Processing

Teys cops flack from ALEC over explanation behind cutbacks at Lakes Creek plant

Beef Central, February 9, 2016

teys cargill logo - CopyTEYS Australia has announced a retraction to a single shift this year at the company’s large Lakes Creek (Rockhampton) beef plant, on the back of a reduction in cattle supply and an increase in live cattle exports.

The reductions will take effect from 15 February.

In a statement issued a few minutes ago, Teys said the supply of available cattle to process had, as predicted by MLA, dropped significantly over the last few months – primarily due to the effects of the prolonged drought. Teys said this had been compounded by an increased demand from the live export sector over the same period.

The Australian Livestock Exporters Council immediately hit back at the suggestion that live exports was to blame.

“To claim that strong livestock export demand is the cause of a downturn in the domestic processing sector belies the facts, and hints at a kind of ‘us and them’ mentality which is damaging for Australia’s red meat industry,” ALEC chief executive Alison Penfold said in a statement issued this afternoon.

Teys general manager corporate services, Tom Maguire, said while the company had been expecting these conditions, it would do everything possible to minimise the effect on its workforce.

To ensure the sustainability of the Rockhampton plant, Teys is reducing daily throughput from 1450 head to 1215 head and consolidating most operations into a single shift – a move that Mr Maguire said would result in some redundancies.

“This is never a good situation, as we value all of our employees. However there must be work for them to do, and at this stage there is a supply shortage that is beyond our control,” he said.

However the company was working closely with affected workers to minimise impacts including offering positions at other Teys’ operations where possible.

He also reassured the local community and producers that Teys was committed to the region in the long-term.

“Teys Australia firmly believes that our Rockhampton plant has a strong, viable future, and that it will provide employment for decades to come in the Rockhampton area,” he said.

The plant is also continuing to focus on supplying premium grassfed beef to key customers around the world.

“We are committed to build on the premium markets which are underpinned by PCAS and MSA. The European Union will remain a key destination for Rockhampton beef,” Mr Maguire said.

“We will continue to provide a strong option in Rockhampton for producers to consider when marketing their cattle.”

Teys claimed the Central Queensland facility was one of the most efficient operations in Australia, employing more than 1100 workers at its peak, contributing $357 million to the regional economy including $155 million in household income, and supporting around 1300 additional jobs in the region.

Live exporters react to suggestion of ‘blame’

Australian Live Exporters Council’s Alison Penfold said the selling-off of stock by producers due to prolonged drought had driven the supply challenges now facing all stakeholders in the red meat supply chain.

“In light of the unsustainably high slaughter figures of 2014 and 2015, the downturn in throughput processors are now experiencing has been inevitable,” she said.

“But any claim that strong livestock export demand is the cause of a downturn in the domestic processing sector belies the facts and hints at a kind of ‘us and them’ mentality which is damaging for Australia’s red meat industry.”

“Livestock exporters would never criticise processors for the numbers they purchase for domestic slaughter, even if it contributes to supply challenges in filling orders for the live trade.

Applying the same principle, it would be clearly unreasonable for one processing business experiencing a production downturn to blame a competing processor for buying too many cattle or pushing prices up, Ms Penfold said.

“Competition is a good thing for the supply chain, especially for producers who should be able to enjoy a full range of market options when selling livestock. The livestock industry is cyclical and closely linked to the vagaries of seasonal conditions.”

“As major players in Australia’s red meat industry, livestock exporters won’t be engaging in any dialogue which denigrates other members in the supply chain, including processors, and expect that other stakeholders do likewise,” she said.

“Much of the red meat supply chain’s long-term resilience comes from the integrated way in which all players in the sector operate. That integration, which is a central tenant of the national Meat Industry Strategic Plan, is a significant strength and, put simply, aims to grow the red meat ‘pie’ for the benefit of all participants.”

Having viewed the ALEC statement, Teys’s Tom Maguire denied that the company was ‘blaming live exports’ for the current position it was in.

“But the fact remains that a lot of killable cattle are in fact leaving Australia on boats,” he said.

 

 

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Comments

  1. Luke Roberts, February 9, 2016

    What’s with Alison Penfold’s ‘holier than thou’ attitude?
    “Livestock exporters won’t be engaging in any dialogue which denigrates other members in the supply chain, including processors,” she says.
    What about the provocative comments made by live exporter Scott Braithwaite in front of a large audience at Beef 2015 in Rockhampton last year? He boasted that live export would win the battle for cattle over processors because of efficiency, and it was likely to become the dominant market for Australian cattle producers?

  2. Jo Bloomfield, February 8, 2016

    I am a small cattle producer who sells to mainly LE, in no way do I want to see the demise of Australian processors but we must have an industry that allows over all profitability and sustainability, that is the big picture. We all need to make a dollar at all levels of production from grass roots right up through to export and retail. Competition is the only way we can ensure we (Producer) receive a fair market value for cattle. Live export is ensuring that competition. We have the right to sell to the highest bidder. There are alot more factors to Australian processors and their operations than simply producers ensuring they keep up the stock numbers and hence maximise scale costs of operation for the processor. History shows that even though physical numbers to processors has decreased actual meat production tonnage has increased. A factor of processor operations maybe, but also due to producers increased herd improvements and management. Meat processors in Australia need to recognise that they do not have the right to expect us to give them cattle at below costs of production or inlieu of better paying markets, and the Australian public need to understand the importance of a competitive environment. There are many woeful historical tales of producers selling into markets below COP, that is exactly what was happening after the LE ban in 2011. Current values for cattle may be high in comparative terms but how long have we traded at par or below COP, when they were low we didn’t see processors offering to pay more than what they had too at market value. If the Australian beef producer can be profitable and viable then numbers in the Australian beef herds will increase and that will be a good thing for the entire industry. It will increase resiliance, research, productivity and available animals for both Australian processors and live exporters. Deny the producer base long term profitability and the whole deck of cards will come down. Long term more significant concerns for Australian processors, like us, are costs of operation, how do we keep a lid on machinery, improvments costs, regulatory government costs or employee costs. In my view in relative terms its not the costs of the physical beast that is hard for the processor to endure its the increasing costs of production. 10years ago the processor maybe paid $2/kg LW now they may be paying double, their wages and cost of infrastructure, technology I would hazard a guess is many more times than doubled in the last 10 years. Whinging at the producer supplying to better paying markets is not going to the solve the situation when we all just want to support our own businesses and families.

  3. Glenn nix, February 8, 2016

    Been killing it for a long time but still not dead .But wait multiple record tonnage over several years , killing more then what are born .Your just wrong Tony .Plenty of cattle in the NT but wrong types for the US market .Getting close to quota & the market has gone soft .

  4. Tony Hogben, February 8, 2016

    …..live exports are killing Australian beef export operators, always have…….but there is no easy answer……unions will destroy it too, if given half a chance…

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