Townsville – Stuart

Jo Bloomfield

10 years ago

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

Hema Maps – Australia Truckies atlas.

Owner/s

Australian Meat Holdings (AMH)
- As at 2001 is wholly owned by ConAgra Inc
- In 1986 AMH was formed from joining of FJ Walker Pty Ltd, sections of Metro Meats Ltd, Tancred Bros Pty Ltd and the Smorgon Group⁹
JBS Australia (Current)
- Employment enquiries go to JBS Australia job opportunities
Abattoirs owned by JBS in Tasmania
- Devonport abattoir (Tas) (2008) – another multi species abattoir.
- Longford (Tas)
- King Island abattoir (Tas) (2008) – closed in 2012.
Abattoirs owned by JBS Queensland.
- Townsville (QLD)
- Rockhampton (QLD)
- Dinmore abattoir (QLD)
- Riverview (QLD)
- Toowoomba (QLD) – more commonly known as Beef City
Abattoirs owned by JBS in Victoria
- Brooklyn (Vic)
- Cobram (Vic)
Abattoirs owned by JBS in New South Wales
- Yanco (NSW)
- Scone abattoir (NSW)
Abattoirs owned by JBS in South Australia
- Bordertown (SA)

Operation

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

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
    - Pentland (QLD)
    - Ross River (QLD)

1990

ABARES report – Foreign Investment and Australian Agriculture
- ABARES foreign ownership 2011

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.

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

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

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

November. ABARES foreign ownership 2011 report is released

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
- - Authors note – the entire article is 17 pages long, the following 5 slides are from the John Berry presentation.
    The Northern Australian Beef Sector : A Processors Perspective John-Berry

‘The Economic impact of the proposed AACo Abattoir’ ACIL Tasman May 2012
- This report considers the impact on other meat processors and cost savings that could be achieved by NT and WA producers who currently send cattle from northern Australia to abattoirs in southern WA or eastern QLD.

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 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
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.
- Dept Ag. Submission to Market consolidation and the red meat processing sector July 2015

Capacity of major beef abattoirs in QLD. Pg 15

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

Major Processing companies by market share May 2015. Pg 16

Cattle Movements to abattoirs. Pg 25

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

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

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

Sources – Townsville (Stuart) QLD.

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