THE processing sector must significantly reduce costs if it is to remain competitive on the world stage says Oakey Beef Exports general manager Pat Gleeson.
Speaking in response to the Cost to Operate Report commissioned by the Australian Meat Processor Corporation, Mr Gleeson said the meat industry risked going the way of Australia’s car industry unless costs were reined in.
“The car industry died a death of a thousand cuts,” Mr Gleeson said. “We can’t let that happen because meat processing is vital to our economy, particularly in rural Australia. There are too many jobs and too much investment at stake.”
The Cost to Operate Report puts the cost of processing cattle in Australia at more than twice that of Brazil, 75 per cent higher than in Argentina and 24pc higher than in the US.
The report also says regulatory costs are about 2.75 times that of Brazil’s, 2.4 times more than the US and 1.89 times more than Argentina.
Mr Gleeson agreed regulatory inspection fees and ever increasing energy costs were two of the most significant cost challenges facing the industry. However, cutting wages was not on the table, he said.
“Australia is a very expensive country to live in and we already have enough trouble attracting people to work in the industry,” Mr Gleeson said.
“I don’t see a major reduction in wages as being any part of the answer.”
Oakey Beef Exports is a major employer on the Darling Downs with more than 700 workers processing some 1000 cattle a day.
“The question is where we will be in 10 years if we don’t do something now,” Mr Gleeson said.
“Things have to change and it has to be a whole of industry approach.
“Every cost the processing sector carried flows up and down the supply chain.
“The reality is we are part of a global industry facing extremely tough competition, which operates with far less cost.
“We need a way forward so we can continue to build and develop this industry.”
New AgForce Cattle president Will Wilson said processing costs were a major concern to producers.
Mr Wilson said more efficient processors were necessary to ensure producers were sustainable.
“There is no way to a dinner plate except through a processor,” he said.
“As beef producers our big concern is that processors get left behind, because producers will have to pay.
“When processors raise concerns about costs we need to find solutions.”