IN a sharp reminder of how tough the Australian red meat processing environment is at present, JBS Australia has confirmed it will close two of its flagship Australian red meat processing facilities, for different reasons.
The company’s Dinmore plant west of Brisbane – easily the largest beef processing facility in Australia, with normal daily operating capacity of 3400 head – will shut for at least a fortnight from Monday 24 August, as the processing industry continues to struggle to raise viable kills in the face of a drought-impacted livestock supply.
Further south, JBS will close its Brooklyn beef and sheep plant indefinitely.
Beef Central understands that Dinmore plant will operate for just two days next week – Tuesday and Friday being the last boning shifts – before the closure is enacted. The company has provided no assurances that it will re-open Dinmore after the scheduled fortnight closure, however.
While the plant had a week-long maintenance shutdown in June due to the growing cattle supply crisis, the upcoming closure is the first extended mid-year closure at the site since 2014, when herd rebuilding was in full-flight and cattle became extremely scarce.
In a clear sign of the industry-wide struggle to secure slaughter cattle supply this year, Dinmore has been operating mostly under three-day weeks since May, delivering throughput at around 50pc of plant capacity. As a high-throughput, low-margin business, it is well known that red meat processing becomes increasingly unprofitable, as throughput levels decline.
The company told Beef Central that it had been losing money at Dinmore ‘for a long time’ this year. The closure would have a big impact on customers, it said, with some consignments inevitably delayed by the decision.
Rates of slaughter across eastern Australia have gradually deteriorated during 2020 since the March rain event, as supply has dried up after two years of drought, pushing stock prices sharply higher. At the same time, cattle prices overseas have declined. In this recent article, Beef Central pointed out that Australian slaughter cattle are now the most expensive in the world.
Australian processing is trapped in a vicious cycle at present, with near-record high cattle prices colliding with listless global beef demand, due to increasing COVID uncertainty. High rates of production out of the US and South America, combined with a sharply appreciating Australian dollar have not helped the equation.
On the revenue side, JBS, like all Australian export processors, is facing challenging trading conditions in world markets, with abundant and relatively cheap US and South American beef eroding our competitiveness.
In confirming Dinmore’s closure to Beef Central this afternoon, JBS clearly laid some of the blame for the development at the feet of the Federal Government’s COVID JobKeeper program.
Neither JBS itself, nor its staff, receive any Jobkeeper financial support, but it is well known that other meat processors and pastoral companies are operating under the Jobkeeper financial umbrella.
As Beef Central pointed out in this earlier article, with labour representing about 70pc of the $300 cost to process a typical 300kg beast, Jobkeeper has in fact created a significant imbalance in the competitive marketplace for Australian slaughter cattle, effectively subsidising some competitors when buying next week’s kill.
Indefinite closure at Brooklyn, VIC plant
In a second major development in the company’s southern Australian operations, JBS has confirmed to Beef and Sheep Central the indefinite closure of its large Brooklyn beef and lamb processing facility near Melbourne.
Brooklyn has been caught up in Victoria’s COVID epidemic that has swept through a number of the state’s processing plant, boning rooms and distribution centres over the past two months, with the list of infected staff at Brooklyn now at more than 100.
Since last Saturday, Brooklyn was bound to operate under the Victorian Government’s new 66 percent manning level formula which applies to processing businesses as the state tries to rein- in its COVID epidemic.
“The persistence of community transmission of COVID-19 in Victoria and the directives from DHHS have meant it is impossible to operate JBS Brooklyn in the current COVID environment,” JBS Southern chief operating officer Sam McConnell said.
JBS Brooklyn’s beef and lamb processing workforce would be stood down for the period of time it takes for the Victorian Government and the Department of Health and Human Services to contain the community outbreak of coronavirus, the company said.
Employees of the company’s Brooklyn Beef and Lamb workforce who were eligible, would be entitled to the state government’s Pandemic Leave Disaster Payment following the DHHS determination for beef and lamb team members to quarantine for 14 days from their last shift.
Mr McConnell said JBS had worked tirelessly with the Australian Meat Industry Employees Union and the Victorian Department for Jobs, Precincts and Regions to ensure that the workforce would be able to access the entitlement.
“I would like to thank those partners for the collaborative nature in which these discussions were held to ensure that we arrived at the right outcome,” he said.
“The health and well-being of our employees, and the wider community in which we operate, is of paramount importance to JBS Australia. As a company, we recognise that our workforce is our greatest asset and we hope that access to this payment goes some way in addressing any concerns around job security and pay during Brooklyn’s closure.”
Paul Conway, Victorian State Secretary of the Victorian AMIEU, said that securing the pandemic payment was an important win for his members who had been working hard to support Victoria’s meat supply during COVID.
“JBS has been in constant communication and consultation with the AMIEU and the DJPR to ensure that workers at the Brooklyn’s facility will be entitled to the Pandemic Leave Disaster Payment. Their engagement with all stakeholders through this process and the measures they have introduced at the facility to protect their workers has been of the highest industry standard,” Mr Conway said.
JBS said it looked forward to continuing to work with the AMIEU, Victoria Health and DHHS to ensure JBS Brooklyn Beef and Lamb processing operations can resume as soon as possible.