This is an AMIEU archive site
Click here for the current AMIEU website
INSIDE NEWS UPDATE



    
Content

1. Live Export Protest Action

Body Jewellery Policy

3. Live Exports Petition

4. Live Exports
5.  Travel Insurance
6.  Superannuation
7.  Woolworths 
    Newsletter No 1

8.  Woolworths
     Newsletter No 2

9.  Woolworths
     Newsletter No 3

10.  Woolworths
     Newsletter No 4

11.  Woolworths
     Newsletter No 5

12.  Woolworths
     Newsletter No 6

13. Woolworths
     Newsletter No 7

14. Woolworths
     Newsletter No 8

15. Woolworths Christmas Special

Woolworths members Protesting


ONLINE USERS
Online Users:
Members:
0
Anonymous: 1

   
   
New WA Government Report on the Meat Processing Industry

Cattle and Sheep Meat Processing in Western Australia

Ministerial Taskforce Final Report

November 2004

Table of Contents

MEAT PROCESSING in WA . TASKFORCE REPORT............................................................... 2

Executive Summary .................................................................................................................... 2

1. BACKGROUND................................................................................................................. 6

2. INDUSTRY OVERVIEW................................................................................................... 8

2.1. Overview of the Meat Processing Sector in WA........................................................... 8

2.2. WA Beef Production, Processing, and Live Exports..................................................... 9

2.3. WA Sheep Production, Processing, and Live Exports................................................. 13

2.4. Seasonal Stock Supply Variability ............................................................................. 17

3. DISTORTIONS TO COMPETITIVE NEUTRALITY BETWEEN VALUE CHAINS ...... 20

3.1. Competition Between Value Chains........................................................................... 20

3.2. Sources of Growth in Live Exports ............................................................................ 22

3.3. Foreign Government Trade Distortions ...................................................................... 23

3.4. Domestic Policy Distortions....................................................................................... 23

3.5. Federal Government Policy Distortions...................................................................... 26

3.6. WA Government Policy Distortions........................................................................... 28

4. IMPROVING CONSISTENCY OF LIVESTOCK SUPPLY............................................. 30

4.1. Possible Solutions for Cattle ...................................................................................... 30

4.2. Possible Solutions for Sheep ...................................................................................... 31

5. MAINTAINING CONSISTENT EMPLOYMENT ........................................................... 31

5.1. Labour Issues............................................................................................................. 31

5.2. Workers compensation............................................................................................... 32

5.3. Training..................................................................................................................... 32

6. DEVELOPING NEW OPPORTUNITIES ......................................................................... 33

6.1. Enhancing Lamb Exports........................................................................................... 33

6.2. Developing New Markets .......................................................................................... 34

7. DRAFT CONCLUSIONS AND RECOMMENDATIONS................................................ 35

7.1. Establishing a Level Playing Field ............................................................................. 35

7.2. Labour Issues............................................................................................................. 39

7.3. Stock Supply Issues ................................................................................................... 39

7.4. Developing New Markets .......................................................................................... 40

8. FINAL CONCLUSIONS................................................................................................... 41

BIBLIOGRAPHY..................................................................................................................... 53

APPENDIX 1: SUBMISSIONS RECEIVED............................................................................ 54

APPENDIX 2............................................................................................................................ 56

APPENDIX 3. Livestock Production Statistics ......................................................................... 57

APPENDIX 4: Training Issues for the WA Meat Industry......................................................... 59

2

MEAT PROCESSING in WA . TASKFORCE REPORT

Executive Summary

The Hon Kim Chance MLC, Minister for Agriculture in Western Australia, on 9 December 2002

commissioned a Meat Processing Taskforce to examine and address the concerns of the cattle and

sheep meat processing sectors in the state. The Taskforce was requested to report on the following

broad Terms of Reference:

! develop a long-term plan for the viability of the meat processing industry;

! facilitate and establish new market opportunities and supply chains, without imposing on

existing commercial relationships, in order to increase exports of processed meat;

! review Government policies and regulations in regards to the impacts of live exports on the

processing sector, and on a competitively neutral marketing structure;

! improve the efficiency of Government regulation of the meat processing industry, including

the overlap or duplication of regulatory functions and the provision of utilities.

The Taskforce reviewed the available evidence, substantiating the existence of direct competition

between the local meat processing sector and the live animal export trade.

The Taskforce concluded that at least some of the problems experienced by the processing sector in

recent years were directly attributable to this competition from the live trade. The impact of the

growth of the live export trade on Australian meat processors has been to exert a powerful pincer

effect on domestic meat processing that:

(a) increases prices that West Australian meat processors have to pay for livestock, and ceteris

paribus reduces their profit margins, and

(b) introduces a powerful competitor into the relevant export markets for West Australian meat

products, namely meat processed from West Australian livestock in the live export market.

The Taskforce believes the growth in live exports, at the expense of meat processing firms, is at

least partly due to a lack of competitive neutrality that can be attributed to the policies of foreign

governments, the Australian Federal Government, and the Western Australian State Government.

The Taskforce suggests these policies undermine a .level playing field. (ie. competitive neutrality)

between the sectors. The major areas of concern were identified as:

! Foreign governments. trade distortions in the form of unequal tariffs that protect domestic

processing in live animal importing countries

! Domestic policy distortions in the form of an apparent bias in Government support for the

live trade while meat processing is disadvantaged by additional costs that are not imposed

on live exporters

! Government taxes and charges that impact on the competitive position of the meat

processing export chain and the live animal export chain:

a. AQIS charges and compliance costs for processors in meeting stringent regulatory

standards for food safety and public health, product specification, animal welfare, and

compliance with importing countries. protocols.

b. direct and indirect costs in complying with occupational health & safety regulations.

c. on-costs of labour employment, including payroll tax, superannuation guarantee, workers

compensation insurance , plus applicable stamp duty, that increase with CPI each year.

d. compliance costs for processors (particularly exporters) in meeting stringent

environmental standards that are constantly rising, while live exporters have very few

restrictions.

e. charges for water and power utilities.

3

! Discrepancies between the regulatory requirements between the two sectors covering such

matters as public health and product safety in both domestic and export markets, animal

welfare, environmental standards, and grading and truth to label.

! Inequities in AQIS inspection charges and Federal Government Subsidies

! Western Australian Government policy distortions in the form of:

. payroll tax imposts

. taxes and charges for Government utilities

. environmental levies and compliance costs

. occupational health and safety policies and procedures

. food safety and public health

. duplication and costs of Government regulatory functions

The Meat Processing Taskforce makes the following recommendations to mitigate these distortions:

Recommendation 1:

The Meat Processing Taskforce recommends that the West Australian Government

determine and implement the best way to correct the distorting effect of the application and

enforcement of its environmental policies on competitive neutrality between the meat

processing sector and the live animal export sector.

Recommendation 2:

The Meat Processing Taskforce recommends that the West Australian Government

determine and implement the best way to correct the distorting effect of the application and

enforcement of its occupational health & safety policies on competitive neutrality between the

meat processing sector and the live animal export sector. Inter alia, employees in the live

export sector should be required to undertake vaccination against zoonotic diseases. The

Meat Processing Taskforce also recommends that the West Australian Government lobby the

Federal Government to continue funding the cost of Q Fever testing and vaccination.

Recommendation 3.

The Meat Processing Taskforce recommends that the West Australian Government

determine and implement the best way to correct the distorting effect of the application and

enforcement of its food safety and public health policies on competitive neutrality between

the meat processing sector and the live animal export sector.

Recommendation 4.

The Meat Processing Taskforce recommends that the West Australian Government should

abolish the WA Meat Industry Authority and devolve it.s responsibility for State

Government policies relating to public health standards and food safety to the WA

Department of Health, devolve it.s responsibility for licensing meat processing export plants

to AQIS and devolve it.s responsibility for saleyards to the Department of Agriculture.

Furthermore, the Western Australian Government should commission the Department of

Consumer Protection to ensure that meat products are properly described and are true to

description. The relevant Departments to which responsibilities are devolved must be given

adequate skills, legislative back up and resources to enable their functions to be carried out

effectively.

4

Recommendation 5.

The Meat Processing Taskforce recommends that the West Australian Government should

either exempt meat processing from paying land tax, or it should apply it also to facilities

that are used exclusively or predominantly for exporting livestock (e.g. holding yards,

feedlots, etc.).

Recommendation 6.

The West Australian Government should vigorously lobby the Federal Government to

actively pursue, as part of its trade negotiations, the elimination of policies of foreign

governments that distort competitive neutrality between meat processing and live animal

exports in Western Australia.

Recommendation 7.

The West Australian Government should vigorously lobby the Federal Government to

change legislation so that independent AQIS officers audit the live export trade to ensure that

it meets the same high standards for animal welfare, food safety, and for meeting importing

country protocols, as are applied to processors. AQIS should determine the charges to be

born by the live export sector on the same basis as it uses to determine charges for the

processing sector, AND any Federal Government subsidies to reduce inspection, licensing,

and audit costs should be equally available to both sectors.

Recommendation 8.

The West Australian Government should introduce payroll tax rebates for firms employing

labour to process meat for export to compensate for foreign and Federal Government policies

that distort competitive neutrality in Western Australia between meat processing and live

animal export value chains.

Recommendation 9.

The West Australian Government should , through the Department of Education and

Training, ensure that all workers in WA meat processing firms have equal access to training

as their eastern states counterparts.

Recommendation 10.

The West Australian Government should , through the Insurance Commission of WA,

explore options to alleviate the inconsistent and generally high costs of workers compensation

in WA.

Recommendation 11.

The Department of Agriculture of Western Australia should invest more resources in cattle

and sheep reproduction R&D to improve livestock turnoff, and to lessen competition between

meat processors and live exporters for the supply of animals.

Recommendation 12.

The Department of Agriculture of Western Australia should invest more resources to assist

farmers to develop profitable mechanisms to supply cattle and sheep throughout the year, via

.out of season. calving and lambing regimes.

Recommendation 13.

The Department of Agriculture of Western Australia should invest more resources to assist

industry to develop supply chains that take advantage of the seasonal and environmental

attributes of each region in Western Australia.

5

Recommendation 14.

The Department of Agriculture of Western Australia should divert funds away from Trade

and Development, and invest more resources in high priority areas to enhance livestock

supply.

Recommendation 15.

The West Australian Government should, through relevant industry organisations and the

Department of Agriculture of Western Australia, further explore options to extend the

definition of lamb to enable farmers to export more lambs, and to meet the heavier carcass

weights desired in the US market.

6

1. BACKGROUND

On 10 July 2002 Agriculture Minister Kim Chance tabled a report in Parliament outlining his

concerns for the beef and sheep meat processing sector in Western Australia. His report followed

the release of a 2001study by the Queensland Department of Primary Industry (QDPI) on the

relative benefits of the beef processing and live cattle exports sectors in that state. The Minister

concluded his report by suggesting a range of new measures to be implemented by the Department

of Agriculture (DAWA) and various other industry bodies to assist the sector, and announced that

he would establish a Meat Processing Taskforce (MPT) to investigate these matters.

In October 2002 Minister Chance announced the following representatives had been appointed to

the taskforce with the objective of examining options to increase the long term viability of the WA

beef and sheep meat processing sectors.

Professor Bob Lindner, (UWA), Independent Chairman

Merv Darcy, Executive Director, National Meat Association (WA)

Roger Fletcher, Managing Director, Fletcher International

Des Griffiths, General Manager, WAMMCo International

Graeme Haynes, Australasian Meat Industry Employees Union (WA)

Garry Minton, Chief Executive Director, EG Green and Sons

Renata Paliskis-Bessell, Manager Rangelands and Intensive Animal Industries, DAWA

Peter Trefort, Principal, Hillside Meats

Wim Burggraaf, Executive Officer, DAWA.

The Terms of Reference for the taskforce were to:

1. develop a long-term plan for the viability of the meat processing industry, with particular

attention to:

. improving prospects for consistent throughput, full utilisation of capacity, and secure

employment for workers for 52 weeks pa;

. maintaining a stable base of well trained employees;

. improving work practices in order to reduce the costs of workers compensation claims;

. ensuring the processing industry is not disadvantaged against competing industries; and

. maintaining a consistent supply of stock to achieve optimum plant utilisation and meeting

market demand.

2. facilitate and establish new market opportunities and supply chains, without imposing on

existing commercial relationships, in order to increase exports of processed meat;

3. review Government policies and regulations in regards to the impacts of live exports on the

processing sector, and on a competitively neutral marketing structure;

4. improve the efficiency of Government regulation of the meat processing industry, including the

overlap or duplication of regulatory functions and the provision of utilities.

7

The MPT held it.s inaugural meeting on 9 December 2002, and has completed eight meetings.

After agreeing on the above Terms of Reference for the taskforce, the MPT advertised for

submissions to be received by 7 March 2003. In all, 25 responses were received from industry and

the general community. Each submission was reviewed by the members and relevant issues were

noted. In addition, the taskforce held consultations with members from the WA Farmers Federation

and Pastoralists and Graziers Association and the WA Meat Industry Authority. Meetings also

included specialist advice from the Department of Consumer and Employment Protection on

workers compensation issues and the Department of Environmental Protection on issues regarding

the regulatory environment and costs imposed on the processing sector. The MPT also sought

advice from various State Government agencies in relation to the regulations and costs associated

with the meat processing industry, relative to the live export sector.

The submissions, together with the expert knowledge contributed by the members and the

contributions from the consultative groups described above, provide the basis for the draft

conclusions and draft recommendations reported below in Chapter 7. A list of submissions

received is detailed in Appendix 1.

A draft MPT report was presented to the Minister in December 2003. In May 2004 the Minister

released an Interim Government Response to the MPT draft report and both the draft report and the

Government response were published on the Department of Agriculture website. The Minister then

requested further feedback from the relevant Government Departments, industry and the public.

This resulted in an additional 18 submissions (see Appendix 1).

The MPT convened its final meeting on 15 September 2004 to consider the contents and

implications of the Interim Government Response to the MPT.s draft report and the second round

of submissions received in response to the Minister.s request for further feedback after the release

of the interim government response.

The MPT reconsidered each of the draft recommendations in light of the Interim Government

response and the additional submissions. In most instances the MPT draft recommendations were

not modified in any way, however it should be noted that Recommendations 1 and 2 have been

altered.

Chapter 8 has been added to the original draft as a result of the Interim Government Response and

the additional submissions received by the MPT. This chapter draws together the final conclusions

and observations of the MPT in relation to the recommendations the taskforce has provided to the

Minister.

8

2. INDUSTRY OVERVIEW

2.1. Overview of the Meat Processing Sector in WA

In financial year 1999-2000, the meat processing industry in Western Australia had a turnover of

$521 million, employed 2,742 people with a wages and salaries bill of $89 million, and was

estimated to have contributed $131 million in .value added. to the Western Australian economy

(Australian Food Statistics 2003, p. 51). However, the previous decade or so has been a difficult

period for the meat processing sector involving significant rationalisation. Firm and plant numbers,

employment and annual slaughtering capacity, stock numbers processed, and capacity utilisation

have all declined dramatically over the past ten years.

Abattoir numbers were relatively stable in the 80.s, and 57 abattoirs existed in WA in 1990. Since

then, many domestic (local/code abattoirs) have closed, and there are now only 29 commercial

abattoirs, which is a long way short of previous numbers in the sector. In the same period, the

number of export plants has increased from 9 to 13, including those processing exotic species.

Of the 29 commercial plants, 23 (79%) are involved in the processing of cattle and/or sheep. Ten

supply the export market, and most of these also supply beef and sheep products to the domestic

market. The balance (13) supply only for domestic consumption. Details below of WA abattoirs

(as at November 2002) were provided by the WA Meat Industry Authority (MIA):

WA Abattoirs (as at November 2002).

Export Species

EG Green and Sons, Harvey cattle

Nebru Exports, North Dandalup cattle

V& V Walsh, Bunbury cattle, sheep

Fletcher International, Narrikup sheep

WAMMCo, Katanning sheep, goats

Hillside Meats, Narrogin sheep, cattle

Geraldton Meat Exports, Geraldton sheep, goats

Beaufort River Meats, Woodanilling sheep, goats

Gascoyne Abattoirs, Carnarvon sheep, goats

Exotic Meat Processors, Margaret River sheep, cattle, deer, ostrich, camel

Watsons Foods, Spearwood pigs

Derby Industries, Woorooloo pigs

Gold Medal Holdings, Baldivis ostrich

Domestic

Dardanup Butchering Co., Dardanup sheep, cattle, pigs, deer

Red Meats, Capel sheep, cattle

Gingin Abattoirs, Gingin cattle

Goodchilds, Australind sheep, cattle

Hagan Bros, Greenough sheep, cattle, pigs

Kununurra Abattoirs, Kununurra cattle

PR Hepple & Sons, Northam cattle, pigs

Shark Lake, Esperance sheep, cattle, pigs

Eastern Districts, Merredin sheep, pigs

WW Forbes & Co, Corrigin sheep, cattle, pigs

BJ & JA Haslam, Hyden sheep, cattle, pigs

Manjimup Abattoirs, Manjimup not operating

TE Cullen & Son, Coolgardie sheep

Kellerberrin Abattoir, Kellerberrin sheep, pigs

Freegro, Oakford rabbits

Koonyen Farms, Baldivis rabbits

9

The growth of the live export trade in both cattle and sheep clearly has had an impact on West

Australian meat processors. While there is no single reason for the rationalisation of the processing

sector in recent years, the growth of the live export trade has been one of the more significant

reasons for excess capacity in the processing sector. Competition by live exporters for the available

supply of livestock at the farm gate has resulted in higher livestock prices, as well as diminished

export markets for Australian processed meat products by enabling a substitute product, namely

meat processed in the export market from Australian livestock. Consequently the West Australian

processing sector has experienced lower levels of throughput and capacity utilisation than it would

have in the absence of live exports.

Selected evidence for recent years on trends in stock numbers, turnoff, and numbers and value of

livestock processed vis--vis exported live are illustrated by charts in the following two sections for

cattle and sheep respectively. Tables containing the data used to derive these charts are included in

Appendix 3.

2.2. WA Beef Production, Processing, and Live Exports

The beef processing sector in WA has seen a substantial restructuring over the past decade or so to

the point where there is now only one relatively large, state of the art export abattoir. There are no

significant active processing plants north of Geraldton. Despite this run down in processing

capacity, the industry continues to suffer from under utilisation of capacity. This is despite the fact

that cattle numbers have steadily increased over the past decade from some 1.5 million to 2.0

million.

One of the key reasons for the reduction in slaughtered cattle has been a lack of supply of cattle to

meet the combined demands of the rapidly growing live export trade, and the domestic beef market,

and an export processing sector that is striving to compete on world markets. Clearly, farm gate

supply has not grown fast enough to accommodate the rapid increase in live exports during the

decade of the 1990.s depicted in the following chart.

Factors contributing to growth of live cattle exports include:

the Brucellosis and Tuberculosis Eradication Campaign program that has brought cattle herds under

control in the pastoral regions, and resulted in higher turn-off.

The introduction of Bos indicus breeds that are suitable for live export to developing, large SE

Asian markets.

As well as a switch to Bos indicus breeds, the introduction of strategic supplementation programs,

herd control, etc. that has led to improved productivity in pastoral regions; especially in weaning

rates, from 45/50% to 80%+.

The consequent demise of all major abattoirs in the north west.

Pastoralists purchasing farms in the northern agricultural region, most of which run Bos indicus

types suitable for live export, to improve productivity.

a break down of the live trade in cattle from Europe to the Middle East. As a result, live export

cattle are now also sourced from the traditional SW slaughter region.

Constraints on returns to SW cattle producers due to inflating costs of land and associated costs

such as rates, environmental factors, transport restrictions, etc.

Competition from other enterprises in agricultural regions, with improved returns from sheep (wool

and meat) and cropping, is likely to generate a further shift of the industry towards the northern

agricultural region.

10

Chart 1: WA Live Cattle Exports

Source: Livecorp

Chart 2 below portrays changes in herd numbers for the past nine years, as well as annual turnoff,

which governs the supply of cattle to the processing and/or live export sectors. The WA beef herd

has grown by some 20% (2.6% pa), or 355,000 head to an estimated 2.1 million. During this

period, the proportion of pastoral cattle has remained steady at around 42%. Turnoff numbers have

also been growing modestly. Furthermore, the recent increase in herd numbers suggests that there

is potential for some further increase in turnoff in future years.

Chart 2: WA Cattle Numbers and Turnoff

Source: ABS, DAWA

11

However, although the population of beef cattle has been growing gradually over the past nine

years, the total number of cattle processed for domestic and export markets has remained relatively

static. Slaughter of cattle and calves declined from a high of 454K in 97/98 to 402K in 01/02.

Meanwhile, live export numbers more than trebled. This is evident in Chart 3 showing the total

number of cattle slaughtered vis--vis numbers exported live. As a percentage of total turnoff,

slaughterings fell from 65% to 53% in 01/02 before recovering slightly last year to 58%. Back in

94/95 this figure was 80%.

Chart 3: WA Cattle Turnoff: Total Slaughter vs Live Exports

Source: ABS, DAWA

At the same time, the value of production and exports has been improving significantly. However it

is clear that the largest growth has occurred in the live export sector. The value of live cattle

exports as a percentage of total export income has increased from 20% in 94/95 to a peak of 59% in

00/01, declining to 52% in 02/03.

Traditionally the value of cattle slaughtered (average $/hd) is higher than that of cattle exported

live, except in the 3 year period 96/97-98/99. The relative value of live exported cattle has tended

to decline over the past few years due to the increasing proportion of female cattle in export

consignments. Given a general trend for female cattle to comprise the majority of cattle slaughtered

in WA, around 60% in the last two years, the overall turnoff of females from WA is very high.

Continuing high levels of turnoff of potential breeder cattle, if maintained, could inhibit future herd

growth and further exacerbate the already serious deficiency of cattle available to supply the

demand from our domestic and overseas markets.

12

Chart 4: WA Cattle Production Values: Total Slaughter vs Live Exports

Source: ABS, DAWA

Live exports are in direct competition with exports of processed meat products. The impact of live

cattle and calves exports on the value of exports of beef and veal, offal, hides, leather, and tallow

vis--vis is clearly illustrated in Chart 5 below.

Chart 5: WA Cattle Export Values: Total Slaughter vs Live Exports

Source: ABS, DAWA

Chart 6 shows the trend of values of cattle products clearly demonstrating the dominance of live

exports, although the past two years are showing a decline as live export prices have reduced,

probably due to the higher proportion of lower priced females in the trade and drought affected

stock in the past two years.

Chart 6: WA Cattle Products: % of Export Value

Source: ABS, DAWA

2.3. WA Sheep Production, Processing, and Live Exports

The strong growth in live sheep exports from WA preceded that for cattle. In the 1980.s, the

market for live sheep exports was almost entirely to the Middle East region, where a significant

trade in live animals had existed for many years. A traditional demand for freshly killed sheep to

supply pervasive wet markets because of a lack of refrigeration and modern distribution systems

was reinforced by demand for live animals to slaughter for religious festivals. In 1989 this trade

received a setback when an embargo was imposed on the export of Australian live sheep to Saudi

Arabia. Despite the fact that this embargo lasted for about a decade, it can be seen from Chart 7

below that the export of substantial numbers of live sheep from WA continued to other Middle East

markets throughout the 1990.s.

Chart 7: WA Live Sheep Exports

Source: Livecorp

While some of the problems that plagued the sheep sector were similar to those faced by the cattle

industry, there were other important differences that affected the available supply of sheep to meet

the twin demands for livestock for processing and live export. In particular, the downturn in the

wool industry as a result of the large stock pile that accumulated during the 90.s saw sheep and

lamb numbers steadily decline from 37 million in 1989 to 23 million in 2003 during a time of lower

prices for wool and sheep. Lower sheep numbers generally, as well as the impact of a series of dry

years, and competition from cropping and other enterprises in traditional sheep areas has seen the

supply of stock stifled.

Chart 8: WA Sheep Numbers and Turnoff

Source: ABS, DAWA

The continuing decline in flock size over the past 6 years by some 17%, from 28 to 23 million, as

well as the temporary increase in turnoff in 99/00 and 00/01 due to dry seasons can be seen in Chart

8 above. Unlike the cattle sector, the size of the sheep flock in WA has fallen to a level that some

would suggest is critically low for a viable future. Recently, ewe flock numbers have been

relatively static; and increased from 11.6M in 2001 to an estimated 12.2M in June 2002. At June

2001, the ewe flock consisted of 8.6M merinos, and 3M crossbreds. Recent evidence suggests that

there have been more matings to non-merino rams, and the average age of ewe flock is increasing.

The proportion of ewes has increased from 41% (1990) through 50% (2000) to a current estimate of

60%+, with a resulting substantial decline in wether numbers.

Factors contributing to the decline in the sheep industry include:

1. The historical decline in wool prices, that have been depressed due to the wool stockpile.

2. A lack of competition amongst buyers, as WA is not competitive with Eastern States.

3. A run of poor seasons has led to poor lambing rates and sell-off of .underdone. stock.

4. A fragmented industry, with poor dissemination of information (cf cropping).

5. Lack of labour availability, and difficulty in recruiting permanent staff (cf casual cropping

staff).

6. Lifestyle considerations by young farmers, who try to avoid the year-round workload of sheep

management. It also is easier for wives to work off-farm in the cropping industry.

15

7. Cropping has been more financially attractive due to crop yields becoming more predictable,

and involving less risk. This has been exacerbated by a lack of market intelligence on

profitability of sheep enterprises.

8. growth of other competing industries, such as high rainfall crops, timber, grapes, olives,

legumes etc.

Significant effort is currently being exerted across the nation by various industry bodies to

encourage increased production. Ratio of lambs turned off per ewe is increasing, as is the

proportion of ewe hoggets for slaughter. The irony is that any restocking to rebuild sheep numbers

is likely to further reduce turnoff and available supply in the short run. As can be seen from Chart 9

below, this reduced turnoff is already impacting on numbers processed as well as on numbers

exported live.

Chart 9 below shows that live export numbers have been increasing until two years ago. Since then,

both slaughter numbers and live exports have declined as total turn-off dropped to an estimated

7.4M in 2002/03 compared with 8.7M in 2001/02 and 10.2M in 2000/01. Slaughter weights are

rising, while live export weights declining.

Chart 9: WA Sheep Numbers: Total Slaughter vs Live Exports

Source: ABS, DAWA

Chart 10 illustrates how competition from live exports has continued to erode the share of turnoff

that is processed.

Chart 10: WA Sheep Production Values: Total Slaughter vs Live Exports

Source: ABS, DAWA

However, when relative shares are expressed in terms of value of production, the live trade stands

out as the larger sector. Over the six years 97/98-02/03 the value for both sectors more than

doubled. Slaughtered stock improved to $197 million while live sheep advanced to $264 million.

This is clearly reflected in the prices paid in $/hd terms for slaughtered versus live sheep and lambs.

In each year up till 00/01 the average live sheep price was around double that for slaughter stock.

The high slaughter lamb prices in the past two years has seen this gap reduce.

Chart 11: WA Sheep Export Values: Total Slaughter vs Live Exports

Source: ABS, DAWA

The value of exports depicted in Chart 11 show a similar pattern for live exports, but exports of

processed sheep products have been relatively stable. In 02/03 live sheep exports contributed about

63% of all sheep export income (including meat, offal and skins) up from 48% in 97/98. However

there was a dramatic rise in the value of slaughtered stock in 02/03 to $197 million (up 70% on

previous year) due to record lamb prices. A substantial decline in the value of skins, from some $35

million to $7 million in five years, has reduced the value of exports from processed stock.

Chart 12 shows the trend in export values of sheep products. The growth of live exports is not as

significant as in the cattle industry as the sheep live export sector has been active for a longer time

and is now relatively stable. However the dominance of live exports, being greater than 50% of the

total export value over the past five years, is obvious.

Chart 12: WA Sheep Products: % of Export Value

Source: ABS, DAWA

2.4. Seasonal Stock Supply Variability

A further constraint is the lack of consistency of supply of livestock due to seasonal climatic

variability. As shown in Chart 13, the majority of cattle in WA are slaughtered in the spring and

early summer leaving processors with less than viable numbers over the autumn/winter seasons.

Chart 13: WA Monthly Cattle Slaughter Variations(a)

 

Source: WA Meat Industry Authority, DAWA (97/98-01/02)

Sheep and lamb processors similarly suffer a severe skew in supply with shortages occurring

especially during the winter months June and July (see Chart 14).

Chart 14: WA Monthly Sheep Slaughter Variations (a)

Source: WA Meat Industry Authority, DAWA (97/98-01/02)

(a) % variation by month from an average month (ie. total annual slaughter/12)

As shown in previous charts both cattle and sheep processors find it difficult to source adequate

stock numbers in the autumn/winter period each year. This circumstance is now exacerbated by the

fact that cattle and to a lesser extent sheep, in good condition after the northern wet, are now being

exported live direct from the northern pastoral regions. In the past many of these animals would

have made their way south to top up the short supply from the agricultural region. These seasonal

deficiencies make it difficult for meat exporters to provide product of consistent quality and

quantity throughout the year, placing in jeopardy markets that they have established. The Taskforce

identified this issue as a key constraint to industry development and profitability.

Table 1 demonstrates that overall utilisation of processing plants in WA is well below optimum. In

2002 utilisation was only 69% and 45% for cattle and sheep plants respectively.

 



      WA Government Reveiw of Meat Processing Industry (2)

Back


Page registered by Administrator Western Australian Branch on 08/11/04 06:12 for topic NEWS UPDATE
PrintSend to a friend
2002 - oxiigen - life support for business - all rights reserved - POWERED BY CHILLI CMS
Terms and conditions - Privacy Policy

archive site by farnham street neighbourhood learning centre