Friday, July 1, 2022

Processing season drags on

Neal Wallace

Covid-19, dry weather and shipping and labour issues have pushed the meat processing season out by up to three months longer than usual.

The beef season looks most prolonged, with Silver Fern Farms (SFF) expecting it to end 12 weeks later, in mid-August in the North Island mid-September in the South Island.

Processors are in the midst of the cull cow kill and SFF estimates waiting times of four to five weeks in the North Island to improve to three to four weeks in the coming months.

The current six to eight week delay in the South Island is not expected to ease for at least the next month.

SFF advises the sheep processing season is eight weeks later than normal in the north, expected to end about early June, and five weeks late in the south, expected to finish later this month.

The South Island venison kill is running about six weeks later than usual in the south, expected to end in early July, and three weeks later in the north, likely to end later this month. 

Delays range from two to four weeks but are expected to improve in the coming month. 

The delay does not surprise AgriHQ senior analyst Mel Croad who says a delayed start to the season due to a poor spring has been compounded by staff shortages, supply chain issues and the impact of Omicron.

Historically the national cattle kill can reach 80,000 a week at this time of the year, but Croad doubts that will be achieved due to staffing issues.

Short processing weeks through April dropped weekly slaughter rates by up to 30% compared with last year, pushing more cattle into May to be processed and creating even larger backlogs.

Croad says space pressure for lambs in the North Island has eased but remains in the South Island.

The overall lamb kill to the end of April is 11.5m compared to 13.7m a year ago with the North Island back 16%, or about 1m, and 10% in the south, about 700,000.

“These lambs are still on farm which means they will have to be processed at some point during the rest of the season,” she says.

The South Island kill has been compounded by dry autumn conditions in Southland and Otago which has pushed lambs sold in store condition to Canterbury.

SFF’s chief supply chain manager Dan Boulton says while waiting times for lamb are reducing, there is a risk animals held into winter could compete for space with bobby calves.

This is especially so in North Island where the lamb kill is well down.

He says the processor is working within the labour shortage and Covid constraints, including recruiting migrant employees, extending night shifts, and condensing shutdowns and maintenance to a bare minimum.

SFF’s livestock team is moving store animals and cull cows to grazing. 

Alliance Group’s manufacturing manager Willie Wiese says it has a policy of keeping plants operating as long as there are sufficient animals to process rather than implementing traditional seasonal shut-downs. 

The Meat Industry Association reports chronic labour shortages and logistic issues have reduced the number of cattle processed in the first quarter of the year by 11% and sheep by 16% compared to 2021.

While processing capacity has since improved, the impact was pronounced in the month of March when sheepmeat exports fell 25% and beef 8% compared with the same month a year earlier.

Association chief executive Sirma Karapeeva says while volumes are down, values remain high.

Exports for the first quarter of 2022 were worth $3.1b a 17% increase on the same period in 2021.

Red meat exports during March were worth $1.15 billion, representing an 11% increase on March 2021.

The value of exports to China dropped 17% to $384m during March, due to lock downs and port disruption, but nearly all other major markets saw an increase.

Karapeeva says global demand and prices remained strong, but the sector was felling impact of supply chain disruptions and processing constraints.

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