Opinion

Opinion: Aussie processing jobs disappear over the horizon on a boat

Matt Journeaux, AMIEU, February 22, 2016

JBS’s Townsville export beef plant has postponed its scheduled seasonal start from February 29 to at least the end of March. No beef plant in Australia is as heavily exposed to the booming live export trade, and in this opinion piece, the Australian Meat Industry Employees Union’s Matt Journeaux* questions the economic and social impact he sees live exports as having on regional and rural economies, where most processors are located.  

 

IF employment prospects in the North Queensland city of Townsville had not been knocked around enough by public sector cuts and the loss of jobs at the troubled Queensland Nickel refinery, the failure of the JBS meat processing plant to re-open after its seasonal close is a cause for real concern.

Livex 2JBS is probably the single largest private-sector employer in the Townsville region, and the 580 workers who are seasonally stood-down every year have been waiting to be recalled to work at the plant for the 2016 season.  The return to work date keeps being delayed and the workforce is under extreme financial pressure.

Meat processing requires specific skills and clearly if these workers can’t keep their traditional employment, they will go elsewhere.  This is bad news for Townsville and quite possibly bad news for Queensland and the meat processing industry.

The failure of the plant to reopen has occurred because of two main reasons.  Drought has reduced the number of cattle for slaughter and live export is taking the remaining cattle at a price with which the meat processors cannot compete.  There is little that can be directly done about the first issue, but surely something can be done about live export.

Live exports removes the value-add to beef as a product within Australia.  That means that the profits and wages associated with processing of the beef go overseas. Our share of the revenue generated by the industry is greatly reduced. In Townsville’s case, the annual direct wages bill injects about $25 million into the local economy, with a multiplier effect adding considerably more than that.

Most importantly for regional areas, this means that there are even fewer jobs available.  Meat processing has paid relatively well, allowing workers in the industry to live comfortably and spend within their community.  As we know, if good-paying jobs aren’t available, people will leave the area and this places further pressure on remaining businesses and government services.

There needs to be some balance between live export and local processing.  The way things are going, the concern is that processing plants like Townsville, and those further south around Mackay and Rockhampton, will close or remain closed, and never re-open.  This has implications for graziers as well who will be completely at the whim of international markets in order to sell stock.  The slight financial advantage currently received by graziers from live export could quite easily become a disadvantage if the only buyers are from overseas, for live animals.

The union movement is calling on government, primary producers and the meat processing industry to come up with a plan to save the industry from decimation by live export.  It is hoped that a reasonable compromise can be arrived for the benefit of all.

 

* Matt Journeaux is the acting secretary of the Queensland branch of the AMIEU.

 

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Comments

  1. Mark Clifford, February 27, 2016

    I am sure these short sighted cattlemen would love to share your “bigger vision for Australia” but being up to their eyeballs in debt their vision is likely a little clouded at the moment.

    This will balance out soon enough and producers will be back on the painful end of the cost/price squeeze.
    Let them enjoy their day in the sun. God knows it’s been a long time coming.

  2. David Nivison, February 26, 2016

    Why should I, a small scale cattle producer, NOT take the best price offered to me for my cattle? Why should I accept lower prices to subsidise the unionised wages in foreign-owned processing facilities in the few years in ten that I can make enough money to pay school fees and mortgages? If processing workers want my charity just come and ask but don’t use market interference to get it.

  3. Matt Journeaux, February 24, 2016

    I have read the previous posts with interest. Senator Lazarus got a motion passed in parliament yesterday that compels all levels of the beef industry to sit down and discuss a solution. I am a firm believer that there is no silver bullet that there is no easy answer to this issue. But beef processing must survive in North Queensland to provide alternative markets for producers. Contrary to the commentary from some readers on this site, meatworkers are not paid a fortune. They work extremely hard and are paid a fair days wage for a fair days work. If people think they are over paid, walk a day in their shoes and let me know then if that statement is true. If anyone thinks we can compete on price with our live exporting nations, they can think again because that is an impossibility. A free market will continue to fail Australia until we are a nation of coffee shops with highly qualified baristas making our daily brew. Sorry but I have a bigger vision for our country than that.

    Editor’s note: Matt Journeaux is the acting state secretary for the AMIEU

  4. Brad Petersen, February 24, 2016

    Those who try to deny the reality behind the valid points raised by this opinion piece are being very short sighted. Far too many cattle producers are jumping holus bolus into the live export market without thinking about the consequences. It might be giving producers a good return for now, but that can rapidly change. All it takes is a stroke of a politician’s pen in a foreign land. What then?

    Producers in the north all complain about a lack of proximal processing infrastructure, and regardless of the attempts to rewrite history by several people here, the fact is the live export trade very much is a major causal factor for that. This is a looming crisis, whether or not the pro live export crowd, along with the cattle industry, choose to see it; the ongoing shortage of supply to northern abattoirs severely undermines their very presence, and it is very likely several will soon be closed down. In future, producers will have little option but to truck livestock further and further south as the facilities in the north disappear; very bad for their bottom line, and a very bad outcome in animal welfare terms.

    Things move in cycles; when the bottom falls out of the live export trade, the same producers who extol its virtues will then be complaining loudly and bitterly about the lack of infrastructure in the north. Unless producers temper their enthusiasm and avarice now for the live export trade, there will be consequences in the not too distant future, mark my words.

    Never mind the attempted history lessons from those with a cock-eyed perspective, the fact is the uni-dimensional nature of the live export trade actually is putting huge pressure right now on the viability of essential cattle industry related infrastructure in the north. If any person denies it, they are either doing so out of ignorance of the facts, or they have biased motives.

  5. Ben Emms, February 23, 2016

    So everyone expects the producer to be the one to subsidise Australian meat processing jobs. The equation is easy. Processors pay more for the cattle than live export companies and producers will happily sell to them. I didn’t see too much hand wringing going on from the meat workers union over the last three years when cattlemen were selling their life’s work for nothing.

  6. Russell Lethbridge, February 23, 2016

    One extremely important point that everyone seems to be missing in this discussion, is profitabillity of the northern producer. Quite clearly the prices received over the last six years, barring the last 12 months have not been adequate to sustain the supply side of the beef industry. Without the producers there will be no beef industry. We need to recognize that everyone in the supply chain has the right to a profit. Yes producers are price takers, however for the first time in many many years through diversity of markets and the supply demand pendulum swinging in favor of the producer, can’t we just let the producers have their day. The producers has been paying the huge processing costs in Australia for many years through discounting measures. The difference in the return to producer is significant. In one case last year, a producer sent cows to JBS Townsville with the lighter end achieving $70 per head. Only to sell the same class of animals the following week, onto a boat for $1000 a head. For any industry to be sustainable long term, for every sector there must be profitiability which is clear not happening now so we have to do things differently and embrace change or we will be at it peril.

  7. Katrina Love, February 23, 2016

    Apologies Beef Central – it was five years ago and the accuracy of the issue became a bit clouded. This is what I was referring to:

    http://www.beefcentral.com/news/processors-raise-hackles-over-foreign-labour-claim/

  8. Anthony Cole, February 23, 2016

    I think you are missing the point, Jo Bloomfield. Processors have hundreds of millions of dollars invested in processing plants. Once shut, history clearly shows that they rarely, if ever, re-open. Live exports, in contrast, have only a fraction of the infrastructure that processors do. They can start and stop on a whim. What this means is that beef producers have to weigh-up short-term gain (as in today’s attractive premiums for live export) over long-term pain (as in permanent closure of beef plants, leaving only live exporters to deal with in future.) Be careful what you wish for.

  9. Jo Bloomfield, February 23, 2016

    Reading this article, Do AMIEU fear competition? Do they expect the producer to give away cattle at below cost of production or in lieu of higher paying markets?
    There are other factors affecting Townsville. The AACo Livingstone abattoir is now in operation and has been since 2014. Cattle from the NT, including AACo themselves supply that abattoir when large numbers of the NT cattle would have previously gone to Townsville.
    Interesting the AMIEU fail to recognise so many costs impacting on processors, including their own intereferences with long EBA negotiations, unrealistic wage demands based on wanting wage rises for the sake of wage rises and nothing else. Any time meat processors have offered alternative earnings abilities to workers they have been forced back to the wages system which is increasingly expensive and costly to cover.
    Australian meat processors have become increasingly dependent on importation of labour, AMIEU don’t support these workers. At times local employees are simply not available or worse don’t want the jobs some of the 457 visa people do.
    Government regulations costing $10 per head more in Australia for every animal processed is adding burden to meat processors as is the Energy costs of $15 per head above other countries. JBS alone pay out over $30M to meet export level requirements. Other significant factors are technical trade barriers of which 261 were cited in 40 key markets costing $1.25B in trade.
    Drought is and always has been a significant factor in livestock supply and is a natural and regular cycle of the Australian livestock production landscape. There has always been periods of inevitable shortages and fluctuations, long before LE became a economical factor in the last 15-20 years.
    To say LE should be curtailed for the AMIEU to blackmail government control of supply to it is nothing short of enabling a floor price for red meat processing. Considering what a monumental failure that was for the wool industry natural, significant competition should not be curtailed when reduction of that competition would impact negatively on the producer.
    No one wants to see red meat processors shut down but lets be realistic and accept simple assurance of supply, while it may help the operational scale of the processor isn’t always do-able by the producers. Ensuring supply doesn’t ensure profitability for processors if they are coping pressure from both sides of supply and demand especially with low demands for US 90CL at present.

  10. Tony Hogben, Bribie Island, February 22, 2016

    …the live sheep trade closed meatworks down in Tasmania , many years ago.

  11. David Hill, February 22, 2016

    As an Australian beef producer running a moderately sized northern beef breeding and fattening operation, I see this as a case of history repeating, we have been here before. Cost of production pressures are not unique to the beef industry in this country. Since the demise of the car manufacturing industry, beef has the opportunity to become Australia’s largest manufacturing industry. Surely all sectors must work together to ensure processing in this country doesn’t go the same way as car manufacturing. Competition from Live Export has been a good thing for producers and regional economies,especially northern ones. The closure had a devastating effect,lowering farm gate prices across the board, to then have several years of drought induced over supply of processing capacity, which meant farm gate returns were at historical lows when global supply was down and demand and prices were high has been the catalyst for a situation some producers and regional economies may never recover from. Losing jobs in a regional centre like Townsville, on top of the job losses at the nickel refinery is potentially devastating. But what has been the costs to other regional economies that rely on beef production for their viability?
    We currently have a federal government that is about efficiency, have the workers at Stuart Creek any idea why the company grid that was on offer last year, more often than not made it more economical for a lot of far-northern producers to send to Dinmore rather than Townsville, why was this the case? What can industry do by working together to ensure that all sectors can operate as cost effectively as possible? I believe the Australian beef industry, whether it is boxed beef or live export has a lot to be proud of, our product, boxed or live exported is the equal of any in the world, so lets change from a margin trading business model to a Value Based Marketing model.
    Regardless of what sector we are talking about history has shown that returns on investment are unsustainable, even by Australia standards. There is a lot of capital tied up in our industry, no matter how the product is traded, to try and regulate supply in a supposed free market economy such as ours is possibly a recipe for disaster. I feel for processing workers, they are a critical part of maintaining the high standards of boxed beef we enjoy, I believe they should enjoy a standard of living equal to any ones, but to start trading one persons job off against another, and basically telling someone they can’t sell to the highest bidder is a slippery slope. As a beef producer, that has traditionally sold over the hooks(until last year when drought forced a feeder weight turn off) I would be happy to be part of ensuring the Australian beef industries future is more sustainable, but if there is a potential demise because of competition from live export, then we will have all failed one another.

  12. Katrina Love, February 22, 2016

    Odd… that has always been the argument form the pro-LE side – we have to send them live because importing countries can’t afford Australian “processing” costs, yet the chilled meat export industry is worth roughly six times that of the live trade, all countries we currently export live animals to (except Turkey) also import chilled Aussie beef and/or sheep meat – the Middle East chilled trade alone is worth the same as the entire live trade and when Bahrain was cut off from live sheep after breaching our MoU back in 2102, they replaced the live sheep with chilled sheep meat processed in Australia…likewise with Saudi now, and Egypt during the periods we suspended trade for their characteristic abhorrent abuse of cattle; how do you explain that – how could they POSSIBLY afford it?

    And careful, Jim McDonald – pretty sure Beef Central had to issue a retraction when it claimed Australian meatworks were full of 457 visa workers – turned out to be about 12%, didn’t it?

    Absolutely false, Katrina Love. No such statement has ever been published, or retracted, on Beef Central. Have you got your media channel right? Editor

  13. Rohan Williams, February 22, 2016

    For a number of years the animal activists have been pedaling this same irresponsibly inaccurate tune. “Live exports cost local jobs”. This is a completely ignorant approach.

    Our modern live export industries rose from the union induced closure of many local processing facilities Australia wide through their irrational pressure for higher wages. That is the reason that our current live export industries are so firmly established.

    Only months ago JBS were complaining about their inability to identify local processing staff for planned future expansion. There are also a known concentration of 457 visa meat processing workers employed on many processing floors. To claim that live export is costing Australian jobs is purely grandstanding propaganda.

    Contrary to claims made by ignorant animal rights activists, the live export industries actually do enhance security for producers who are tired of accepting the dictation of local processors. 30 years behind time, cattle producers are finally receiving a realistic return for their cattle. What Mr Journeaux conveniently fails to mention is that, if JBS and other processors offered a competitive price for cattle, then there wouldn’t necessarily be the shortage of supply.

  14. Wendy Allen, February 22, 2016

    I am vehemently opposed to the live export industry primarily because of the shameful treatment of the animals, but I also oppose the export of Australian jobs to third world countries. People need to see the big picture here. Australians for many years enjoyed a high standard of living with good wages and working conditions. To maintain that we need to be prepared to pay a little more so that goods can be grown/produced/manufactured here. The cheap imports are coming at a terrible cost. There will be no jobs for future generations. No one surely would believe the politicians when they talk about job creation. We need to resist this push to move our jobs offshore and turn us into a third world country by putting our money where our mouth is.

  15. tom brown, February 22, 2016

    The three biggest Meatworks in the USA (24/7) are located on the US/Mexican border for one reason, cheap labour, illegal immigrants, referred to as ” wet backs”, work for $5 a hour, visitors banned.

  16. Randy Winks, February 22, 2016

    Unions are to blame for many of Australia’s woes. We certainly need unions to protect workers as seen from the slave trade. However unions never appreciate when fair is enough. They have gone on strike over the years, pushed costs of production up and pushed jobs over seas to the detriment of the Australian worker. Australia loses its competitiveness and unions and workers pay the price. Believe me that is a fact. Unions want to open their eyes.

  17. Gary Richards, February 22, 2016

    I am a Butcher 35 years, 32 years on the land 800 head of cattle, we had to dip every 21 days, our lives where very hectic. Over the last 12 months I have dreaded trying to buy beef, staff and customers haven’t a clue what I have experienced in trying to purchase beef. Our biggest fear is now a shortage of beef, Abbattoirs have not opened since october, some abbattoirs only killing one and two days a week. I have managed to skim through with my buying so far, when all the old meats dry up look out on price. another item worrying me is what has been our count on young cows and heifers, with the drought I can understand graiziers short of money, bank repayments, It is our female cattle we need to preserve and look after for all our futures. Don’t worry about export cattle they are not suited for our Butchers cattle, they are perfect for live cattle, don’t get to worked up, why don’t we kill and send in a box, this would create many jobs, now this won’t work I have experienced in Asia, they will only kill their animals early morning before daylight, every cut is the same price, so is pork done the same. the average person in these countries have no fridges or freezers, they survive daily with minimal food.
    My biggest fear is now Brazil if they come in it will devastate all of our beef Industry. Another problem before christmas was a shortage on pork, normally prices go down after Christmas, they are still the same, another problem has been Chickens for 13 weeks I could not buy Fresh whole Chickens, the supermarkets where filled and the butchers missed out, in the last two weeks it has returned to normal. In my 35 years this has been the greatest problem for us butchers in the last 12 months.

  18. Jim McDonald, February 22, 2016

    It costs roughly double to process a beast in Australia compared to the USA, let alone the countries we live export too. The meat workers union is not wholly responsible for this state of affairs but they deserve a healthy slice of the blame with their greedy wage demands. Thanks to the unions acceptance of the 457 visa system there are not as many real “aussie” jobs at stake as the meat workers union makes out.

  19. jenny james, February 22, 2016

    Cost of production
    $35 Asian
    $150 USA
    $350 Au
    Meatworks proceeded to screw the producer down to where we had to go LE to exist. The horse has bolted and they are getting what they deserve. It is time they now get smart and increase productivity.

  20. Keith Warren, February 22, 2016

    Forget blaming live export, meat processing is destined to go the way of the motor manufacturing industry through unrealistic wage costs and low productivity. Where Australia processing costs per body are double those in the US and ten times those in developing world countries, ultimately the industry can’t compete. Protectionist practices only hurt the farmers and the consumers.

  21. Katrina Love, February 22, 2016

    Gee… we’ve only been saying this for 20+ years. Not only does the live animal export trade subject all animals to worse welfare outcomes than if they were slaughtered here, and offer no certainty for producers, and besmirch our reputation, it also exports Aussie jobs and profits.
    Bad of the animals, bad for the producers, bad for Australia.

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