CONTINUED tough livestock supply conditions for meat processors were reflected in a $1.06 million pre-tax profit for the 2016-17 year for the Northern Cooperative Meat Co at Casino, which held its annual meeting this week.
The result was down 34 percent on last year’s$1.57m profit result. Providing a better comparison of the past two years of dramatically reduced cattle supply, however, NCMC produced back-to-back record profits of $23 million and $25 million in the two preceding 2014 and 2015 years, when cattle were abundant.
This time last year, NCMC was warning shareholders about a likely loss for its 2016-17 trading year. That was avoided, however – primarily because of major capital injection into productivity improvements at the plant, financed during the earlier boom years.
A good example was the impact of new cold storage infrastructure, completed in October last year, which added additional on-site chilling and freezing capacity. Previously, NCMC was leasing substantial off-site chillers and freezers, with associated freight and double-handling costs, now removed.
“It’s likely we would have turned a loss last financial year, had it not been for the productivity improvements we implemented earlier,” general manager Simon Stahl told Beef Central.
Beef throughput at the plant last financial year was back another 5-10pc on 2015-16, but that was coming off an already low base, following a dramatic 25pc decline in slaughter numbers the previous year. Numbers processed this year were among the lowest seen in the past 20 years. The veal business was also badly affected in 206-17, back another 10pc in slaughter numbers.
NCMC chairman John Seccombe told shareholders at this year’s AGM that this year’s profit (albeit modest) was pleasing, particularly considering the challenging conditions in the beef industry.
“Last year we predicted a downturn in our beef processing business due to higher than usual cattle prices. While that did come to pass, we were able to minimise the impact through effective cost management,” Mr Seccombe said.
Like most beef processors across eastern Australia, NCMC has struggled for slaughter numbers this year, averaging four days kill each week, but sometimes less.
The NCMC board told shareholders they expected beef processing returns would continue to be down in the short term, but the outlook from late 2018 and beyond was looking brighter, in terms of cattle supply.
“Seasons are starting to work in our favour, but we still think there is another good 12 months to go before slaughter numbers start to improve with any consistency,” Mr Stahl told Beef Central.
As it regularly does in profit years, the NCMC board agreed to pay a rebate back to cattle producer members this year, of $2 a head. At its profit peak back in 2015, grower members received $17 a head, totalling about $3 million that year.
The tight cattle supply has also led to some ‘ebb and flow’ in the plant’s number of service kill customers this past year, but some are likely to recommence when cattle numbers improve, Mr Stahl said.
Other highlights reported at this week’s AGM included a 15 percent reduction in lost time injuries over the past year.
Co-op’s strong 84-year history
Established in 1933, the Northern Cooperative Meat Co is a farmer-owned processing business, servicing export and domestic beef and pork markets through a modern processing facility near Casino in northern NSW.
The facility has the capability to kill about 8000 cattle a week, using two separate processing floors – a beef floor processing cattle over 150kg and a veal floor for lighter stock with capacity for 800 a day.
The Co-op provides customers with a world-class processing facility to process beef, veal and pork to customer specifications. The plant complies with stringent quality control guidelines providing accreditation as an approved processor for the EU, US, Japan, China, Korea, Halal, Organic, and bio-dynamic markets.
The largest component of the business is in providing service kills for outside operators, under the Casino Service Processing (CSP) business division.
CSP maintains a secure segregation system for carcases intended for the EU, Halal and Organic markets. The plant implements stringent product hygiene standards and operates a state of the art computerised refrigeration plant that optimises the storage life for chilled and frozen products.
Independent of its service kills for other operators, the NCMC co-op owns and operates its own beef and pork processing and trading business, NCMC Foods, marketing a range of quality brand lines including Fairlight Red, Fairlight Black, Co-op Fresh, Queens Veal, Ramornie, Northern Rivers, Ramsey and Manning Food brands.
NCMC also operates Casino Hide Tanners, one of Australia’s largest tanneries, as part of its integrated processing service. CHT processes the co-operative’s and outside hides from green through to wet blue leather. Established in 1975, CHT was one of the first tanneries in Australia dedicated to the tanning of cattle hides for export. Expansion has made it one of the larger installations in Australia, with the capacity to process more than 900,000 cattle hides each year.