Processing

Ag plans should address processing issues also: JBS

Beef Central, 07/06/2013

Meat processors, which represent the single largest manufacturing industry in Queensland, have called on the State’s LNP Government not to overlook the importance of the value-adding sector in its 30 year strategy for progressing agriculture.

Queensland agriculture minister John McVeigh this week launched the Queensland Government’s 30 year vision for agriculture, which outlines 60 initiatives aimed at doubling the state’s agricultural production by 2040.

The State’s biggest meat processor, JBS, has commended the Queensland Government for recognising the value of agriculture to the State’s economy and for implementing a long-term plan with clearly defined targets and strategies.

However, it has also noted that the plan is heavily production focused, and appears to understate the importance of meat processing to the State. The strategy document places the value of the meat processing sector’s annual contribution to the Queensland economy at $1.5 billion, whereas processors believe the real figure is much closer to $4b.

JBS spokesman John Berry said that with 80 percent of beef produced in Queensland destined for export, any long-term plan to improve agricultural productivity must also address issues that impact on processor competitiveness in international markets.

“Doubling agricultural production is an important goal, but maximising the value out of that product by having strong, internationally competitive processing capacity is extremely important as well,” Mr Berry told Beef Central.

The ‘number one issue’ for the industry was market access. “We need to ensure we broaden our international market access, not narrow its orientation," Mr Berry said. Broader market access was of commercial benefit to the entire chain including producers.

The cost of processing an animal in Australia is 2.4 times greater than the cost of processing an animal in the United States, driven higher by local factors such as high labour costs, a requirement for Australian processors to pay full federal meat inspection costs, and high utility costs.

In the case of JBS’ Dinmore plant on Brisbane’s western outskirts, the advent of the western corridor project had resulted in significant increases in water charges over the past two years.

Mr Berry said the Queensland Government plan should include a stronger focus on reducing constraints to the competitiveness of the State’s meat processing sector – which accounts for more than half of Australia’s total meat processing capacity – in international markets.

“The issue around our cost to operate and our competitiveness versus US and Brazil is critical,” he said. The role of Government in working directly with Industry around such issues is imperative.”

Areas in specific need of attention included improvements to road and rail infrastructure to support more efficient movement of livestock, and a requirement for a clear focus on commercially driven research and development.

He also suggested that Federal and State Governments focus on allowing more direct and structured engagement with key players in supply chain from farming to processing. 

Governments historically had focused on engagement with industry associations, and while these bodies played an important role in developing policy, a strong need also existed at for more active engagement between State and Federal Government and those with significant investments along the supply chain.

“It is also about looking at what the Queensland Government can do to promote policies to improve the competitiveness of the Queensland beef supply chain, from the paddock through to the processor, to the Federal Labor Government and the Coalition.,” Mr Berry said.

“It is about sustainable, viable and profitable players throughout the entire supply chain, you can’t have one part of the supply chain profitable, and the other parts of the supply chain under pressure, so it is about developing a totally integrated approach focused on taking cost out in a strategic manner throughout that whole supply chain.”

Mr Berry said it was important for the Queensland Government to understand the priority issues around the Queensland Beef Industry, an industry of national significance with more than half the state’s beef cattle herd and beef processing capacity, and to be a strong advocate to the Federal Government on key issues to improve competitiveness.

  •  John Berry will address these issues in more detail at an industry forum in Roma next Wednesday. For more details click here

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