The Australian red meat processing industry’s peak industry council has called on levels of Government and industry to recognise the impact that record input costs, regulatory burden and encumbered market access is having on the industry, following the closure of another processing company within Australia.
As widely reported this week, Churchill Processing in Ipswich will close its doors at the end of September, leaving 500 staff out of work.
Australian Meat Industry Council CEO Patrick Hutchinson said the red meat and pork processing industry faces an “axis of issues” that continues to impact profitability and growth.
“Our sympathies go out to the staff and management of Churchill, “said Mr Hutchinson.
“However, once again, this clearly illustrates our industry continuing to work in the midst of the worst terms of trade in its history.
“The Churchill closure highlights the urgency required for all levels of governments to get serious on regulatory reform.”
Mr Hutchinson said Australian processors were currently experiencing continued trade and management issues on a daily basis, including:
• Record high livestock prices (current EYCI of 548 cents still 25% above five year average with record of 725 cents occurring in August 2016);
• Supply constraints;
• Increasing input costs including energy;
• An unfavourable exchange rate; and
• Burdensome and duplicative government oversight
“In addition, an uncertain export trading environment, including technical market access difficulties, is significantly affecting establishments’ viability and profitability,” he said.
China suspensions costing $1m a day
“For example, in relation to the temporary Chinese import clearance suspensions applied to six Australian meat processing establishments in late July 2017, the inability for these establishments to access this valuable market is costing them over $1m a day in combined revenue.
“This has significant flow-on effects to the livestock supply chain, including stock purchasing decisions, establishment operations and number of processing shifts. This impacts the lives of everyday Australians in regional centres.”
“Increasing the cost of doing business through unharmonised regulations between state and federal, as well as potentially introducing new regulations, also continues to plague the industry.
“Talk of introduction of further red tape within industry, rather than its reduction, further hurts confidence.
“The recent senate inquiry into rationalisation in the red meat processing industry has shown the potential to impose further regulations onto an already heavily regulated industry that is completely out of step with government rhetoric on business support in Australia.”
“We work with and support the Red Meat Advisory Council (RMAC) in rejecting not only the baseless accusations of anti-competitive behaviour but also the notion of adding further red tape through potential onerous reporting and auditing of AMIC members and the industry arising from an inquiry without evidence.
“As an industry representing 35,000 full time workers and another 100,000 through multiplier effects (as at Jan 2017), we call on all governments to work with us to improve issues around the cost of doing business, not add to it.”