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JBS shutters second lamb plant, as livestock supply and price issues intensify

by Jon Condon, 17 March 2017
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JBS Australia will temporarily close a second southern lamb processing plant this week, and plans to extend the current closure at the company’s Longford, Tasmania lamb chain by an additional month.

JBS logoThe company’s Cobram lamb facility on the Murray River west of Melbourne will close for four weeks, with last kills scheduled for yesterday, March 16. The plant’s 290 staff, and unions, were informed of the decision this morning.

Cobram can process up to 3200 grass and grain-fed lambs a day, as well as hogget and mutton.

The Cobram decision follows a JBS announcement last month that the company’s Longford lamb chain would close for four weeks, due to livestock supply challenges. That decision did not affect Longford’s beef chain, which continues to operate. The Longford lamb closure has now been extended by four weeks.

While JBS does periodically have short seasonal maintenance shutdowns at this time of year in its southern operations, the Cobram closure is a stand-down, consistent with the plant’s Enterprise Agreement with staff.

Both the Cobram closure, and that at Longford – which is technically a temporary closure, rather than a staff stand-down – will be reviewed in another four weeks, staff were told.  A re-opening at both facilities will be examined for week commencing April 24, Beef Central understands.

“We will continue to keep the workforce aware of developments, as they occur,” JBS director John Berry said this morning.

Tight supplies and high livestock prices continue to erode processing margins across eastern Australia, with a string of beef and lamb plant closures announced since the start of the year.

In addition to the two JBS plants now temporarily closed, Manildra Meat Co, Cootamundra, Southern Meats’ Goulburn, NSW, and Shark Lake meatworks near Esperance, WA, have temporarily or permanently closed, citing extreme livestock prices and procurement as the cause. Victoria’s McGillvray abattoir in Gunbower closed last week after more than 60 years of operations.

“As a company we did not take this decision lightly, we just had a situation where supply has tightened significantly,” Mr Berry said. “We’ve seen a decline in livestock supply across the east coast of Australia over the last 12 months, leading to a number of closures and significant cut-backs.”

Mr Berry said the JBS team has worked hard in southern Australia to continue to maintain production through its Longford and Cobram plants.

“Unfortunately we’ve hit the wall in terms of supply, and these decisions, as difficult as they are, are in the best interests of the business and the workforce in the long-term.”

JBS will continue to process lamb for its Great Southern brand program at the company’s Brooklyn plant near Melbourne.

Global animal protein sector is highly competitive

“From a buy, make and sell perspective, the market is strong and we as a processor can’t control the international market nor the currency,” Mr Berry said earlier.

He said the animal protein industry was highly competitive in Australia and internationally. But Australian and state governments needed to understand that operational costs – whether it be energy or general regulatory costs – play a significant part in the Australian processing sector’s competitiveness against American, Brazilian and New Zealand processors.

Speaking after the earlier Longford closure, Mr Berry said while strong livestock prices were good for producers, at the same time, there had to be a much better understanding within the industry at state and federal government levels that the current model was not sustainable in its current form, unless stakeholders were able to start taking cost out of the processing business and importantly, continuing to gain competitive market access internationally.

An example of that was the timeframe it had taken to finalise an expansion of chilled market for beef and lamb to China.

“China’s not the silver bullet, but it is an example of how the government needs to be working with industry to convert these into real opportunities for the Australian red meat sector,” he said.

Speaking during the recent lamb global markets outlook in Melbourne, Australian Meat Industry Council processor general manager Patrick Hutchinson said the sheepmeat industry could expect to see reduced lamb processing capacity across the industry later this year.

In addition to high livestock prices, energy costs, labour costs, and red tape associated with the cost of compliance were all weighing the industry down, he said.

Tight sheep supply and the high level of competition for a dwindling resource have seen the respective restocker and light lamb indicators averaged 145c/kg and 101c/kg higher, year-on-year, the Melbourne global markets forum heard. Trade and heavy lamb indicators have also trended above year-ago levels so far in 2017, up 69c and 52c, respectively.

Prices are forecast to hit record average levels in winter for mutton and lamb, according to MLA, on the back of a supply shortfall which has been amplified by the current restocking movement.

 

Reader's Comments


Comment
  • Darren James Cameron March 20, 2017

    It’s not only these plants. Look at Townsville; for eight months they keep telling them it could reopen, so they don’t have to pay redundancy.

  • Darren James Cameron March 20, 2017

    One day’s notice. What other companies can give one day’s notice to full time workers and think that’s fair? But we have to give notice of leave or resignation two weeks in advance.

  • Paul Ford April 30, 2017

    It’s devastating to see the meat industry suffer due to costs and contracts that are often to the detriment of those employed in the meat industry. I was a slaughter man for 19 years and walked away in 2006, as rumour and speculation affected many during supposed maintenance or future contract discussions, which led to threats to close down, which leads to workers giving up entitlements to keep their jobs.
    Being out of the industry for 12 years now, I’m told by reliable sources within the industry that lamb slaughter men are still only earning $820 per week, which is what I was earning when I left in 2006, but doing an extra 1000 each day to make that amount.
    My suggestion to those who are in this situation is to move on to other employment, as job security in this industry is short-lived and the writing is on the wall. You are just a number on a locker. Look for work or start up your own small business and find stability for yourself and your families. You can do it.

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