FOREIGN investment has always played an important role in meat processing, says meat industry veteran Stephen Martyn.
It started out as British and American investment at the turn of last century, then the Japanese arrived in a big way in the 1980s and 90s and in more recent times - New Zealand, China, the US again, Germany and Malaysia, to name just a few, have come and in some instances gone.
With foreign investment has come capital, technology and new markets, Mr Martyn said.
The decade and a half following the arrival of the US trade is referred to in Mr Martyn’s comprehensive history of meat processing in Australia, ‘World on A Plate’, as the golden years.
The period marked massive expansion.
The first shipment of chilled boneless beef primals to Japan in 1970 was possibly one of the most important defining moments, according to Mr Martyn.
“It came at the same time as containerisation in shipping and further refinements in vacuum packaging technology - we could suddenly deliver a chilled product in prime condition to retail markets in Japan that previously only had access to frozen products.”
The Crash
IN 1974, two of Australia’s biggest export markets - Japan and Europe - closed their doors to imported beef to protect their currency and local industry.
That forced a substantial fall in exports.
Australia’s cattle herd grew to over 33 million, then came the inevitable liquidation and at the end of the 1970s abattoirs were running at capacity.
It wasn’t uncommon for cheaper cuts to be rendered rather than sold as raw meat, Mr Martyn said.
Export diversification schemes were introduced.
“The US was covered by a quota,” Mr Martyn explained.
“Exporters were encouraged to sell cheaper to other countries to remove the surplus production and at the same time earn quota to ship to the US, which was by far the highest price.
“That drove exporters into new markets - Africa, Eastern Europe, parts of Asia and the Middle East.”
When the Japanese trade started to rebuild, it came with new Japanese investment as part of joint ventures or as wholly-owned foreign investments, Japanese companies entered the Australian supply chain - from feedlots to processing facilities.
“Prior to the closing of the Japanese market all the risk had been taken up by the Australian side- in the future that risk would be shared ,” Mr Martyn said.
The Past 25 Years
AUSTRALIA is a high-cost player in the global market - our costs of production have always been higher than those of the US and Brazil and others with whom we compete - and that is mainly related to labour costs and Government charges.
So says ‘World on a Plate’ author Stephen Martyn.
“It has been the drive for greater efficiency and the need to reduce costs per unit in order to remain globally competitive that has been the driver for building the industry we have today,” Mr Martyn said.
“Sector studies in the 1990’s comparing processing facilities in all the major world producers at the time suggested that to remain competitive Australia needed to reduce costs and achieve greater economies of scale. That meant rationalisation of existing capacity..”
There was great pain in the processor rationalisation - in towns where they were the biggest employer, meatworks were closing.
“But it was essential to ensure the industry remained competitive” Mr Martyn said. “Developing export markets to take production in excess of domestic demand has allowed the industry to develop those economies of scale but those same economies have meant fewer and bigger plants.
“Concerns over less competition generates calls for more meatworks but that road, as Alan Parker identified in the 1980s, only leads to inefficiency and under-utilisation.”
Today, strong foreign investment remains in competition with Australian owned processing facilities, with Brazilian-owned JBS and the US-Australian joint venture Teys Australia the country’s two largest processors.
Thomas Foods International, a wholly Australian owned family business, shows that the Australian model can also be just as globally competitive.
Roger Fletcher, Fletcher International, is universally respected for what he has achieved in the sheep industry – his is the story legends are made of, from a drover in western NSW at age 20 to one of the largest sheepmeat processors in Australia with processing facilities at Dubbo in NSW and Albany in WA.
His more recent expansion into rail freight logistics has benefited all agriculture in NSW and shows the entrepreneurial spirit that has been the cornerstone of the meat processing sector in Australia is far from over, according to Mr Martyn.
Much had been written of the exploits and grandeur of our pastoral kings of the past, he said.
“They played an essential role. Exporters did not have a business without them,” he said.
“But equally, little of that success would have been achieved without the entrepreneurial guile and spirit of those who then processed and exported those meat products overseas and the uncanny vision many had for the opportunities that existed in far flung export markets, despite the challenges and risks.”