Logistics the key to keeping beef on shelves

Logistics the key to keeping beef on shelves

Beef
MASKED UP: The new way of doing business at Victorian saleyards.

MASKED UP: The new way of doing business at Victorian saleyards.

Aa

Plenty of beef, and processing capacity, but how quickly can supply chains pivot?

Aa

Supply chain timing and logistics will be the big challenge as the beef industry works to keep retail shelves stocked during the new era of heavy lockdown measures in Victoria, rather than processing capacity or availability of meat.

This is how many see the situation unfolding following yesterday's move by the Victorian Government to reduce processing by 33 per cent as part of its strategy to contain the transmission of coronavirus.

While analysts are hesitant to predict how the restrictions might impact the availability and price of beef to consumers given the enormous number of moving elements and the uncharted territory the industry is heading into, most felt there was enough capacity in other states to ensure beef demand is met.

A large percentage of beef on supermarket shelves comes pre-packed from case-ready operators, who typically have operations in other states that could be ramped up if their service kills in Victoria are impacted, agribusiness experts explained.

Coles and Woolworths do buy carton meat to top-up but that also should be able to be shipped in from other states - and quite often is anyway.

But just how quickly, and smoothly, the pivoting can happen is the unknown.

Of course, the effects of erratic consumer behaviour, and the potential for panic buying, also has to be factored in and many believe there may well be scenes of empty mince shelves again.

SEE: Mince the first fresh food to be swept up in panic buying

Because 70 per cent of Australia's beef production is exported, and a large amount of that goes into food service which is currently taking a big hit due to lockdowns around the world, there is spare meat about, beef marketers said.

The increased incidence of higher-value cuts on retail shelves in Australia this year is a result of this situation.

Rabobank's senior animal protein analyst Angus Gidley-Baird said the domestic beef market was a higher value market overall so when there was increased demand at home, product was diverted.

It's difficult to compare because it's not a case of apples and apples but as an indication export values are currently sitting around $9 to $10 a kilogram where as the retail beef price in Australia is around $19/kg.

Beef processing across the country has been operating well under capacity for some time on account of low livestock supply, and the corresponding high costs of cattle.

Eastern States cattle slaughter was last week back 21pc on this time last year, with Victoria back 20pc, although the week prior Victoria was back 36pc, affected no doubt by COVID closures at some plants.

However, peak processor group the Australian Meat Industry Council says discussions with its members still indicates the new restrictions will result in a further 30pc reduction in supply chain throughput overall and a follow-through reduction in saleable meat in Victoria.

NAB agribusiness economist Phin Ziebell, based in Melbourne, said one thing to consider was that if Victoria did not take radical action to contain the spread of the virus, the alternative for the meat processing sector was rolling, unscheduled shutdowns of plants, which was arguably even more detrimental.

Most analysts agreed there'd be caution on the part of retailers about upward movement of beef prices.

Not only would there be a risk of the perception of profiteering in desperate times but retailers would be conscious of price-resistance, Mr Ziebell said.

There is a point at which beef retail prices hit a ceiling, whereby substitution to cheaper proteins kicks in.

The fact that most of Australia's beef production and processing occurs outside of Victoria was a safeguard against a replication of the situation that occurred in the United States, where plant closures led to massive falls in livestock prices and rises in retail beef prices, analysts said.

Peak producer group Cattle Council of Australia has also moved to reassure Australians beef would still be readily available in butcheries and supermarkets, despite the second wave of COVID-19 in Victoria.

CCA president Tony Hegarty said the industry had professionally navigated the first wave to keep the supply chain running.

"We put solid practices in place to keep our beef on the shelf, both here and overseas," he said.

"We are now in a stronger position to respond because of our experience in the first wave.

"When plants have shut down, our industry partners in the processing sector have enacted strict protocols to effectively isolate the problem, stopping further spread of the virus."

Mr Hegarty said it was also important to recognise COVID-19 was a community transmitted public health issue, not a food safety issue.

ALSO IN BEEF: How one beef brand has defied COVID

The story Logistics the key to keeping beef on shelves first appeared on Farm Online.

Aa

From the front page

Sponsored by