Another abattoir to close as supply chain struggles under costs burden

(23 October 2018)

The likely closure of Devonport City Abattoir in Tasmania is terrible news for a local community and a worrying sign for the wider industry, according to the Australian Meat Industry Council (AMIC), which is calling on state and federal governments to commit to whole-of-supply-chain support and recognition.

AMIC CEO Patrick Hutchinson says the announcement yesterday that abattoir operator JBS will end their operation in a few weeks is the latest in a string of closures, underpinned by a number of challenges, with energy prices at the top of the list.

The Devonport abattoir is an older facility, but the truth is that in current circumstances its commercial viability would have been under strain no matter what. Facilities across the country, no matter their location, their ownership or the species they process, are under enormous pressure, Mr Hutchinson says.

Regardless of what efficiencies processors are able to bring to their plants, unavoidable costs are being imposed, particularly in terms of energy pricing and especially gas, with prices through the roof.

While there is hope that a new operator may be found for Devonport, there have been multiple plant closures in Tasmania in recent years, including Huon Valley, Cooee Point and King Island, while the other Tasmanian establishment operated by JBS, in Longford, no longer processes lambs.

Devonport City Abattoir is a service-kill domestic facility, but for other facilities including export plants, Mr Hutchinson says labour costs can also be crippling.

This latest closure and many before it are symptomatic of a deeper issue around lack of proper support for the supply chain. We see strong investment at the producer end of the supply chain, and we support that investment, because processors and butchers cant be successful if farmers are not successful.

But the opposite is true, too. Investment in the supply chain is investment in the success of Australian farming, and were just not seeing it. Our members are looking at their short, medium and long term viability and some of them are facing hard, hard decisions that will reverberate up and down the supply chain.

If governments want to invest in agriculture, they need to recognise what a mammoth task it is to run a processing plant. If they want to help farmers, they must support the whole supply chain.

Following the announcement of the Devonport closure, Tasmanian Minister for State Growth Peter Gutwein said this years State Budget included $1 million to increase trade, marketing, value and sales of Tasmanian meat.

This is great news on the face of it, but those bodies representing the interests of the broader supply chain have not been consulted on how this investment can make the most difference, Mr Hutchinson says. We know nothing about it.

The news this week is a sad reminder of what can happen without a clear supply chain vision. Its terrible for 100 Devonport workers and their community. Its a tough time for the company. It leaves independent retailers in the state scrambling to make alternative arrangements ahead of Christmas. And that’s just one abattoir. Its time to get serious about recognising and supporting the supply chain.

 

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Further information:
Patrick Hutchinson
CEO, Australian Meat Industry Council
02 9086 2200
phutchinson@amic.org.au