Thursday, August 18, 2022

Staffing issues slow cow kill

Processors have been on the backfoot with the cattle kill since Omicron swept through the country

Usually the cow kill would be falling off a cliff by this point, freeing up slaughter capacity and sending farm gate prices upwards. 

But, as was widely expected, everything is dragging out longer. 

Processors have been on the backfoot with the cattle kill since Omicron swept through the country and limited the number of workers on-site at a given time. 

And the timing couldn’t have been any worse, since usually it’s all hands on deck through these months as dairy farmers flood the market with culls before drying-off for the winter. 

Not to mention processing the usual number of cattle was always going to be harder work since staffing issues have been an ongoing theme even before Omicron.

Up to May 14 (the latest kill stats available) the 2021-22 cow kill had fallen 103,000 head or 16% below the same weeks last year. 

The graph below shows the trend over time well, with only different Easter dates briefly pulling the weekly kill above last year at the start of April.

In terms of pure numbers, there’s a bigger wave to work through in the North Island with its 56,500 head deficit on last year. 

However, that only places production roughly two weeks behind schedule if meat companies are able to keep plants running near the maximum seen this year. 

Though, in reality, it’ll be a little longer given staff absenteeism has flared up again recently and bobby calf production will start taking the odd chain out action.

Down in the South Island there’s a 47,000 head hole in the cow kill. 

That might sound better, but there’s much less cattle kill capacity available in this part of the country, which actually pulls the cow kill a little over three weeks behind schedule factoring in the highest weekly kill to date. 

But again, this doesn’t factor in any reduction in day-to-day staffing or any preparation for the bobby kill.

Another thing to consider is the South Island cow kill has carried on well past the usual June 1 cut-off point for the previous two years, keeping processors running at full steam for at least an extra three weeks. 

In other words, it’s looking as though it’ll be mid-July at absolute earliest before the South Island cattle plants start to settle down to resemble something akin to an off-season. 

The good news is this has been a few months in the making and meat companies planned in advance for this situation. 

One example of this is with cow contracts for July and August kill, taking the pressure off dairy farmers by giving them the option to sell through the yards or the paddock to these traders, rather than risk chewing through the feed they have while waiting for slaughter space.

This article was written by AgriHQ analyst Reece Brick. Reece’s reports provide key insights into what makes our sheep and beef markets tick. Subscribe to AgriHQ reports here.

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