Levies collected vary according to stock levels and trading amounts. The greater the number of sheep and lambs there are in Australian farming systems, and the more sheep and lambs that are traded, the greater the transaction levy collected. The Department distributes collected levies to the relevant industry levy recipient bodies to support industry’s marketing, research and development, animal health and welfare commitments, and the chemical residue testing program. These levy recipient bodies include Meat and Livestock Australia, Animal Health Australia and The National Residue Survey. 

Notably, the sheep and lamb transaction levy rates have not changed since they were established in the late 1990s. Sheep Producers Australia undertook reviews of the levy in 2005 and 2018–19, but that work now needs a refresh to reflect today’s industry and where it is heading. Since the levies were first implemented, the cost of delivering research, marketing and industry services has evolved with inflation, and understanding what this means in real terms is an important part of assessing how the current system is operating.

Practically, what this looks like is first undertaking independent analysis and economic modelling of the levy and current arrangements. This work is starting now. It includes assessing how the current levies are performing — examining revenue, expenditure, return on investment, efficiency and effectiveness — and then considering what options, if any, may be appropriate given changes in the industry, levies collected and investment priorities.

Options that are identified for the potential for progression would then be subject to consultation with levy payers (producers), to understand the level of industry support. Subject to that support, a preferred option could then be proposed by Sheep Producers Australia to the Minister for Agriculture, Fisheries and Forestry for consideration by government.

In undertaking this process, Sheep Producers Australia must meet the 12 levy principles, introduced by the Australian Government in January 1997. These principles, and their supporting levy guidelines,  provide a framework for establishing or amending agricultural levies, ensuring they are necessary, beneficial, industry-supported, and efficiently managed.  

Reviewing the levy is not about change for change’s sake, nor is it a decision already made. It is also not a proposal to unilaterally increase levies. It’s the initiation of a conversation about what future sheep industry investment looks like. 

Questions about the levy have also emerged through broader conversations as part of The Future Flock consultations. Discussions in these workshops and through one-on-one interviews have focused on industry structures, investment, and long-term enablers for the future growth of the sheep industry. 

A levy review is something the sheep industry would benefit from - not because change is inevitable, but because asking whether our settings are right is good governance. 

This conversation belongs to producers, and Sheep Producers Australia will continue working to ensure it is grounded in producer priorities and long-term value for the industry. 

More information: About levies and the levy system - DAFF