The Australian Meat Industry Council (AMIC) has welcomed a new Federal drought package released yesterday but says that most of the processors, which provide thousands of jobs in regional Australia, will find themselves ineligible for low cost loans that could keep their doors open.
AMIC CEO Patrick Hutchinson says it was good to see recognition of the supply chain and the broader community in the package, which offers no-interest loans not only to farmers but to small businesses which rely directly on the agri sector. But support for processors is limited to those with fewer than 20 employees.
“This could be a much-needed lifeline for our smaller processor members and others reliant on the agri-sector including retail butchers, boning rooms, cold stores, wholesalers and exporters, but drought doesn’t discriminate and bigger processors are feeling the impact, too,” he says.
“The meat sector is an industry that employs nearly 200,000 people directly and indirectly, and in regional areas the local processor is often the biggest employer in town. Keeping these facilities operational is critical for regional communities.”
Mr Hutchinson is currently in China alongside Trade Minister Simon Birmingham, progressing opportunities in Australia’s largest market. He says he is concerned that this work won’t deliver to its full potential if processors aren’t supported in the same way through the drought.
“Conservative estimates suggest we can expect a 20 per cent drop in processing volume in 2020 if we don’t see significant weather changes. Processing and exports are low-margin businesses dependent on throughput, so the sector is really going to struggle, especially given that they’re facing increased government cost-recovery fees and charges even as throughput falls,” he says.
A solid period of sustained rainfall will actually worsen the situation for processors, with impacts on rural and regional employment.
“Livestock numbers are so brutally depleted that if we do see good rains, producers will be looking to hang onto stock in order to start rebuilding their herds, so even coming out of drought – much as we are eager for that day – won’t solve our problems for a long time.”
Drought Minister David Littleproud said this week that the red meat processing sector had its ‘own drought coming’, acknowledging that towns will be decimated if processors close.
“Processors are in peril in regional Australia and the impact on rural economies of losing these businesses would be catastrophic,” Mr Hutchinson says. “Minister Littleproud understands this. We commend the Federal Government for committing to this new package, but we need more focused support for our meat sector to survive.”
The package announced a range of measures including no-interest periods on drought loans for farmers and small businesses, support for remote students and economic stimulus for regional communities.