Processing

NSW processor Monbeef to close for eight months, due to sustained market pressures

Jon Condon, December 4, 2020

SOUTHERN NSW beef processor Monbeef will shutter its facility for eight months in early January, due to ongoing market pressures.

The closure is a stark reminder of the extreme challenges facing red meat processors this year, with critically short livestock supply after severe drought, and consequent record high cattle prices. Many processors have been logging losses of $200 to $300 a head on adult slaughter cattle for long periods this year.

Monbeef is a small hot boning export plant processing around 150-180 head per day near Cooma, employing around 100 staff. Most of the kill is made up of dairy and beef cows plus bulls, primarily producing frozen manufacturing beef. The US is the plant’s single largest market, with about 70pc of all production exported.

MonBeef was bought in 2019 by Japanese meat trading company S Foods.

Under the direction of S-Foods, Monbeef management told staff yesterday that after the most extreme year on record, with fires, floods, high cattle prices and the COVID pandemic, a decision had been made to suspend processing. It was announced that the plant would go into a stand-down period for an anticipated eight months from 11 January 2021 – the original return date after the scheduled annual Christmas/New Year closure.

“S Foods made the decision after it became apparent that it was financially unsafe for operations to continue at the plant under the current business environment,” a Monbeef statement said.

During the eight months stand-down period, a small number of essential workers will be retained to ensure that there is a successful transition for the re-opening of the plant.

General manager Rudy Nonis said while the stand-down notice was extremely difficult to deliver, S Foods had advised that this decision was essential for the longevity of the business.

“We have tried looking at different options to keep the plant running, however we have been unable to find an alternative. This is by far the hardest thing that Monbeef management has had to do in the history of its operation,” Mr Nonis said.

All current staff will be compensated until 17 December and will be contacted prior to re-commencement of operations, and provided with the opportunity to recommence work at the plant, should they be interested, he said.

Monbeef’s plant was commissioned in 1998, becoming the first purpose-built hot-boning plant constructed in New South Wales, using the latest hot-boning design and technology. The plant sits on the same site as the earlier multi-species facility operated for many years by Frank Ripzsam and the Dorahy brothers.

In recent years significant investment has been made in introducing new technology and equipment to improve efficiency and allow an expanded range of products and packaging options.

Since the arrival of widespread rain back in March/April across eastern Australia, slaughter cattle supply has tightened dramatically, leading to widespread industry speculation that longer-term plant closures would follow at some point.

Monbeef has been operating for an average of four days each week for the past six or eight months.

Livestock price key factor

Australian Meat Industry Council chief executive Patrick Hutchinson said a range of factors had contributed to the Monbeef closure, but price (driven by availability) of livestock was a key factor.

“But there are other factors, as well. The Aussie dollar currently sits around US74c, its highest level for some years, which reduces the competitiveness of Australian exports.”

“Frozen beef exports, across the board are down about 30pc this year.

Asked whether more log-term processing plant closures were on the cards, given current trading conditions, Mr Hutchinson said AMIC was talking with its processor members regularly.

“Normal Christmas/New Year shut-downs appear to be on track for export plants, and there is no suggestion yet that new season openings may be delayed in 2021. But we have to steel ourselves to the prospect that other processing facilities may close next year, because cattle supply is likely to remain very tight for the foreseeable future,” he said.

“A big summer wet season across eastern Australia, as predicted by BOM, would only make supply conditions worse,” he said.

 

 

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