ENCOURAGING signs are emerging that the worst of the red meat processing labour challenges experienced last year may have passed – but expanding kill volumes this year and next may yet see the problem return.
The early stages of 2024 have produced a marked rise in slaughter numbers compared with last year. The first four weeks of processing activity reported by the National Livestock Reporting Service shows kills averaging 12pc higher than the same period in 2023 (adjusted for public holidays).
While cattle supply obviously plays a big part, another factor appears to be improving access to processing labour.
Three of Australia’s largest multi-site processors have told Beef Central that the severe labour challenge is now not as acute as it was last year.
One large Queensland plant is adding considerable production capacity in coming weeks (see separate story tomorrow). A group of six southern Australian beef plants that either activated or expanded new production capacity last year are now expanding throughput. Beef Central understands the new Thomas Foods International plant at Murray Bridge is now processing 500 head a day, and getting closer to its stage-one target of 600/day.
Another significant point during the worst of the processing labour crisis last year was the abandonment of some labour-intensive processes in order to try to maximise carcase throughput. In some cases, valuable offals that previously were being processed for human consumption were simply being consigned to the meatmeal chute, as a low-value by-product, because of the labour issue. In other cases, more sophisticated and bespoke manufacturing activities on primals for particular customers were shelved, simply in order to keep up with cattle supply. All left money on the table by processors.
Offshore labour grows
Greater supply of offshore labour is part of the reason for recent growth in processing volume.
The Pacific Australia Labour Mobility (PALM) scheme is the primary temporary migration program to address unskilled, low-skilled, and semi-skilled workforce shortages in rural and regional Australia. Built on partnerships between Australia and Pacific island nations, the program accepts workers from ten participating countries: Fiji, Kiribati, Nauru, Papua New Guinea, Samoa, Solomon Islands, Timor-Leste, Tonga, Tuvalu and Vanuatu.
A Federal Government report published before Christmas showed there were 38,164 PALM scheme workers employed in Australia in December. Of that number, 9894 (26pc) were employed in the “meat and meat product manufacturing” field (mostly covering beef, lamb, pork and chicken production). Agriculture, horticulture and fishing was the dominant PALM scheme user, accounting for another 69pc of all labour under the scheme.
The same Government report published a year earlier showed PALM labour in meat processing at 7801 people at the end of 2022 – representing a rise of 27pc in the following 12 months.
There are currently more PALM scheme workers in Australia than there have ever been since the program started in 2022.
Beyond the PALM scheme, there is also growing use of offshore labour from countries like China, Brazil, the Philippines and Vietnam under the Temporary Skills Shortage (482, formerly 457) visa.
One of the challenges in qualifying for employment under 482 is basic English language skills, however one processor told Beef Central that initiatives like English language training were helping deliver suitable candidates out of countries like Brazil and China, where English language skills are often limited.
“For us, better labour resourcing is mainly being driven by the PALM scheme, but we are also starting to bring in people again from China, the Philippines and elsewhere under 482 visas,” one processor company executive said.
So how much impact do additional staff resources have on plant throughput?
One experienced plant manager said each additional boner (a crucial position in the de-boning and fabrication process) could handle 20 bodies of beef per day, or 100 per week. Add an additional ten boners to a large production floor, and throughput could rise by 1000 head per week.
But of course, behind each skilled boner there is a team of boning room personnel contributing to the process of stripping meat from a carcase and getting into a carton. In a typical beef plant, each boner is backed by 1.4 to 1.5 slicers (units of labour), plus a host of packers, machine operators and other personnel.
Task just keeps growing
But just as it looks like beef and lamb processing labour congestion may be easing, the size of the task ahead continues to grow.
Meat & Livestock Australia’s most recently published industry projections (the 2024 instalment is due later in February) has Australia’s 2024 national adult beef kill at 7.6 million head, before rising to 8.35 million in 2025.
That represents a 1.4 million head or 20pc rise in two years – and that forecast is only like to grow, once MLA’s latest 2024 Projections are released in a couple of weeks, following the seasonal turnaround.
It means that labour shortage, relative to cattle supply, may again start to get badly out of alignment – especially at a time when processors can see some opportunity ahead to improve their margins, following two bleak years when record high cattle prices sent many processing balance sheets into negative territory.
Analyst Matt Dalgleish recently remarked on the strong start to 2024 for Australian red meat processing volumes across the east coast, with beef and sheepmeat abattoir throughput running ahead of annual average trends.
“East coast cattle slaughter has average weekly kills of nearly 83,000 head since the start of January, which is 11pc higher than the January 2023 open and about 8pc above the five-year average weekly pattern,” he said.
“It is good to see processors managing to get livestock through the kill floor in such an efficient manner. However, annual slaughter volumes anticipated for 2024 of around 7.6 million head of cattle, along with 29.7 million head of sheep and lamb, are still short of the drought-driven turnoff seen in 2019-20 of around 9 million cattle and 32 million sheep, when seasons really turn dry.
“In fact the industry may have dodged a bullet this year. If conditions had stayed dry as BOM forecast last year, turnoff could have been a lot larger, which would have seriously tested processing labour capacity,” Mr Dalgleish said.
“This reminds us that the processing sector needs ongoing support to be able to attract skilled staff and continue to build kill floor efficiency through the implementation of robotics and other labour saving practices,” he said.