Processors spend up on upgrades, technology

MUCH of the so-called super profits made by processors during the period of record cattle turnoff leading up until the end of last year is being pumped back into equipment upgrades and improved technology.

Hundreds of millions of dollars has been reinvested in plants across the eastern seaboard, all targeting efficiency gains to try to somewhat bridge the big gap between what it costs to process an animal in Australia compared to competitor countries.

Many are taking the opportunity provided by throughput cutbacks, brought on by the severe shortage of cattle and high prices, to get construction workers onsite and big projects completed.

Australian Meat Industry Council chair Lachie Hart said the significant re-investment from the processing sector in the past 18 months had seen some cutting-edge technology introduced.

“I suspect every abattoir is currently spending money upgrading – cautiously of course, because everyone is very aware of the tough times ahead,” he said.

“Processors are gearing up for when livestock numbers improve. It’s an indication they do have optimism in the future of this business.

“It’s all to improve costs of production – every business, when they invest in capital, does it for efficiency gains.”

Leading the way is the country’s only farmer-owned beef and veal co-operative the Northern Co-operative Meat Company (NCMC) at Casino.

The business will this year spend upwards of $40 million on upgrades with the view to driving costs out to pave the way for growth when the cattle supply situation turns around.

The main component of that is a $30m state-of-the-art cold chain management system, which was commissioned this month.

Major equipment in the cold chain plant includes a tunnel able to chill in 24 hours and plate freezers to allow all production to be frozen onsite.

A Dematic smart sort carton system – a European product that allows for individual automatic carton dispensing and is the first one in Australia designed for frozen environments – is part of the upgrade.

Chief executive officer Simon Stahl said where cartons were handled up to five times, they are now only handled once.

A $7m knockbox and race system, delivering big improvements to animal welfare and occupational health and safety, became operational in January.

The NCMC will also see a new boiler come online next year and has invested millions in its wastewater treatment plant.

Mr Stahl said much of the work had been on the drawing board for ten years or more but it was the sheer volume going through the plant during the two years up until December that provided the funds.

“Profits went high but, like all processing operations in Australia, we knew our Armageddon was coming,” he said.

“We know we are facing a negative profit loss sheet for the next one to two years but with support from our members and efficiencies gained through re-investment, our goal is to be around after well after that.”

Australia’s second largest meat processor and exporter Teys Australia also continues to invest in improved efficiencies across most of its plants.

General manager corporate services Tom Macguire said Teys had increased the ability to sort and store product in response to the growing demand from customers for more and more different products.

“We have also increased our chilled and freezing facilities so we can be more flexible in meeting demand,” he said.