Processing cost to operate highlighted in new report

Australian meat processors are dealing with operating costs which are dramatically higher than their key global competitors, and intervention is urgently required to safeguard the future of the local industry. AMIC CEO Patrick Hutchinson says the Analysis of Regulatory and Related Costs in Red Meat Processing, recently released by the Australian Meat Processor Corporation (AMPC), offers a stark illustration of how difficult it is for Australian processors to compete.

The red meat processing sector, of which beef processing is the largest contributor, is estimated to have contributed over $21 billion in value add to the economy in 2015/16, including over $8 billion in household income and nearly 130,000 jobs.

The report found that average cattle processing cost per head is 24% higher in Australia than in the United States, 75% higher than in Argentina and more than twice as much as in Brazil.

The AMPC report shows regulation and certification are major contributors to this disparity, with more than half the costs in Australian processing (excluding livestock purchase) due to some form of regulation. Labour is also a significant factor in cost-to-operate discrepancies across markets. AMPCs report found labour-related charges make up nearly 60% of total operating costs in Australian facilities, compared with less than 50% in the other countries examined.

The full report is available from the AMPC website.