Large beef processors have skipped killing shifts in the past 12 months, not through a lack of slaughter cattle, but a lack of manpower to process them. The solution lies in an industry wide approach, AMIC argues…..
THE entire red meat industry supply chain – not just processors – will be impacted by the ‘people drought’ that is being seen across the meat processing sector in Australia, the Australian Meat Industry Council warns.
Several large export meat processors have confirmed that they have been forced to skip operating shifts this year, not through lack of cattle, but a lack of the manpower at hand to turn the raw material into boxed beef.
Visiting Rockhampton for Beef 2021 last week, the Australian Meat Industry Council’s chief executive officer Patrick Hutchinson was on a mission to build awareness about the challenge, which he says will impact the entire industry if action is not taken.
“Producers, lotfeeders, transport operators – everybody is affected if the processing industry cannot attract the manpower to process stock,” Mr Hutchinson said. “It is looking an acute pinch-point for the whole industry.”
The meat processing sector had a strong presence at Beef 2021 last week, with AMPC showcasing an exciting array of technologies that it believes can help capture the imagination of younger people seeking a career path, who may consider the processing industry as a worthy place to work.
“To some of our processor stakeholders, labour is now regarded as a bigger issue than the supply of cattle,” Mr Hutchinson told Beef Central.
“We (the broader beef industry) now need to look at this very closely, because essentially, everybody along the chain can be affected by this problem.”
“Producers across Australia are breeding their way back into a better position, and we are seeing our commodity trade (principally made up of cow and bull meat) drop dramatically for that reason). But what happens when that flush of breeding activity delivers bigger numbers of slaughter cattle in coming years? The question must be asked, will we have the processing personnel there to handle them?”
Processors were ‘more or less just coping’ now, with very low kills after drought, but many remained very concerned about what happens later, when supply momentum again starts to grow, Mr Hutchinson said.
Asked how much lead time there was likely to be, he thought production pressure would be considerably higher by spring next year (2022).
“But processors have to make a call early. Lifting processing volume is not like switching on a light – it takes months, or even years to build a skilled workforce to handle greater numbers,” he warned.
“We’re going to have to really get started in addressing this issue. We are doing everything we can to provide pathways into our industry, for highly skilled, semi-skilled and unskilled workers. But the biggest issue is that despite government trying to incentivise people to move to the bush, inevitably we find we are still looking for 4000 jobs a day across the red meat processing industry,” he said.
Where are these people going to come from?
Mr Hutchinson said some processors had recently been unable to start their chain for a day’s killing shift, through lack of manpower.
“Others are paying millions, weekly, for overtime, to try to fill the gap left by the lack of available workers,” he said. “Not only is that an additional large cost burden on processors, but for the employees involved, the risk is that they start to burn out.”
“Processors are reaching desperation stage – it is a perfect storm that is brewing,” Mr Hutchinson said. “We are able to manage it reasonably well at the moment because supply is so low, but it’s only a matter of time before this creates a huge pinch-point for the entire industry.”
On top of that, recent longer-term plant closures had seen personnel drift out of the industry, to seek employment elsewhere. Whether they would come back once those plants re-open, was up for debate.
“Some have gone on to work for other processors, but equally, others have now left the industry,” he said. “It’s a dwindling pool that we have to work with.”
“While we’ve been hearing during Beef 2021 from so many different people about how great prices are, and how great our research projects are performing, unless the industry can kill the cattle at the end of the day, nothing else really matters.”
Ten years ago, the explosion in the mining industry created similar labour challenges in processing, but the leakage today was much more broad-based.
Artificial interventions caused by COVID Jobseeker last year took much of the incentive out of the job market, with some people electing to stay at home on COVID support, rather than go to work.
“We were able to absorb that because of low cattle supply,” Mr Hutchinson said. “But what’s happened now is that we are not keeping pace with what’s happening – as Jobseeker runs out they are looking elsewhere for work.”
Gate to plate response
Mr Hutchinson said the entire red meat industry, from gate to plate, needed to take a cold shower and work towards a common solution to the problem.
“The collective industry needs to stand up and say, this is our biggest immediate challenge,” he said.
“It’s not plant-based or cell based protein, the price of cattle, or market access issues – we believe the single biggest challenge facing the red meat industry is finding and retaining the labour necessary to keep the red meat production system going. Otherwise, everything stops.”
“As an industry, we face not having the people to stay in business.”
While the processing industry was doing well in creating a connection with young people, in seeking a career path in processing (see images here of youngsters looking at robotics, automation and other technologies on AMPC’s Beef 2021 stand), many were recruits potentially five to ten years down the track, rather than for an immediate start.
“There’s lots going on in the background, but we need staff now. We’re working with the Department of Employment as one of only 12 industry organisations that are participating in the PATH program, about ensuring that we can start the development of a recruitment, retention and advancement program for young people.”
“The government is helping by making things like agriculture and food degrees less costly, and TAFE projects working with young butchers. It’s about starting a story, and the importance and worthiness of working in the food industry.”
“But while we need more engineers, technologists and food scientists in a changing industry, the fact is the numbers we need in boning room and killfloor personnel are far greater. The thickest end of the jobs shortage crisis is in semi-skilled and unskilled floor workers.”
“What we have to look at, if we want to be successful over the next 20 years, is not about breaking new fields and jobs in technology, food science or innovation, but finding the people to be there, on the floor.”
That meant getting the policy setting right at government level, with industry and government working together to approach the problem, Mr Hutchinson said.
“Without it, agriculture stands no chance of getting to the Federal Government’s target of $100 billion in farmgate value by 2030. If we’re at $66 billion now, based on farmgate value, what happens when the price of cattle declines a little over the next five years, and we won’t have enough people in the industry to process them? We won’t make it.”
“The government needs to realise that when the red meat industry sneezes, agriculture gets a cold.”
Fortunately ag Minister David Littleproud had decided to ‘use different levers’ to try to help achieve the $100b in farmgate value target, through initiatives like the Meat Modernisation of Regulation project. But the more immediate, direct problem was labour starvation.
“If we are going to sit there are say, this is an industry for the future, and encourage venture capitalists and investment first to get involved in the red meat industry, we need to get on top of the looming labour crisis. This is the key,” Mr Hutchinson said.
“Venture capitalists are well likely to avoid the red meat industry, if they identify processing labour challenges as a serious pinch-point,” he said.
“But this is a supply chain-wide problem, and needs a supply chain-wide solution. Everybody has to pull together to achieve the outcome we need.”
Not replacing ‘jobs’ with ‘robots’
Mr Hutchinson said while automation and robotics featured widely in processor tech displays at Beef 2021 last week, the industry was not simply trying to replace ‘jobs’ with ‘robots.’
“These new technologies are principally about assisting the current workforce – not replace them,” he said.
“We need to capture the notion that between the image of a steak, and another of a man on a horse pushing some cattle down a paddock, there is a vast spectrum of things happening in between to allow that to happen. That’s the start in helping motivate people to recognise that there is a worthy career in this industry.”
Asked whether imported labour using 457 visas was part of the bigger solution, Mr Hutchinson said imported labour was in fact more expensive than domestic staff. All 457 holders were in fact skilled labourers, as opposed to semi or unskilled.
“That’s because there is a form of ‘taxation’ on 457 holders upon entry into the employment cluster within a processing plant, a second at exit to permanent residency, and another tax that goes to the Skilling Australia fund.
The 457 visa holders were not used because they were a form a cheap labour, but principally because domestic labour was now at such a critical level, he said. “Our own permanent residents are saying, this is not an industry I want to be involved in.”
Mr Hutchinson said the issue was not just about the meat and livestock industry – it ws about rural and regional Australia.
“Meat processing is one of the biggest employers in regional and rural Australia. But unlike the other big regional employer, the mining industry, the red meat supply chain is owned by a multitude of Australian families – people who are the fabric of rural and regional Australia.”