New analysis on meat processing capacity released

// Industry

Beef + Lamb New Zealand’s Economic Service and the Meat Industry Association have released an assessment of processing capacity across the country and the potential impact on waiting times for farmers.

Joint Media Release

The COVID-19 meat processing protocol, which requires physical distancing between plant employees to prevent the spread of the virus, has reduced the industry’s processing capacity by approximately 50 per cent for ovine and 30 per cent for bovine.

The assessment’s findings are that the already significant waits that some farmers are currently experiencing will be further lengthened. This is causing concern, particularly for those in drought areas with backlogs but also in the Southern South Island, where there are longer waits, more stock on-farm than desirable and the growth season window is rapidly closing.

Lamb, Mutton and Bobby Calves

  • The analysis forecasts extra delays to lamb processing in the South Island in April and May with processing being pushed back at least a further week.  In essence, if farmers were expecting a four week wait before the protocol, that would now be stretched to five weeks.
  • By the end of May that extra week backlog should be cleared. In the North Island, the analysis does not forecast further delays on top of what farmers are currently experiencing.
  • Lambs are being prioritised over cull ewes and farmer commentary is that significant backlogs on ewes also exist.
  • It is unlikely there will be much impact on processing of bobby calves because that is typically done in July onwards when sheep processing is ceasing on the calf processing chains, which is expected to be after the protocols have been lifted.

Adult Cattle

  • With cattle, it’s particularly important that farmers talk to their processor as each will have individual plans around prime versus manufacturing.  The analysis here looks at the different animal classes and the forecast numbers still to be processed versus capacity.
  • There is forecast to be an extra week’s delay on top of any current backlog of prime steer and heifer in both islands in May.  This extra one-week backlog is expected to carry on through to June in the North Island.  Bull processing is well advanced. Those with bulls still on will likely be caught in the cattle backlog.
  • There is forecast to be an extra week’s delay to cow processing (predominantly cull dairy cows) in both islands in May, followed by a return to the normal seasonal pattern in June. This is most pressing in the South Island where the bulk of cull dairy cows have yet to move to processing.

Sam McIvor, Chief Executive of Beef + Lamb New Zealand (B+LNZ), said the sector is aware there are already significant waits for some farmers.  These are particularly acute in drought areas where farmers haven’t been able to move stock to slaughter and in Southland, where there are large backlogs and the Autumn pasture growth window is rapidly closing. 

“What this analysis sought to identify is what difference the processing reduction would make to that wait, and the knock-on effects across species and islands.

“It confirms there will be some extra delays for farmers to get stock processed so we are encouraging farmers to talk to their processor to understand exactly how it will affect them. The processing capacity constraint is also having a knock-on effect on dairy farmers who rely on grazing off and those farmers who look to move weaners and other young stock through to finishers. Some of those avenues are closing due to the backlog. The analysis reinforces the need for farmers to have a feed plan in place.

“We know it has been a stressful few weeks for farmers and rural communities and there are still hard decisions ahead for many. It has been great to see the sector pull together and support each other through this time.” 

Sirma Karapeeva, Chief Executive of the Meat Industry Association, said it is still early days with the new protocol so the capacity figures may change. 

“Processors and their people are bedding in the new way of working and are looking at ways to optimise their processing operations over the coming weeks to better manage demand.

“We recognise the pressure many farmers are under at present and the meat processing sector is working with the Ministry for Primary Industries to see whether there are science-supported changes that could be made to the protocol, particularly as we look out to Alert Level 3, that would allow an increase in throughput, while not compromising the safety of our people in any way.

“Processors and exporters are also moving inventory out of cold storage to free up space for incoming stock. This depends on commercial contracts for export orders and logistics flows, both of which are experiencing some disruption.”

There are significant differences in terms of how far each region is through the processing season, and every processor and plant has variations in set-up for ovine versus bovine, and the class of animal they process,-” said Ms Karapeeva.

“While the fundamentals for red meat globally and New Zealand in particular are strong, we will continue to face rapidly changing market dynamics through the next year.  Processors and exporters are working together to ensure the industry has the best chance of success in this environment.”

B+LNZ, together with the MIA and processing and exporting companies, will be updating processing data and reforecasting on a weekly basis and feeding this back to the industry. B+LNZ is also working with the Ministry for Primary Industries and other industry organisations such as Federated Farmers and DairyNZ to identify regional feed levels and supplement levels.

B+LNZ is building some regionally-representative feed budgets to further illustrate the current situation for farmers in each region and examine relevant management options and the financial implications.

Notes to editor

Due to uncertainty about how long Alert Level 4 may last, and whether the physical distancing rule will remain under Alert Level 3, the B+LNZ Economic Service modelling is based on the current protocols remaining in place for eight weeks from the start of April. 

For more information please contact Sam Halstead on 027 474 6065