Abattoirs have fine-tuned adding more value per worker: ABARES

Still, Australia is processing less cattle in a sign that slaughter-per-worker is trending downwards.

At the same time, the value of output is trending upwards.

All that adds to what the chief beef and veal economist at the Australian Bureau of Agriculture Resource Economics, Jonathan Wong, describes as a 'good news story' for meat processing.

More work in abattoirs is now being done on additional processing to value-add products before they are sold along the supply chain, he said.

The volume share of more processed cuts like frozen primal and bone-in cuts relative to total exports has increased since 2000.

The average value added by each worker has increased in the past decade.

"Australian agriculture is notoriously volatile but through the ups and downs the meat processing sector has adapted and been able to add more and more value," Mr Wong said at ABARES' big conference Outlook 2023 in Canberra this week.

While some workforce shortages may persist in abattoirs, it is not likely to impact slaughter capacity over the next five years, ABARES is suggesting.

Processors will swap out their least profitable activities as higher labour costs make them unviable.

"A trade-off has to be decided on, between doing further processing work to generate a high-value product or pushing through more volume with less processing," Mr Wong explained.

"Each processing plant has to make that choice at the moment - which option adds the most value to their enterprise."

In this financial year, the share of 'more processed' beef exports has fallen. However, it's likely to be both the workforce constraints and a greater price spread that has driven that, according to ABARES.

"A greater price spread in a time of labour shortages is likely to incentivise production of greater volumes of less-processed products, to accommodate the increasing supply of slaughter-ready cattle," Mr Wong reported in this month's ABARES Outlook report.

"In years with a relatively abundant supply of cattle, the share of more processed cuts tends to show dips or relatively flatter periods as processors manage the trade-off between time spent and return possible.

"When the price spread does improve, processors are likely to have a greater incentive to employ more workers to capture value and better manage the trade-off between processing time and return-per-animal. This will enable meat processors to offer higher wages in the current tight labour market."

Slaughter is always closely correlated to prices, Mr Wong said.

"This relationship does exist across all meats but is particularly strong in cattle," he said.

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Agriculture labour market specialist at ABARES Louise Capel said while most people in meat processing work full time, anecdotally there were reports of changes emerging.

"For example, some processors are offering flexible hours, so parents can do a school drop-off and pickup and work the hours in between," she said.

"And Australian Meat Industry Council data shows that while most are directly employed by facilities, labour hire companies do play a part and we can see that in the part time number, where 50pc come via these companies.

"Overseas workers are also playing a larger part in meat processing now.

"It will be interesting to see the effect these changes have on meat processing overall."

Ms Capel said labour costs had long been a challenge for the entire ag industry but had also lead to increased innovation and technology.

Michael Rogers, general manager corporate affairs at Teys, Australia's second largest meat processor and sixth largest food company, said his organisation now employed 1500 Pacific Islander people and it was expected the Pacific Australia Labour Mobility - known as PALM - scheme would remain a key part of workforce management.

Teys has 4500 employees in total, across 70 nationalities - Mr Rogers said that was not a recent development.

Teys buys cattle from more than 7000 beef producers across the East Coast.

In terms of the broader meat industry, Mr Rogers referred to discrepancies between government and industry figures. For example, ABARES has the total red meat workers at 35,000, where the industry says there are 30,000.

He said there were similar discrepancies in other ag sectors, such as horticulture.

"These numbers are important because it's not that we are talking about needing 300,000 extra people but rather very defined pathways for each sector to fill specific roles," Mr Rogers said.

"We do ourselves an injustice by using very large numbers that don't lead to good conversations with the government around visa pathways."