Townsville – Stuart

Other Names

  • JBS Australia Stuart meatworks

Current Operation

  • Aus Meat Accreditation registration dated 29/12/2015 #4 – JBS Australia Pty Ltd (Townsville).16
    • registered as a Beef, Offal export facility.16
  • Direct employment enquiries to www.jbssa.com.au

Location   

Aust. townsville

Map - Townsville 002

Hema Maps – Australia Truckies atlas.

Owner/s

Operation   

Townsville, Stuart abc 26.11.2015._edited-1

JBS Stuart abattoir, Townsville December 2015. Source ABC Rural

 

Other abattoir sites of historical significance in Townsville region

Ross River abattoir (QLD)

Pentland (QLD)

Other historical and current meat processing facilities located in Australia can be viewed at;

Australian abattoirs inactive map

abattoirs_edited-1

History of Townsville – Stuart #4 

Year

1975

  • Australia was in a severe economic crisis.14
    • Most severe since the Great Depression.14
    • Profits slumped and mass sackings followed with general manufacturing factory closure occurring.14
      • Unemployment in Australia reached 5%.14
    • Whitlam Labour government at the time, economic policy swung from expansion to reining in the ballooning deficit.14
      • government felt key to recovery was ‘healthy profits’.14
        • attacked dole bludgers, wage rises and militant unions.14
      • large scale protests occurred across Australia.14
      • Townsville 3 meatworks stopped work for the day October 24.14

1990

8. ABARES Nov 2011_edited-1

Proportion of cattle slaughtered by ownership of abattoirs 1990
Source ABARES foreign ownership 2011 Pg 31

1991

  • 77 Beef export Abattoirs are in operation in Australia at this time.22
    • 27 have some level of foreign ownership.22
    • Ownership dominated by Japan, UK and the US.22

2003

  • Is currently operating 7 days a week, 2 shift operation9
    • employs 800 people9
    • Producing product predominently for the US9

2005

  • Significant regions of drought across QLD.

QLD Drought 2003_2005_edited-1

Queensland drought situation 2003 – 2005 www.longpaddock.qld.gov.au

2007

  • May. JBS purchase the facility (CY 2006)9.
    • JBS Friboi Group, headquartered in Sao Paulo – Brazil9
    • Sale concluded in July9
    • Now made Friboi group the largest beef and 3rd largest pork processor in the world9
    • Integrated facilities in 4 countries9
    • Access to 47% of the worlds beef markets9

2009

  • Difficulties in operation lead to downgrade of 7 day roster.10
  • JBS schedule end of year seasonl closure early in first week of December1

2007_2009_edited-1

Queensland drought situation 2007 – 2009 www.longpaddock.qld.gov.au

2010

  • August. Since February there has been 430 retrenchments at Townsville and Dinmore4
    • Another 230 staff losses at Killarney & Pittsworth4
    • Total of 960 meat processing jobs lost since February4
    • Australian Meat Industry Employee Union (AMIEU) believes the primary cause of the loss of jobs is the existance of the live animal export trade4
    • Agforce state that there are long delays in processing at this point with an 8 week wait to get cattle into Townsville and other southern plants4
      • More likely market forces are to blame with the Global financial crisis4
      • Extremely high Australian dollar over a long period4
  • Seven day roster was downgraded to 5 days.11

2010

IBIS Jun 2010_edited-1

Major Companies in the Australian Red meat processing industry

Source IBIS world June 2010

2011

  • JBS elect to combine it’s US and Australian beef processing results into a common finanical report presented at ‘US beef’.19
    • Impossible to distinguish Australia’s performance and contribution to the overall result.19
  • July.National slaughter rates decline 5%.25
    • Australian currency pressures.25
      • A$ is now above US108c.25
      • economic news out of US could send currency even higher.25
      • higher A$ would cripple Australia’s already limited price competitiveness for beef in international markets.25
    • QLD which does approximately half of Australia’s processing capacity.25
      • Down 8% from the previous week.25
      • lowest kill recorded in QLD in July for past decade.25
      • Down 21% on same period last year.25
      • Significant number of QLD plants only killing 3-4 days.25
    • listless export beef demand.25
    • Meat processing and export is low-margin business due to.25
      • Import duties.25
        • Indonesia 9%.25
        • Korea 40%.25
        • Japan 38%.25
      • New AQIS charges on meat inspection would add millions to processor costs.25
    • Is currently a big build up of meat in cold stores due to difficulty in selling into sluggish markets, Japan and the US.25

7. ABARES Nov 2011_edited-1

Red Meat throughput Australian abattoirs, Foreign and Australian owned 2011 Source ABARES foreign ownership 2011 Pg 29

2012

  • This was a presentation given by John Berry, director of JBS at ABARES conference 07/03/2012 considering the issues and operating environment that the meat processing industry works in

Beef industry 1985. JBS_edited-1

Cattle production 1985-2010_edited-1

beef industry 2010. JBS_edited-1

Industry challenges_edited-1

 

response to challenges_edited-1

AACo abattoir impact._edited-1

Souce ACIL Tasman, page 2

  • Distance Darwin to Townsville 1,864km3
    • Current transport costs (2012) the cost differential (including carcase shrinkage) $160 for a 500kg live weight animals3(Page 2)
    • Current cull cow market value (MLA Mareeba 08/05/2012) meatworks paying $1kg lwt for 430kg cull cow would net return $2703(Page 7)
    • Assumption is made costs for NT producers to Livingstone abattoir would be $403
      • Livingstone abattoir sale places $182 better value on the cull cow.3(Page 9)
  •  May. John Berry – JBS CEO calls for removal of ‘roadblocks to the development of the northern cattle industry’10
      • carbon tax looming10
      • ongoing issues to transport logistics10
      • labour force shortages10
      • market access10

2013

  • August. US grinding beef prices surge to a 3 year high13
    • combination of increased demand from the US and lowering effect of the Australian dollar13
      • currently at $US0.8942c13
  • Port of Townsville exports 65,000 head of cattle in calendar year of 201311
  • 2013 was a record breaking year for beef exports.11
    • Australia selling more than 1.1M tonnes of chilled frozen meat overseas11
  • November. JBS Swift Australia install closed-circuit television camera’s (CCTV) in it’s Australian meatworks.18
    • For the purpose of animal welfare and meatworker safety issues.18
    • CCTV for internal use by only JBS, with no plans to allow outsiders to view the footage.18
  • JBS’s US beef division (which includes Australia) delivered drop in net sales and earnings in it’s third quarter financial results.19
    • Australia’s division performance and overall contribution to the overall result is impossible to distinguish due to inclusion with US and Canadian beef processing results.19
    • Earnings before tax $134M,.19
      • Down by 22.5% on previous quarter.19
      • Down by 28.4% on third quarter last year.19
    • result reflection of domestic North American markets.19
      • Improved performance had occured in Australian.19
        • Demand had increased in Chinese markets.19

2014

  • Jan. 20 Australia’s most northernmost meat works begins operations11
  • “Quite clearly there was a number of available cattle, two years where we had good seasons and obviously with the dislocation of the live trade into Indonesia we saw numbers aplenty” John Berry.11
  • Australia has been experiencing a protracted and severe drought11
  • To continue for the beef industry to be competitive it needs to lobby government as a common voice to consider11
    • cost structures
    • regulatory burdens
    • market access and transport infrastructure
  • No plans to reinstate the seven day roster from downgrade that occured to 5 days a week in 201011
    • Challenges in the North around supply11
    • focus is making sure continuity of supply throughout the year11
    • 20 plants have closed in Northern Australia past 25-30 years.11
  • July. JBS Australia purchase majority shareholding in NSW based Andrew Meat.20
    • specialise in high quality, portion cutting and further processing of meats for domestic and international restaurant and foodservice customers.20
    • produce ready-cooked meals.20
    • company banner Creative Food Solutions.20
    • Andrew Meat will allow JBS expansion into high growth retail and value-adding segments.20
  • Expansion of the Andrew Meats business will start in November .21
    • JBS global strategy to expand into value added meat protein – opportunity to expand margins.21
    • JBS have an existing value-added division – Food Partners.21
      • supplies food service customers like Pizza Hut and Domino’s with toppings.21
    • Andrew Meats focus will be produce ready meals.21
      • ‘grab & go’ beef roasts, designed to compete head on with hot cabinet roast chickens sold in supermarkets.21
      • Domestic markets were very immature but also with significant growth potential.21
  • At this time JBS operate.20
    • 10 processing facilities.20
      • Daily processing capacity of more than 8,000 cattle and 21,000 small stock.20
    • 5 feedlots.20
  • November. A north QLD cane farmer, David Cox, Burdekin is seeking developmental approval to build an abattoir at his feedlot and live export facility at his Dingo Park property5
    • 60 km south of Townsville
    • Facility could process 900 cattle per day
    • Create 300 jobs
    • Entire costing would be $75M
    • Facility will be in direct competition with the JBS Stuart Townsville works
    • I’m suggesting to them all (potential investors), if they pay 20-30% more to producers than what they’re currently getting, they’ll get double the amount of beef out of north QLD” David Cox
  • “We’ve had the devils own time trying to get cattle killed during 2014, because the current meatworks in the north have a far better supply than their kill capacities” Kevin Curry, Charters Towers Livestock agent5
  • Cattle were being rejected at Townsville and sent to Dinmore because there was no kill capacity at Townsville6
  • From 2011-2014 there was a hugh divergence in cattle prices with US cattle prices increasing dramatically as Australian prices collapsed6
  • December. Seasonal end of year closure occured 17/12/20141
  • Port of Townsville exports 247,000 head of cattle in calendar year of 20141
  • JBS currently operate 12 meat processing plants across 5 Australian states8
    • Wages & local procurement $730M (Excluding livestock purchases)8
    • Employs 8,500 people at the facilities8
      • Employs 12,000 people in Australia8
    • Total revenue of $6.5B8

JBS plants 2014_edited-1

JBS processing plants in Australia

Source JBS submission #50 Market Consolidation.

  • JBS estimates its current share of four eastern states beef kill – 20% (excludes service kill)8
    • JBS share of Australian beef production 16%8
    • Market share of national small (lamb, mutton & goat) 16%
  • JBS spent $2.4M on halal certification costs of approved religious certifiers in 20148

2015

  • January. MLA forecast.23
    • Australian cattle herd has gone from 35 year high (2013) to 20 year low (2015).23
    • Australian cattle herd slip to 26.8M head by June 2015.23
      • by 2016 expected decline to 26.5M head.23
      • by 2020 27.9M head.23
    • Adult cattle slaughter expected to slump 15% year on year.23
      • 2015 to 7.8M head.23
      • 2020 expected 7.9M slaughter.23
    • Long term Female average in 2014 52%.23
      • Normally female kill percentage 47%.23
      • Only in years 1977, 1998 & 2003 has female kill been above 50%.23
    • Beef exports record levels in 2014 1.39M tonnes shipped weight.23
      • Expected to drop 20% to 1.3M tonnes in 2015.23
  • March. Foreign ownership of Australian red meat processing facilities
  • Nippon share_edited-1

    Share of Australian red meat processing

    Source The Stock Standard. VFF March 2015

  • June. Cost of processing in Australia 1.5-3 times the cost of processing animals in another country8
  • cost of processing grain-fed cattle in Australia is twice of the USA8
    • lower levels of productivity in Australia in regards to kg per unit of labour8
    • 2 major differences between Australia and the USA8
      1. Government regulation
        • $10 a head more in Australia8
        • Dept. of Australian Agriculture fully recover costs of meat export inspection and certification8
          • Australia wide DAFF costs $80M8
          • JBS contribute $14.5M8
        • Export plants don’t use DAFF but use approved employees, which plants fully cover costs8
          • JBS estimate an additional $30M at Export level8
        • USA & Brazil governments provide services at no or minimal costs to processors8
      2. Energy Costs
        • $15 a head more in Australia8
    • Technical barriers to trade (TBT’s)- Total value in Australia estimated at $1.25B as identified costs8
      • 261 TBT’s in 40 key markets8
        • 136 have significant trade distortion impacts8
  • July. The following charts are from a submission by the Australian government Department of Agriculture to the Senate rural and regional affairs and transport references committee inquiry into Market consolidation and the red meat processing sector.

abattoir capacities dept ag sub consolidation_edited-1

Capacity of major beef abattoirs in QLD. Pg 15

T2 Throughput state beef_edited-1

Share of throughput by state for beef in 2014. Pg 16

T4 processing companies market share_edited-1

Major Processing companies by market share May 2015. Pg 16

M4 direct cattle movements NLIS QLD_edited-1

Cattle Movements to abattoirs. Pg 25

F12 hourly labour costs food manufacturing_edited-1

Hourly labour costs for food manufacturing industry Pg 30

  • November. JBS will closing the plant earlier than usual for seasonal closure1
  • Australia has a dramatically reduced beef herd after 2 years widespread drought1
  • Closure is planned 27/11/20151
  • Reasons for early closure1
    • Plant is running our of slaughter cattle
      • drought driven reductions in the cattle herd have impacted supply of slaughter stock
      • High rate of stock liquidation reflected in record throughput of stock year to date. More can be read of this in this article by Beef Central. Declining Slaughter numbers
      • Live export has been extremely busy through the Port of Townsville, creating direct competition with the meat processor for slaughter animals, particularly those heavy enough in catagories to Indonesia and Vietnam
        • Port of Townsville will possibly export up to 300,000 head in calendar year of 2015
      • Heavy exposure to US market – Grinding beef 90CL
        • 90CL has fallen more than 130c/kg since early October
        • Now at it’s lowest value in 15 months
        • Type of cattle killed at Townsville means a large volume is processed into 90CL
      • Authors note – this not mentioned in any articles but I would like to point out that the Darwin.Livingstone Abattoir AACo started processing in September 2014 with throughput of approximately 300-400 day through 2015. This may have had some impact on the number of stock that would normally have left the NT and been processed at Townsville. Costings were done relative to the Livingstone facility in the ACIL report May 2012
  • All processing sites across Central & Nth QLD have been struggling for stock numbers1
  • Stuart plant at this point hasn’t dropped weekday shifts1
    • Has been a decline in daily tally
      • Dropped from 903 head /day 3 weeks ago to 780 head /day and currently at 660 head /day
      • 660 head a day is 70% utilisation
        • highly inefficent but allows to keep workforce on
        • continuance of operation of running the plant to normal shutdown time for the workforce and fixed cost reasons is acceptable
      • JBS will attempt to sustain Rockhampton plant to normal shut down times1
  • Workers are expected to recommence 18/01/2016, depending on seasonal conditions.1
  • Impact of early closure – effect on jobs and local regional community1
    • Most staff as closure at end of November have 3-4 weeks of annual leave due
      • longer closure will result in finanical hardship
  • JBS annual company wages Australia-wide is nearly $1B1
    • Almost all is in relation to regional and rural areas.
  • Plant closes for seasonal break – 25/11/2015 1 month earlier than usual2
    • 580 permanent staff are forced to take leave until the plant re-opens
  • Australian deminished herd means cattle available to processing sector will drop from 9M head to 7M in the next two years2
  • Whether all of us across the processing sector scale back operations or whether some operations are not as commercially viable as others – all that’s going to come out to play in the next 12 months” Anthony Pratt – JBS Chief operating officer of the North.2
  • I’m not an advocate for cattle not going on boats, but when you  get too many going out, when you start getting these slaughter weight cattle going out, that’s when we start to affect the balance” A Pratt2
  • “In order for the farmer to get the best return for his cattle, there’s got to be an equilibrium there”2 A. Pratt.
  • For every dollar invested into a business it generates $5 in the economy2
    • JBS investments in the Northern region turns into $400M of direct economic benefit to the area.2
  • December.Grazing industry representative, Peter McHugh rubbishes claims that live export was a major factor in early closure of meatworks6
  • Authors note – I was unable to find a copy of the article – ‘Beef with live export’ by the Townsville Bulletin 28/11/2015 to which Mr McHugh was referring.
    • JBS management said the works had shut down four weeks early because too many cattle went out on boats6
  • Peter McHugh claims the main reason for the early closure was QLD’s severe drought.6
    • Last 2-3 years there has been the biggest sell-off of cattle in Australia ever6
      • that is a reflection of drought
    • Graziers were accepting 4-12 week wait to get cattle killed.6
    • meat processors need to pay a rate equal of higher than live export6
  • Australian 90CL (90% meat/10% fat) blended cow prices continue to fall.12
    • Now quoted at $US1.84/lb CIF12 (Unsure what CIF means)
      • down another $US0.03c/lb on previous week12
      • down $US0.71c/lb same time last year12

US 90CL Beef central 15.12.2015_edited-1

90CL Cow graph – Source www.beefcentral.com

  • December. ATO publishes tax data for agribusiness corporates.15
    • Data interpretation – Companies do not pay company tax on revenue (total income) they pay on profits after paying all expenses, including wages, capital replacement, supplier costs and other operating expenses.15
    • Income tax information is for 2013/14.15
  • JBS Holdco Australia Pty Ltd produced Total Income $4,040,948,610.15
    • Taxable Income $419,882,525.15
      • Tax Payable $44,809,334.15

2013_2015_edited-1

QLD Drought Situation 2013 – 2015 www.longpaddock.qld.gov.au

Sources – Townsville (Stuart) QLD.

  1. ‘Early seasonal closure for JBS….’ Beef Central 09.11.2015
  2. ‘JBS shuts north QLD plant….’ ABC rural. 26.11.2015
  3. ‘The economic Impact of the proposed AAco abattoir’ ACIL 2012
  4. ‘Unions push to end QLD Live exports’ QLD Country Life 13.08.2010
  5. ‘Chinese demand for Australian beef…’ ABC Rural 11.11.2014
  6. ‘Rep takes aim at meatworks’ Townsville Bulletin 09.12.2015
  7. The Northern Australian Beef Sector : A Processors Perspective John-Berry
  8. sub50_JBS Inquiry into the effect of market consolidation on the red meat processing sector
  9. MLA – Top 25 Processors 
  10. ‘Berry calls for united front on beef battleground’ ABC Rural 08.05.2012
  11. ‘JBS starts with a blank sheet after record export year’ ABC Rural 21.01.2014
  12. ‘No bottom in sight for US grinding meat prices’ Beef Central 15.12.2015
  13. ‘Prices lift again for 90CL grinding beef, as $A effect grows’ Beef Central 06.08.2013
  14. anu.edu.au-Whitlam sacking 1975
  15. ‘ATO publishes tax data for agribusiness corporates’ Beef Central 18.12.2015
  16. AUS-MEAT Accreditation Listing 29.12.2015
  17. ‘Big Beef producer cuts deal with Tasman group’ The Age 06.03.2008
  18. ‘Swift CCTV camera action’ Weekly Times 13.11.2013
  19. ‘JBS delivers lower third quarter beef sales, revenue’ Beef Central 14.11.2013
  20. ‘JBS takes stake in Andrews Meat’ www.farmonline.com.au 09.07.2014
  21. ‘What’s behind JBS taking a big stake in Andrews Meat Value adding Businnes? Beef Central 10.07.2014
  22. ABARES foreign ownership 2011
  23. ‘MLA forecasts beef market adjustment’ The Land 27.01.2015
  24. ‘Booing meatworkers reinstated’ Caboolture News 28.06.2011
  25. ‘Caualties emerging as export kill pressure continues’ Beef Central 25.07.2011
  26. “North see’s direct competitive price tension between processors and live ex’ Beef Central 12.08.2015
  27. ‘Grids trending down, as disconnect emerges between young cattle and slaughter markets’ Beef Central 19.01.2016
  28. ‘Weekly kill -Processors dropping shifts in preference to chasing cattle, at a loss’ Beef Central 27.01.2016
  29. ‘Live export tensions reignited amid ongoing uncertainty for Townsville meatworkers’ ABC Rural 23.02.2016
  30. ‘Townsville’s JBS meatworks opens after four month closure’ ABC Rural 31.03.2016
  31. ‘AMIEU condemn Barnaby’s support for live export expansion’ Beef Central 27.05.2016
  32. ‘Weekly kill: QLD grids rise on back of earlier rain, while eyes turn to cyclone impact’ Beef Central 28.03.2017
  33. ‘Processors consider representation model based on manufacturing instead of ag’ Beef Central 22.06.2017

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