AUSTRALIA'S biggest meat processor has announced this afternoon that it would immediately close its King Island processing facility in Tasmania.
It also comes after the company closed its Riverina feedlot in NSW in April citing pressure from the high Australian dollar and just seven months after the appointment of new chief executive officer Andre Nogueira, reportedly installed to trim fat from the business.
In a statement from JBS, Mr Nogueira said the King Island business, which employs about 105 workers on an island of 2000 people, had not been profitable since its acquisition by the Brazilian multinational. JBS operates 11 processing facilities across Australia.
He said JBS had committed capital and resources to make the business profitable long term, but "unfortunately has been unsuccessful".
He said factors which contributed to the closure included the high cost to operate in terms of utilities and domestic and export freight costs and variability in livestock supply and "leakage" of numbers of cattle from the island during the year.
“We have made every effort along with the support of the Tasmanian Government to try and make this business operate. We acknowledge that this decision will have an effect on the King Island community and our workforce," he said.
"We will be actively working with government and the union to support and assist affected workers in transitioning based on their skills to available vacancies at Longford as a first step and to other JBS processing sites if suitable.
“JBS appreciates the strong support it has received from a large number of the King Island producers and our excellent relationship with the King Island Producer Group chaired by James Hill.
"Our ongoing commitment is to continue to be a major buyer of cattle on King Island and to maintain the integrity of the King Island Beef brand and further grow the brand domestically and internationally from our Longford facility on mainland Tasmania.
“The meat processing business operates under small margins. Current market conditions have been and continue to be challenging. We will continue to operate our meat processing facility in Devonport and look at opportunities to expand our Longford beef and lamb operations. We believe today’s decision is prudent and in the best long term interest of our Tasmanian operations.”
In addition to Mr Nogueira's statement, JBS Australia corporate affairs manager John Berry said:
“The Tasmanian Government has been fully supportive of JBS and our plans for growing the King Island and Tasmanian beef and lamb brands that we own. We have been encouraged by their approach to industry development and their response to our issues.
"Importantly, we will be actively working with the Tasmanian and Federal Governments to improve the competitiveness of our business around utilities costs and trade-waste infrastructure and the Commonwealth to support export freight from Tasmania under the Tasmanian Freight Equalisation Scheme.
"Tasmania has a great clean and green natural environment for producing high quality beef and lamb.
"However, the cost of moving containers to and from Tasmania to the mainland is often more expensive than from Australia to the export market. This is a major cost disadvantage for Tasmanian beef and lamb product."
More to come
