Strong domestic cattle market to counter global pandemic

Opposing forces will dominate the Australian cattle market in 2020, with limited supply and strong local demand driving prices, but tempered by the global COVID-19 disruption, according to Rabobank’s Australian Beef Cattle Seasonal Outlook.

The just-released report, titled The Battle of the Bulls versus Bears, outlined that despite the market being seriously tested by contracting global economic growth and COVID-19 containment measures, domestic forces would emerge victorious, keeping cattle prices high.

Rabobank senior animal proteins analyst Angus Gidley-Baird said widespread rain had buoyed local restocking motivation among producers, reducing cattle sales and adding buying competition in an already supply-constrained market, with Australia’s cattle inventory reportedly at a 30-year low.

“We estimate the Australian cattle slaughter will fall 14 per cent in 2020 to 7.29 million head, with a further decrease of two per cent in 2021,” he said.

Production was expected to drop to 2.1 million tonnes – among the lowest volumes seen in 15 years – with seasonally-driven increases in slaughter weights failing to offset reduced numbers. While price-positive for graziers looking to sell livestock, Gidley-Baird said low cattle availability would create challenges for producers, processors and feedlots, forced to manage their businesses with lower livestock numbers and high cattle prices.

Low slaughter numbers were also expected to contribute to a dramatic decline in Australian beef exports, forecast to drop 17 per cent in 2020 to one million tonnes. The significantly decreased cow slaughter – reducing Australia’s production of lean manufacturing beef – was also expected to result in a shift in volumes between export markets, Gidley-Baird said.

“The US is a large market for lean manufacturing beef – 62 per cent of exports to the US are manufacturing beef – and, all other things being equal, we expect exports to the US to drop in 2020,” he said.

Forecasts suggest a dramatic contraction in global economic growth in 2020 resulting from COVID-19 that will be worse than experienced in the global financial crisis (GFC) of 2009, with large economic declines expected in key Australian beef markets such as the US, China and Japan.

As a high-priced protein, Gidley-Baird said, beef would feel the impact of reduced consumer expenditure, with overall beef demand – particularly for premium products sold through full-service restaurants – expected to decline. Heavily reliant on foodservice trade, Australia’s beef exports would also be hit by COVID19-led social restrictions, particularly in China, where more beef was eaten out of home.

“This disruption to food service and slowing economic conditions is expected to place downward pressure on Australia’s beef export prices, creating a difficult price squeeze for those in the beef supply chain managing high cattle prices in a softer global market,” he said.

At the same time, Gidley-Baird said, a weaker Australian dollar, China’s reduced pork availability due to African swine fever, and the US-China trade deal were all positive offsetting factors.

Domestic price outlook Despite countering global and domestic forces at play, the report forecasts the average annual Eastern Young Cattle Indicator (EYCI) to increase by 30 per cent in 2020, to equal the annual average record set in 2016 at AUc632/kg. Based on the last reported EYCI price of AUc741/kg on March 19, this would mean prices were expected to ease but still remain strong over the remainder of the year.

However, given the forecast dramatic reduction in economic activity, uncertainty remained surrounding global beef price performance. Australian regional outlook With climatic conditions taking a toll on northern cattle herds in past seasons, breeding inventory across Queensland and Northern Territory was estimated at a 20-year low in late 2019.

Gidley-Baird said breeding numbers in some areas of southern Queensland were expected to be 75 per cent below normal, yet, despite tough conditions, well-priced sales had generated solid returns, placing producers in a strong position to start the recovery. As such, the report tipped Queensland would emerge as the “colosseum” of the Australian cattle recovery.

“Producers, feedlotters, processors and live exporters are all vying for a very small pool of cattle, and prices in Queensland may see some of the strongest gains across all states given this fierce competition,” Gidley-Baird said.

Breeding cattle numbers were also significantly down in central and northern New South Wales, while higher breeder numbers and calf availability out of the south of the state remained closer to normal.

He said Victorian producers remained well-positioned to capitalise on national restocking demand and higher prices, with most areas – east Gippsland excluded – maintaining close to normal breeding numbers.

In South Australia, producers could also look forward to a positive year, despite 2019’s dry conditions and reduced cattle inventory in the northern pastoral country.

“There may be slightly softer demand by local producers for replacement cattle, compared to NSW and Queensland, but these markets will still provide strong buyer interest for South Australian producers looking to sell cattle,” he said.

Dry conditions across much of Western Australia’s cattle-producing regions had driven increased slaughter rates, and would curb 2020 production, Gidley-Baird said, however upward price pressure would come from east coast demand. In Tasmania, current breeding cattle on-farm numbers were similar to early 2019, reflective of normal levels, yet increased competition from the mainland could see the movement of cattle out of the state.

Collaboration with Guardian Bandsaw delivers for meat processing industry

Recognising a pressing need for improved and comprehensive safety systems in the meat processing sector, Auckland-based innovators, kanDO Innovation founded Guardian Bandsaw in 2015.

With its history of developing vision detection systems coupled with the experience of building rugged, robust solutions for an industry such as this, Guardian Bandsaw was formed based on superior expertise by engineers with years of experience in the meat industry.

Fast forward to just two years later and Guardian Bandsaw offers the most advanced safety system on the market!  Recognising that software does not operate in isolation, the team at Guardian Bandsaw designed a new, hi-tech bandsaw from the ground up as an advanced solution to old-fashioned bandsaws.

The state-of-the-art Guardian Bandsaw today offers customers complete peace-of-mind with real-time feedback and a host of industry-first benefits such as; a unique 3D vision system which incorporates a protection zone around the blade, higher speed of vision and braking systems, no damage to the blade during braking, automatic tensioning of the blade for blade changes and after braking events, an automatic safety check prior to operation, video capturing of trip events and E-stops for review which helps improve productivity, e-mail alerts when trips occur and much more!

Answering to the call of Industry 4.0, Guardian Bandsaw looked to suppliers such as SMC to advance its already sophisticated system. Keith Blenkinsopp, Director of Guardian Bandsaw was intrigued by SMC’s offerings and had previously worked with the pneumatics company on a project for kanDO Innovation. Keith now looked to SMC to for the latest technology to ensure efficient control of its pneumatic technology. “At Guardian Bandsaw we are constantly looking for ways to improve efficiencies and deliver on the best possible technology out there.”

“Based on our requirements, SMC recommended a perfectly suited solution and offered us a unit for trial purposes which met our expectations without a glitch” explains Keith.

On the other side of the spectrum, SMC looked to Guardian Bandsaw as its perfect partner in automation with SMC focused largely on the meat processing sector in ANZ. SMC Branch Manager for New Zealand, Peter Wilson elaborates on the collaboration: “In listening to Keith’s requirements, the brief was to offer a compact tidy and efficient system to control the pneumatic requirements of the machine, thus we recommended SMC’s EX260 Ethernet module mounted on our SY3000 series Valve Manifold”.

SMC’s sleek SY series of unique, all-purpose valve manifold offers next level flexibility, improved space savings of 29%, increased flow rates of up to 1500 litres and greater cost savings while boasting up to 200 million cycles.

Designed to match with SMC’s EX fieldbus system, it offers an array of compatible protocols, reduced wiring time, an IP67 rating and a self-diagnosis function. The units are set with rubber and metal seals. In fact, the metal seals last for decades and would even outlive the machine – perfect for safety.

“It speaks volumes when you are confident enough to offer a perfectly matched solution on trial and know that it will 100% deliver. Rather than offering a sales pitch, SMC allows our products to speak for themselves,” says Peter. “Having already established a relationship with kanDO Innovation, we trust that this is the beginning of a very successful relationship with Guardian Bandsaw!”

 

Buyout of Western Meat Packers Abattoir

Rod and Shana Russell have completed a buyout of Russell and Lee family members in Western Meat Packers Group’s Margaret River abattoir. This means the couple now have 100 per cent ownership of all assets of Western Meat Packers Group, which employs 360 people and has an annual turnover of about $150 million.

Announcing the successful buyout, WMPG CEO Andrew Fuda said such a positive investment by the founders of the business, which began in 1983, signalled an exciting stage in the beef company’s future.

With a five day a week throughput of about 400 cattle a day and some relief in sight in terms of cattle supply, the Margaret River facility, located on a 100-hectare site and employing 100 people, is implementing significant chiller capacity upgrades and other fitouts to accommodate developing export market prospects.

“Although we currently send all beef, typically sides and quarters, overnight to WMPG’s Osborne Park boning and packing facility to ensure rapid turnaround from paddock to plate, we’re moving towards boning and packing at our Margaret River plant to optimise expanding business opportunities in Asia in particular,” Fuda said.

“A new integrated chiller and freezer unit at Margaret River will allow faster packing and freezing, minimising shrinkage while also improving yields of offals, which are becoming increasingly sought after by WMPG’s Asian export customers.

According to Fuda, the new fitout also meant that shifts could be expanded and processing could move to seven days, with a weekly slaughter capacity of more than 4000 head.

“Also, with chilling and freezing all under one roof and on the site where the cattle are slaughtered and processed, it’ll put us in the frame for export listings for China and Malaysia, both markets we’ve been working on for quite some time,” he said

“The Western Meat Packers brand and reputation for quality and reliability in Asian markets, developed and nurtured over 30 plus years by Rod and senior management gives us confidence that once equipped with the appropriate listings, we can move quickly to supply.”

Jamie Warburton Andrew Fuda at WMPG Margaret River.
Jamie Warburton Andrew Fuda at WMPG Margaret River.

Packaging for the meat industry: industry dinner

The Australian Institute of Packaging Victoria (AIP VIC) is running a joint technical dinner with the Society of Plastics Engineers (SPE), which will cover the latest innovations in packaging for the meat industry.

The speakers:

  • Madapusi Srinivasan (Associate Dean, Chemical and Environmental Engineering, RMIT University, Melbourne) will present a paper on ‘Polymers, Plastics and Packaging for a Sustainable Future’.
  • Alan Adams MAIP (Market Manager – Retail, Case ready Meat, Poultry and Seafood Sealed Air) will be discuss ‘Consumer insights into packaging vs food waste and behaviours that are driving change in retail pack formats in the Australian meat case. A review of pack attributes that can capitalise on these changing consumer demands.’
  • Michael Lee MAIP (Manager, High Value Food Frontiers, Meat & Livestock Australia) will be speaking about ‘the latest innovations, trends and opportunities in the meat industry’.
  • Stuart Shaw (Red Meat Business Manager, Scott Automation + Robotics) will provide an overview of current developments and innovative technologies being Implemented by Scott in the meat processing industry.

All of industry is invited to attend. The event takes place on September 6 at Box Hill Golf Club.

Rising energy costs put Australia’s meat processors at risk

Rising energy costs and lack of reliable supply are threatening to push Australia’s red meat processing offshore.

The Australian Meat Industry Council (AMIC) is currently conducting a survey of its members to determine the scale of the problem and help create an energy policy for the industry.

 According to AMIC’s Robert Barker, affordable and reliable energy supply is crucial for Australia’s meat processing sector. Gas in particular is important as a source of reliable energy to maintain the baseload, and for direct input in plant operation.

 Early results of AMIC’s survey have showed that energy costs were up an average of 30 per cent in 2016 when compared with 2010.

Some of the larger meat processors reported additional energy costs of $20 million in the past 12 to 24 months.

“The red meat processing industry in Australia is the largest manufacturer in Australia, supporting over 130,000 jobs, most based in regional areas,” said Northern Cooperative Meat Company chief executive Simon Stahl.

“If Australia wants to stop this industry moving offshore, urgent attention to the cost of manufacturing is required at all levels of government,” he told Fairfax Media.

“Energy is at that critical stage, not only in terms of cost but also continuity of supply. Urgent action is required and serious consideration should be given to taking export exposed meat processing plants off the grid.”

Big River Pork to expand and create 140 jobs

Pork processor, Big River Pork has announced a $14 million investment at its South Australian plant which is set to create 140 new jobs in the Murray Bridge area.

The project will also create an estimated 46 jobs in the construction phase and will benefit local farmers, transport operators, feed suppliers and other participants in the local pork industry.

The expansion will enable Big River Pork to increase its production to meet a new long term supply agreement as consumer demand for pork continues to grow.

The expansion will make Big River Pork one of the largest pork processors in Australia.

Big River Pork Chairman Geoff Hampel told the ABC the project would allow the company to increase production in line with a new supply agreement.

“Over the years the shareholders of the company have increased their volumes and they’ve gained new business in various customers around Australia,” he said.

“It’s great news not only for Big River Pork and its employees but for new employees, the town and the economy.”

The company’s investment is being supported by the State Government through a total $900,000 grant with equal contributions from the Economic Investment Fund and the Regional Development Fund. Investment Attraction South Australia (IASA) has been the supporting agency in this development.

“This expansion by Big River Pork is a confident investment in South Australia, creating 140 new full time equivalent jobs, and further securing our state as a major player in the Australian pork industry,” said Premier Jay Weatherill.

“Big River Pork is a major employer in the Murraylands, with a current workforce of 190 full time equivalent positions and this will increase to a total of 330 when the expansion is expected to be completed in 2019.”

Pork CRC set to sow animal welfare advances

Australian Pork (Pork CRC) CEO Roger Campbell, says major progress and breakthroughs in pig and pork R&D were made across all four of the CRC’s programs.
 
“We’ve improved the welfare and performance of sows grouped in gestation, we’re developing alternative strategies to improve animal health, disease diagnostics and pork eating quality, plus advancing biogas management and grain inputs,” Dr Campbell said.
 
“Australia’s pork industry and researchers have led the world in transitioning from stall to group housing of gestating sows, with industry showing the forethought and courage to make the move and our scientists then making it work on a welfare basis for the sow and in terms of reproductive performance for the producer.”
 
Pork CRC scientists are now looking at satiety and enrichment for gestating sows and at the welfare and well being of sows and their piglets during farrowing and lactation.
 
“The latter remains a challenging area, but we have the best in world working on it and a very innovative program in place,” Dr Campbell said.
 
According to Melina Tensen, Senior Scientific Officer (Farm Animals), RSPCA Australia, Pork CRC’s R&D programs reflect an awareness of emerging issues and responsiveness to growing consumer expectations that may impact the industry.
 
“Pork CRC’s research is essential to the success of alternative farrowing and group housing systems and to farmer uptake of such systems,” Ms Tensen said.
 
“Undoubtedly, thanks to the success of the Pork CRC’s group-housing workshops, many pig farmers have implemented housing and feeding systems that best suit them and close to three quarters of gestating sows are now sow-stall free.
 
“The success of Pork CRC, in addition to the quality of the research, is attributable to the significant resources that major pig producing companies are willing to invest in order to achieve practical, on-farm improvements.
 
“This and the efforts of every single pig farmer who has transitioned or is still in the process of transitioning to group housing, should be highly commended.
 
“As Pork CRC’s work moves into the next stage, RSPCA remains committed to working with the pig industry and its stakeholders on the challenging journey towards high integrity Australian pork,” Ms Tensen said.
 
Dr Campbell said that in the next four years, Pork CRC would address areas across its four programs where gaps in knowledge still existed, while helping ensure Australia produces the highest quality pork in the world and that Pork CRC continues to help industry differentiate itself from the rest of the world.

 

Meat industry moves towards consolidation

Consolidation of the Australian meat industry is allowing companies to improve efficiency and bring the consumer closer to farmers.

Yesterday (7 July), Sanger Australia announced its merger with Bindaree beef, to form Bindaree Beef Group.

Graham Greenhalgh, CEO, Sanger Australia, says the move will bring the customers’ needs closer to the producer by removing one of the links in the chain.

Both Sanger and Bindaree have been separately selling meat from the McDonald family. “Separate share holdings, separate aspirations, separate everything and so by joining those two businesses together, we take out any issues between the objectives or visions of those two companies and we make sure we’re aligned,” Greenhalgh says.

“People are seeking and searching closer connections to the producer and have more interest in insuring the producer groups are prospering. People are becoming responsible in how they consume food and they want to ensure that the value that they’re paying for the food passes down to the farmer…so this [merger] is going to certainly help with that. We’ll have one set of objectives and we’ll be closely aligned and we think it will contribute to delivering better efficiency between the producer and the consumer.”

Over the past 20 or 30 years, the meat industry has become less fragmented, Greenhalgh says.

“The four biggest meat companies in Australia have massive financial strength, massive global positioning and I think that’s a real positive for the industry, it’s enabling investment into the industry and that investment is bringing efficiency.

“That consolidation of business allows people to invest more to drive more efficiency and to make that connection between the customer and the farmer closer and more responsive and that’s absolutely what we’re endeavouring to start doing.”

 

Sanger Australia announces merger with Bindaree Beef

Meat sales and marketing company, Sanger, announced an agreement with Bindaree Beef to merge into Bindaree Beef Group.

Sanger will continue to operate as an independent, stand-alone subsidiary of the new company.

“At Sanger we care about outcomes for rural Australia and its people. Since 1973 we have been sharing Australian meat with the world. We all live, breathe and love meat. Over the years we have grown and it is our passion for what we do that has led to our continuing success”, said long term Sanger shareholder, Graham Greenhalgh.

Sanger has expanded rapidly over the last 5 years. This financial year Sanger has marketed and sold $650m of meat, supplying 350 regular customers around the world and across all sectors of the food and hospitality industry. Sanger specialises in supplying branded beef grades such as Wagyu, Angus, marbled grain and grass fed beef, farm specific supply chain brands, veal, lamb and chicken.

Sanger is operated by seven partners all holding senior executive positions in the company with combined meat industry experience of 142 years. Sanger also focuses heavily on investing in young talent to deliver solutions for customers well into the future. Having grown from a team of 20 a few years ago, Sanger now has more than 60 meat sales, marketing and support specialists located in Sydney, Melbourne, Dublin, Dallas, Atlanta and Shanghai.

“During a period of recent consolidation within the meat industry, we saw the opportunity to partner with our major supplier, who supports our customers with about 55 per cent of their combined orders. The merger will also allow our livestock team to work more closely with the sales team to deliver better outcomes for our customers and producers”, said Bindaree Beef Director, John Newton.

The merger took effect on 6th July 2015 and was a non-cash transaction between the companies.

 

Baiada Group busted by Fair Work Ombudsman

The Fair Work Ombudsman today released the findings of its Inquiry into allegations levelled at the Baiada Group over employment practices at its three poultry processing sites at Beresfield, Hanwood and Tamworth in NSW.

The Inquiry found exploitation of a labour pool comprised predominantly of overseas workers in Australia on the 417 working holiday visa. Exploitation included significant underpayments, extremely long hours of work, high rents for overcrowded and unsafe worker accommodation, discrimination and misclassification of employees as contractors.

It also found non-compliance with a range of Commonwealth workplace laws and very poor, or no governance arrangements, by all parties in the various labour supply chains,

An Inquiry was launched in November, 2013, following complaints from plant workers that they were being underpaid, forced to work extremely long hours and required to pay high rents for overcrowded and unsafe employee accommodation.

Baiada is the largest Australian-owned poultry processing company and has a market share of more than 20 per cent. It produces the Lilydale Select and Steggles chicken brands for customers including Coles, Woolworths, IGA, Aldi, McDonald’s, KFC, Pizza Hut, Red Rooster, Nando’s and Subway.

Baiada refused permission for Fair Work inspectors working on this Inquiry to access the factory floor at its worksites, denying them an opportunity to observe work practices, as well as talk to employees about conditions, policies and procedures.

Baiada also failed to provide the Inquiry with any “significant or meaningful” documentation on the nature and terms of its labour contract arrangements.

However, the Inquiry found that employees working at Baiada sites are not being paid their lawful entitlements.

The company had verbal agreements with an extensive list of labour-hire operators used to source most of its workers, largely 417 working holiday visa-holders from Taiwan and Hong Kong.

Baiada’s labour-hire contractors were unwilling to engage with the Inquiry and produced inadequate, inaccurate and/or fabricated records to Inspectors.

Based on limited material provided, hundreds of thousands of dollars could not be accounted for as money moved through various hands down the company’s labour supply chain.

As at October, 2013, information provided by Baiada indicated that it had verbal agreements to source labour with six principal contractors; B & E Poultry Holdings Pty Ltd, Mushland Pty Ltd, JL Poultry Pty Ltd, VNJ Foods Pty Ltd, Evergreenlee Pty Ltd and Pham Poultry (AUS) Pty Ltd.

Baiada paid these principal contractors per kilogram of poultry processed, rather than hours worked – in other words, irrespective of night shifts, weekends or public holidays.

The six principal contractors in turn sub-contracted to at least seven other second-tier entities, some of whom further sub-contracted down a further two or three tiers, involving up to 34 separate entities in total.

There were no written agreements and the model relied on high levels of trust.

During the course of the Inquiry, four of the six principal contractors and 17 other sub-contractors ceased trading.

One day before the director of two companies was due to meet Fair Work inspectors, he sent an email advising that his two entities were being liquidated. The matter is being referred to the Australian Securities and Investment Commission (ASIC).

Over the course of the Baiada Inquiry, Fair Work inspectors made numerous site visits to registered addresses of the various contractors, as well as attempting to make contact by email, fax and phone using both bilingual staff and interpreters.

The Inquiry found that a large amount of work was performed “off the books”, as amounts paid to contractors did not correspond with the number of workers and wages allegedly paid to them.

The overseas workers were primarily recruited by sub-contractors through Chinese newspapers, Facebook or Taiwanese backpacker websites.

The advertisements frequently asked applicants to respond with details of their nationality, height and weight and were potentially discriminatory.

First-hand accounts from some of the workers at the plants were obtained by bilingual Fair Work inspectors who travelled to Beresfield and Hanwood, and community opinions and experiences were obtained through a series of co-ordinated “listening posts”.

Workers at Beresfield reported that they would not get any work unless they rented accommodation from the labour hire contractor, and rent was allegedly unlawfully deducted from their pay.

One property, found to be sleeping 21 people, was purchased in March, 2012, for $370,000 as a rental accommodation. Based on 20 people paying $100 a week each, it has a potential rental income of over $100,000 a year.

Most of the workers at the Hanwood site were managed by Choy Pty Ltd, which de-registered during the course of the Inquiry.

Choy’s director, Sokhan Sin, is now engaged by other contractors to manage workers at the plant, including overseas workers.

Investigations continue into allegations that Mr Sin directs employees to work very long hours, such as 5.30am to 11pm.

The Inquiry’s findings on each of Baiada’s six principal labour-hire contractors:

B&E Poultry Holdings Pty Ltd

In February this year, two Taiwanese 417 working holiday visa-holders contacted the Fair Work Ombudsman alleging they had worked up to 17 hours a day for three days at Baiada’s Beresfield plant for no wages.

At the time, the minimum wage in Taiwan was equivalent to $A4.95 an hour compared to the Australian national minimum wage of $16.87, plus penalties where applicable.

When Fair Work inspectors contacted B&E Poultry – the principal contractor named on their factory ID card – they were told the workers were engaged by a supervisor contracting to one of its sub-contractors in a personal capacity, and were unable to provide any details about the employer.

However, B&E agreed to resolve the matter by paying the workers at the Award rate.

B&E Poultry did not directly engage any employees at the three Baiada sites – but does employ staff at its own processing factories at Ormeau, in Queensland and Blacktown, in NSW.

Last year, after the Fair Work Ombudsman had received requests for assistance from B&E employees resulting in back-payments of more than $100,000, the Agency required the company to enter into an Enforceable Undertaking to ensure its ongoing compliance with federal workplace laws.

Mushland Pty Ltd

The company failed to disclose information specifically requested by the Inquiry and subsequently the phones of both the company director and its accountant were disconnected.

Baiada was unable to provide any further contact details for Fair Work inspectors.

However, analysis of the limited information which was provided, including invoices and pay records, shows that Baiada paid Mushland $255,415.07 for the month of October, 2013.

Mushland in turn paid $52,460.85 in wages to 18 employees for the same period, leaving a total of $202,954.22 unaccounted for – even though 11 of the workers had been underpaid more than $3300.

Mushland de-registered in July, 2014, and workers were reluctant to act as witnesses for the Fair Work Ombudsman.

JL Poultry Pty Ltd

JL Poultry refused to provide the Inquiry with an accurate contact address.

Fair Work inspectors made two site visits to the registered address, only to be told the director was not known and was not located there.

Written correspondence could only be directed to JL Poultry after a Notice to Produce was served on its financial institution, which provided further contact details.

It took the company seven months to provide Fair Work inspectors with records.

The records revealed that in over one two-week period, Baiada had paid JL Poultry $139,080.37.

However, JL Poultry had only paid wages to nine employees totalling $8746.80, leaving a margin of $130,333.57 unaccounted for.

The Fair Work Ombudsman issued JL Poultry with an on-the-spot fine and Letter of Caution in relation to record-keeping breaches, but the company was de-registered in December last year.

JL Poultry advised that its contract with Baiada had been cancelled.

VNJ Foods Pty Ltd

The Inquiry identified that VNJ Foods Pty Ltd directly engaged only one employee.

Records obtained by Fair Work inspectors show that VNJ made cash payments of up to $150,000 a week to a sub-contractor, Clearview LG Pty Ltd.

Despite repeated site visits, telephone calls and email contact, Clearview failed to provide any records or engage with the Inquiry.

VNJ Foods entered into voluntary liquidation during the Inquiry.

Evergreenlee Pty Ltd

Evergreenlee did not engage any employees directly.

Rather, it sub-contracted to two other companies with one common director – CCKY Pty Ltd and WL Jian Pty Ltd, which engaged 19 and 33 employees respectively.

CCKY ceased operating in June last year.

The Inquiry found WL Jian Pty Ltd failed to keep time and wage records as required by federal workplace laws and issued the company with two on-the-spot fines and a Letter of Caution.

Pham Poultry (AUS) Pty Ltd

The Fair Work Ombudsman ran a separate, parallel inquiry into Pham Poultry after receiving requests for help from more than a dozen employees at Beresfield.

Pham Poultry sub-contracted to four other companies, including FoxInt Pty Ltd, whose director Quoc Hung Pham, was also a director of the principal contractor.

Despite Baiada paying Pham Poultry $1.078 million for the month of October, 2013, FoxInt was paying its workers as little as $11.50 an hour for shifts up to 19 hours a day.

Up to 30 workers were housed in a six-bedroom house with only two bathrooms for which they were required to pay $100 a week.

The Fair Work Ombudsman could not locate Quoc Hung Pham, but the second director of Pham Poultry, Binh Hai Nguyen, agreed to repay 10 workers a total of $20,250 to partially rectify the underpayments.

In response to the ABC’s Lateline report in October, 2013, Baiada advised the Fair Work Ombudsman that it had asked Pham Poultry if workers in the supply chain were being paid correctly, and had received the following information:

  • A letter from Pham Poultry’s accountant stating that the company was “compliant with the Poultry Processing Award”, and
  • An unsigned letter from Pham Poultry on company letterhead, also stating that it was compliant with the Modern Award.

Pay-slips provided by Pham Poultry show that for one week, it paid 12 employees (including the company director) wages totalling $6828.83.

However, the $6828.83 payment contrasts with a total of $196,307.01 paid to Pham Poultry that week by Bartter Enterprises Pty Ltd.

Baiada advised the Fair Work Ombudsman that based on the information above, it was “satisfied” that Pham Poultry was compliant with Commonwealth workplace laws.

The Inquiry does not agree and believes Baiada has failed to implement adequate governance arrangements to monitor its sub-contractors.

NTD Poultry Pty Ltd was named as a principal contractor for Baiada in December, 2013, replacing Pham Poultry.

However, a three-tier supply model remained in place, and the final labour provider continued to be FoxInt Pty Ltd, whose director Quoc Hung Pham was also a director of Pham Poultry and who could not be located by Fair Work inspectors.

The Inquiry received advice that FoxInt employees continued to be underpaid at rates as low as $11.50 an hour, but a reluctance by employees to act as witnesses prevented the Agency from pursuing any enforcement action.

Below is further example of the difficulty Fair Work inspectors encountered with sub-contractors during the course of their Inquiry:

DMY Trading Pty Ltd

DMY Trading and Yu Lin Trading Pty Ltd, operated by husband-and-wife directors, had six sub-contractors supplying workers to Baiada’s Hanwood site.

Based on records provided by DMY Trading, Fair Work inspectors attempted to serve a Notice to produce documents on one sub-contractor.

When they arrived at the address provided, they found an automotive workshop. The business had been there for 25 years and the owner had never heard of the labour-hire contractor.

Similarly, when Fair Work inspectors sought to contact two other sub-contractors, the addresses provided led them to clothing manufacturers who had never been involved in the poultry processing industry.

As a result of its Inquiry, the Fair Work Ombudsman recommends Baiada:

  • Ensures its sub-contractors identify the true employer and display the employer’s name on factory ID cards,
  • Introduce an electronic time-keeping system to properly record the start and finishing times of all employees,
  • Set up a formal complaint and dispute resolution process, including the appointment of a Mandarin-speaking human resources representative,
  • Commission an independent, external specialist to review its labour-recruitment practices,
  • Implement protocols and policies to improve governance arrangements to ensure workers at its sites are being paid correctly for all hours worked, and
  • Prepare industry and language specific induction materials for all workers.

For its part, the Fair Work Ombudsman will continue to work closely and collaboratively with other regulatory agencies and groups to:

  • Use Section 550 of the Fair Work Act and its accessorial liability provisions to ensure parties do not turn a “blind eye” to minimum employee entitlements, and hold to account those we find who are involved in contraventions of Commonwealth workplace laws,
  • Investigate labour supply chain practices, such as sham contracting, which deprive vulnerable employees of basic rights and protections, like penalties, overtime, allowances or leave; and pursue those responsible, 
  • Initiate enforcement action against parties, including any accounting and legal professionals found to be assisting businesses to provide false and/or misleading records to Fair Work inspectors,
  • Engage with major buyers of processed chicken products, such as Coles, Woolworths, KFC, Aldi and others, to raise awareness of the importance of compliant and ethical supply chains and, where appropriate, seek partnership agreements to promote compliance,
  • Assist Baiada to implement the recommendations of this Inquiry,
  • Develop a database, accessible by industry, to record all details and compliance history for contractors in the poultry processing industry. If the pilot is successful, the database could be expanded to include contractor information for other industries, such as the meat, horticulture and cleaning industries, 
  • Provide ongoing reports about the findings of investigations into non-compliance with workplace laws in other supply chains to assist other federal and state agencies, lead businesses and customers to understand the industries and to help promote ethical, moral and socially responsible practices,
  • Release this Report. There has been significant public discussion around the labour supply chain in this industry and there is public interest in the findings of this Inquiry. Baiada customers should have this information to make informed choices. It is also hoped the public release of this Report will give confidence to employees previously too frightened to speak to the Fair Work Ombudsman to now come forward with concerns about potential breaches of workplace law.
  • Inform the activity of Taskforce Cadena and the Phoenix Taskforce.

The Fair Work Ombudsman considers that the information it has obtained to date warrants further investigation into the Baiada Group and its contractors.

Ongoing inquiries will focus on accessories to contraventions, sham contracting, and provision of false and/or misleading records to Fair Work inspectors.

The Inquiry noted that when labour hire contractors were asked to demonstrate to Baiada that they were compliant with federal workplace laws, only “minimal evidence” was supplied, which the company appeared to accept at face value.

“Employees working at the Baiada Group’s sites are not being paid their lawful entitlements,” the Inquiry found.

“There is also a range of other conduct which may contravene the Fair Work Act under way at Baiada sites.

“The Fair Work Ombudsman encountered significant barriers to pursuing further inquiries or taking enforcement action in relation to a number of contractors who directly engaged workers, because they did not co-operate, entered into voluntary liquidation or were de-registered.

“In a large number of instances where Fair Work inspectors attempted (and persisted in attempting) to engage with contractors, they ceased operations and were quickly replaced with new ‘price takers’ – resulting in suppliers of labour forced into accepting market prices with no powers to negotiate a higher price.

“It is important to note the actual work and subsequent non-compliance with workplace laws is taking place on premises owned and operated by Baiada. It is therefore the chief beneficiary of work carried out by this labour force.

“Baiada has the ability to take steps to ensure that workplace laws are complied with on its sites.

“There has been extensive media coverage and public debate regarding underpayment practices occurring at Baiada.

“The Fair Work Ombudsman has a history of investigations at worksites where these issues have been raised with Baiada representatives.

“The findings of this Inquiry place Baiada and the head contractors on notice and therefore aware workplace laws are not being complied with and that correct minimum entitlements may not have been and may not be being met.”

The Fair Work Ombudsman’s ongoing inquiries and use of a range of specialised regulatory powers will continue to target practices that are found to be unlawful in supply chain arrangements in the poultry processing industry.

The Fair Work Ombudsman has asked Baiada to publicly declare that it has an ethical, moral and social responsibility to join with the Fair Work Ombudsman to stamp out exploitation of vulnerable workers at its work sites, and extended an invitation to Baiada to join with them in a compliance partnership.

 

Boxed beef sales prompt AACo turnaround

The Australia Agricultural Company has reported a statutory net profit after tax of $9.6 million this year, a $49.5 million improvement on the previous year.

Last year, the company made a loss of $39.9 million but has since switched its strategy to transform from a pastoral company to a beef producer and marketer.

In the first full year of its strategy, the company saw a 42 percent increase in sales of its boxed beef, which AACo Managing Director Jason Strong said shows significant progress in transforming the company.

“Sales of boxed been now account for 77 percent of revenue, up from 59 percent in the previous corresponding period,” he said.

“In the last six months, this included the first sales of boxed beef from our new Livingstone Beef processing facility at Darwin

“These sales are into global markets where our traceable supply chains, sustainable practices and unique Australian heritage can command premium prices. Building our brands is the next stage of transforming and growing our business.”

The Australian Agricultural Company opened Livingstone Beef in the Livingstone Valley, about 50km southeast of Darwin, in late February.

The facility will process up to 1000 head of cattle a day at full capacity and it will produce export beef, hides and rendered products.

 

Oakey Beef Exports opens green energy plant

Oakey Beef Exports has installed a giant Biogas dome and the first COHRAL lagoon in the world.

The Global Water Engineering COHRAL plant was officially opened this month by Australian Federal Industry and Science Minister and MP for Groom Hon Ian Macfarlane.

The plant will extract green energy biogas from its waste water streams to replace millions of dollars’ worth of natural gas currently consumed at the abattoir on Queensland’s Darling Downs.

The plant – the first GWE Covered High Rate Anaerobic Lagoon in the world – will produce 183.3 gigajoules of energy a day when it reaches design capacity through the combustion of methane produced. The new plant delivers high quality waste water by extracting organic content, which it converts into methane to replace fossil fuels. The GWE anaerobic digestion technology involved can remove more than 70-90 per cent of organic waste content.

“The green energy produced represents 40 per cent of our current usage of natural gas and will produce direct ongoing savings year after year. The cost of construction is expected to be repaid inside five years,” said Oakey Beef Exports general manager, Pat Gleeson.

Additional benefits include reduced greenhouse gas emissions, improved quality of wastewater and greatly reduced odour emissions from the plant.

“The effect of burning the methane will save the equivalent of 12,000 tonnes of CO2, equivalent to removing 2700 cars from the road,” Gleeson said.

Federal Minister Macfarlane said the project was a poster child that served as an example to industry throughout Australia and worldwide.

“This is a good project whichever way you look at it,” he said. “This is one of the most modern – if not the most modern – meat works in Australia.”

In addition to lowering the plant’s dependence on increasingly expensive supplies of natural gas, the Global Water Engineering anaerobic digestion plant will simultaneously produce waste water far cleaner than typical waste lagoons.

 

Thomas Foods International lands Angus Beef deal

Australia’s Angus beef is set to hit the plates of many more consumers across the globe following an exclusive supply deal.

The country’s largest 100 percent Australian privately owned meat-processing company, Thomas Foods International and industry organisation Certified Angus Group (CAG) have signed an exclusive licensing deal to grow the national and international market for Angus beef.

From August 1, 2015, the brands CAAB (Certified Australian Angus Beef) and Angus Pure and Natural Beef will be produced under exclusive license to Thomas Foods International.

“This is a great opportunity to build on two established brands and expand sales of Angus beef to a global market hungry for premium meat,” Thomas Foods International chief executive officer Darren Thomas said.

“We see enormous potential to grow markets for Angus beef across Australia, the United States, Europe and Asia.

“We have a long standing and proud association with Angus beef. Capitalising on our established markets and distribution networks we can now take it to the next level.

“Under this arrangement with CAG we expect to increase our throughput of premium Angus beef four-fold over the first 12 months alone.

“Thomas Foods International has invested significantly in state-of-the-art processing facilities so we’re well placed to meet the market’s growing appetite for Angus beef.”

This recent investment includes a new $25 million beef boning facility at Murray Bridge and an upgraded feedlot at Tintinara, both in South Australia.

Thomas Foods International sources its Angus beef from farms across Australia. It is processed and packaged at facilities in South Australia and New South Wales with distribution hubs located at Adelaide, Coffs Harbour, Brisbane, Darwin and in the United States. Thomas Foods International has been a processing partner with CAG for eight years.

Chief executive officer of CAG Ms Kate Brabin said the landmark license for the brands is for five years to 2020 and represented a great deal for members of Angus Australia.

‘We are very excited about the future for our brands under exclusive license to Thomas Foods International,” Brabin said.

“The move to exclusivity on both brands presents a wonderful opportunity to further grow the brands domestically and in international markets. The future of the brands is in safe hands.”

 

Hockey approves JBS’s $1.4 billion takeover of Primo

Brazil’s JBS has been given approval to acquire Primo Smallgoods.

The ABC and others report that treasurer Joe Hockey approved the $1.4 billion sale to JBS’s US subsidiary, with conditions that contact processors retain access to Primo (Australian Consolidated Food Holdings).

Under the conditions, JBS must ensure:

– “the Scone abattoir in NSW must remain open and retain its capacity for consignment killings accessible by third parties

– JBS reports to the Foreign Investment Review Board (FIRB) on its compliance every six months, and

– the transaction be reviewed in three years.”

Primo’s operations include five pig processing plants in Australia and New Zealand and about 3,000 employees.

Dow Jones reports that JBS will benefit from an Australian reputation for premium farm produce. It comes after last year’s China-Australia free trade agreement was reached, from which Primo would benefit through lowered tariffs for imported smallgoods.

The announcement came after the ACCC last month said it would not oppose the sale, as it would not substantially reduce competition in the beef processing sector.

Nationals Senator John Williams said this was evidence that competition laws were not doing their job against “creeping acquisitions”, he told the ABC.

“If you just go along buying one company, then another company, then another company, taking small steps, that's OK by the law,” he said.

"We need to change the law so that cannot happen because we're going to end up having two or three companies running this nation, which would be a disaster."

His concerns about reduced competition were highlighted by NSW Farmers Cattle Committee chairman Derek Schoen, who said that JBS and Primo were direct competitors, and prices for farmers would be pushed down.

“The acquisition of Primo by JBS will (make it) incredibly difficult for any new entrants to enter the market," Farm Weekly reports him as saying.