Introduction.
The Meat Industry is Australia’s seventh largest export industry, with earnings of $4.5 billion per year, employing some 26 000 people. This industry has developed over the past 40 years, from the basis of a domestic industry, which was supplying our own needs. In that time, our population has expanded, and our meat consumption pattern has changed considerably. We eat less beef and lamb than we did, and we are eating much more chicken. Over the period, the meat industry has undergone radical structural changes. TOP

Background Information
Prior to 1957,the Australian meat industry consisted of two distinct segments:

• Above the Tropic of Capricorn, grass fed cattle were produced for export as frozen, bone-in carcasses, or for canning as corned beef. Large, seasonal, beef only abattoirs were situated at ports, with their own cold storage facilities. British companies (Vestey, Borthwick) which also operated in the domestic market in other states mainly owned them. There was some American presence (Swift). The bulk of the sales were to Britain.

It should be stressed that this did not represent a major part of the industry, and that the cattle industry in the north was relatively primitive. Cattle were overlanded long distances to market, and had to be at least 4 to 5 years old to be able to stand the walk. Infrastructure was poor, and losses in drought years were severe. Periodically, recommendations were made that the railways should be extended, at least to the Barkley Tableland, to reduce these losses. In good years, these were forgotten, and the railway was never extended past Mt. Isa.

• Below the Tropic, abattoirs were typically mixed species plants (cattle, sheep and in some cases pigs and calves) serving the domestic market. In Victoria, there was a seasonal lamb export trade, again dominated by the British companies. Plants were dotted at regular distances through the wheat/sheep belt, roughly 100 kilometers apart. Many country towns drew their meat supply from local slaughterhouses of a poor technical standard.

In the capital cities, the meat was mainly supplied from very large, Government owned and operated abattoirs. These had arisen from the public perception of the meat industry as requiring strong external regulation. TOP

Public Perception of the Industry
A major influence on the public perception of the meat industry was the book "The Jungle", by the American journalist Upton Sinclair. Writing at the end of America’s period of unregulated capitalism, 1870-1912 (the so-called "Robber Baron "period) Sinclair was what we would call an investigative journalist, but was known then as a "muckraker". In 1907, he exposed the conditions and practices prevailing in the Chicago meat industry, at that time dominated by Swift and Armour.

The abuses he detailed appalled the public, and resulted in the reform of the American Health laws related to meat production in 1908. It is significant that the specifics were covered in the order in which they appeared in the book. It was widely accepted that the salt meat (commonly called "embalmed beef") supplied to the US army by Chicago in the war against Spain in Cuba (1898) was credited with killing more American troops than the Spanish bullets.

The book had a large impact in Australia, and our Pure Food Acts were passed in 1908. Australia was then, as now, one of the most highly urbanized countries, and one result of the American meat scandals was the creation of very large abattoirs in the capital cities to ensure that the supply of meat was from publicly owned plants with thorough meat inspection.

Prior to 1922, Sydney’s meat came from an abattoir on Glebe Island, at which operators rented space to slaughter their own requirements. This was replaced by the Metropolitan Meat Authority’s plant at Homebush, which carried out the slaughter of stock on a "service" basis. That is, it did not own the stock, but carried out the processing for set fees. Meat entering the city from other sources was subject to re-inspection for a fee.

Homebush (now the Olympic site) was a vast plant, employing over 3 000 men, and was much bigger than any current Australian plant. On a big day, it would kill over 1 000 cattle, 1 000 pigs, 1 000 calves, and up to 25 000 sheep and lambs. (The largest sheep plant in Australia at present kills 8 000 per day). Similar plants operated at Cannon Hill (Brisbane) Samcor (Adelaide) Robbs Jetty (Perth), and Derwent Park (Hobart). Stock was brought in by train to large adjacent saleyards. These plants usually operated at a loss, but provided a guarantee of hygienic standards for the Government.  TOP

Expansion of the Public Sector
In the 1950’s, rapid population growth began to strain the distribution system. The NSW Minister for Agriculture, Eddie Graham, initiated the building of decentralized abattoirs in major regional centers, to reduce the load on Homebush. These were medium-sized, multi-species plants operated by either Municipal Authorities or County Councils. Plants were built at Moree, Guyra, Gunnedah, Mudgee, Dubbo, Forbes, Blayney, Goulburn and Wagga Wagga. These complemented existing Municipal plants at Newcastle, Maitland, and Tamworth. The public sector dominated the industry.

These plants were declared "Central Killing facilities", and the slaughterhouses within their areas were largely eliminated. The primary consideration was clearly the improvement of health standards for the community at large, and this was seen as a public responsibility. It was felt that the reduced distances for stock to travel would improve the quality of meat offered. These decentralized plants sent meat into Sydney by train, through the newly constructed "Country Meat Hall" inside the Homebush plant. The meat was unloaded at night, and retail butchers came in the early morning to purchase carcasses, which would be delivered into their shops the same day. Homebush continued to function until 1989, and had a vital distribution function. TOP

Growth of the U.S. Market
Britain’s proposed entry into the Common Market reduced Australia’s access for meat into the UK. At the same time, the growth of the popularity of hamburgers in the US opened up a market for Australian meat there. After 1957, Australian sales to the US grew very rapidly. Lean Australian meat was used to dilute the fatty American trimmings, to make ground beef, so that our meat was complementary to and not competitive with their meat. This fact does not appear to have been grasped by US legislators, who have periodically imposed restrictions on the entry of our meat in times of US gluts.

There were two effects of the leap in the US market. Cattle numbers rose rapidly, talked up by an enthusiastic Meat Board, from 18.5 to 33.4 million head. The bulk of this growth took place in the south, where land had many alternative uses, since there was little opportunity to increase carrying capacity in the north. This meant that our slaughter capacity was now misplaced. A large amount of capital was expended in raising plants in the south to meet the USDA standards. Much of this expansion was in the NSW municipal sector. Since the demand was for frozen, boneless meat, boning rooms were built and rented out to operators who did not own their own plants. However, since the abattoirs did not own the meat, the operators secured the trading profits, and the meat works secured only fixed fees. Their large capital investment gave them only a limited income in return.

In the mid 1970’s, the American and Australian long-term beef cycles coincided, and America sharply reduced access for Australian meat. Prices fell sharply, and Australia entered a period of herd reduction. Numbers fell back to 22.5 million. Again, the reduction was mainly in the south. Growers exiting the industry dumped stock onto the market, further accenting the fall in values. The fringe operators who had used the Municipal plants ceased operations, leaving these plants with vast over-capacity, and a heavy debt load. The centre of gravity of the industry moved back to Queensland

The Queensland industry had changed, however. The Commonwealth Government had funded a "Beef Roads" program in the 1960’s, which improved transport for stock. The development of road trains allowed more stock to be carried at much reduced costs. Development of areas like the brigalow belt increased carrying capacity. Stock could be turned off earlier; so more stock could be turned off from a given area. Productivity was up.

Additional plants were built nearer to the stock, at Alice Springs, Katherine, Tennant Creek, Point Stuart, and Mudginberri (Northern Territory) Broome, and Derby (W.A.), and Mt. Isa and Pentland (Queensland). Because of their isolation, these plants had higher operating costs, for which they compensated by paying lower prices for cattle, and so the grazier obtained comparatively little benefit from them.

Australian meat prices fell heavily as a result of the glut, and there was a sharp- if temporary- rise in domestic consumption. This fell back when prices began to recover. After the boost in activity from the herd reduction phase, the Municipal sector was close to collapse, with accumulated debts of $57 million. The Wran Government agreed to bail them out, on condition that the plants were demolished and their licenses cancelled. Virtually all accepted the terms.

From the 1970’s, the inexorable growth of the two big supermarket chains had begun to erode the traditional retail butcher. Credit cards and the motor car were part of a retail revolution. The supermarkets became the major purchasers of meat. The country meatworks, now privately owned, were able to take advantage of improved refrigerated road transport to offer delivery on a "direct" basis from the abattoir to the butcher’s shop or supermarket, eliminating the traditional wholesaler. Rail transport and the Country Meat Hall were redundant.  TOP

The Japanese Market
On the export side, the development of the Asian market, as a result of rapid economic growth, opened up new opportunities for Australia in the 80’s. These markets wanted high-grade chilled beef, not lean grass-fed hamburger meat. America was rapidly replaced as the preferred market, and lot feeding became established to produce the type of premium meat the Japanese favored. There was substantial Japanese investment into the industry, since the Australian processors found that they were unable to operate directly into the market.

The European BSE scare, discoveries of new strains of E coli, and insecticide residue concerns have all interrupted this trade. The collapse of the Asian boom, and a glut of meat on the American market, have combined to reduce the level of trade, with the Americans securing an increased share of the Japanese market. Our trade with America has fallen. All the time, the threat of competition from a South American meat industry, freed at last from the problems of foot and mouth disease, is in the background.

Sheepmeat Industry
The sheepmeat industry, by contrast, is buoyant. Mutton is a by-product of the wool industry, and the Australian demand for mutton, other than for sausage manufacture, has fallen as incomes have increased. It is now mainly produced for export and the lamb market is expanding. Large efficient sheep plants have been able to develop wider markets: sheep meat is exported to some 42 destinations while beef sells to 5 principal users. Australia is the major supplier with little opposition. There is ample room for both New Zealand and us in this market.

Over the past decade, companies have tended to specialize in beef or sheepmeat. No new multi-species plants are being built. The improvement in technology from inverted dressing chains has allowed a significant reduction in manning. Two plants (Dubbo and Goulburn) kill some 70% of the sheep processed in NSW.

Basically, then, the export meat industry has developed over the past 40 years, reacting constantly to external changes with surprising rapidity. There are a number of considerations, which should be looked at more closely. TOP

Trading Profits
There are two distinct transactions involved in abattoir operations: one is a trading function, involving the purchase of animals at a saleyard or by treaty, transport to the abattoir, and the sale of the meat, offal and hides. The other is a service function, involving the receipt, slaughter and boning of the animals, packing and freezing the meat and the processing and sale of the by-products. Where the same company owns the abattoir and the product, these functions will be costed separately, and they may both be profitable at any given time, one may be, or both may not be. Where the abattoir kills for a set fee, and does not own the animals, it is known as a "service" operation. Usually, the potential profits from trading exceed those from slaughtering. In the case of the NSW Municipal sector, it seems clear that their inability to access the trading profits was a factor in their demise.

The second problem of service operations is that the decisions, which determine the volume of activity, are made external to the business. It is therefore difficult to maintain a constant level of activity. In addition, higher clerical costs are generated by having to keep track of, and account for, product for a variety of clients (e.g. hides). Where it all belongs to the same firm, it is not necessary to separate these items. TOP

Production Levels
In common with most manufacturing operations, meat processing breaks even at about 70% of nominal capacity, due to the impact of fixed costs. The higher the level of capital investment, the higher the breakeven. Profits are made between 70 and 100 % capacity, and operation below 70% will incur a loss. The aim of management will be to operate as close to 100% capacity as possible. The real vulnerability of the service operator is thus apparent. If he does not have the ability to "plug gaps" by processing on his own account, he faces losses, or reduced profits, on any days when throughput falls.

One major advantage of "one brand" operation is this control over the level of activity. The plant can be operated constantly at its most profitable level, and clerical costs are minimized because the entire product belongs to the firm.

Stock Catchments
The capacity of the plant determines the size of the stock catchment necessary to maintain the stock supply. Most plants are initially sited in a particular place because of perception of a suitable stock supply. The density of the livestock population in the catchment area determines the distance over which stock can be drawn. Because Australia has relatively low stock densities, due to our low rainfall, the costs of transport (which rise as the catchment is extended) have tended to restrict plant sizes. In the 60’s and 70’s, the average sized plant was 400 head per day. In the 80’s, this rose to 600. Only one plant in Australia processed at a level of 1 000. The development of feed lots, and the B-double, has tended to change this. There are now a number of plants processing over 1 000 per day. TOP

Plant capacity. This is a difficult notion to define. Basically, in Australia this is determined by refrigeration – " you can kill what you can chill". Line speeds and manning levels can be varied. Working a second shift can double capacity, but additional refrigeration, by-products and wastewater treatment capacity are required. Had Australia opted to increase its capacity by shift work in the 60’s, it would have emerged with a different industry.

Industry Capacity is a much more difficult problem. Theoretically, it is the sum of the capacity of the individual plants, which make up the industry. But this is relative to the stock supply. When stock are held back from the market due to rain, the industry may well exhibit surplus capacity. In drought times, when graziers want to destock quickly, the supply of stock can exceed abattoir ability to process them.

Industry capacity is regulated by the various state Meat Industry Authorities, through the granting of new licenses and the renewal of old ones. These bodies police the standard of construction, and ensure that the premises conform to the regulations. In some cases, they determine the granting of new licenses on the basis of "needs": they may refuse a new application on the ground that it is too close to an existing plant.

This then raises a policy question: whether they should grant licenses to any applicant who can meet the desired construction standards, and leave the market to sort out which survive, or whether they should attempt to equate the overall capacity to the stock supply, knowing that this can fluctuate widely. There is also the problem that some capacity may be poorly located, due to shifts in stock population over time, so that the real capacity may be less than it appears.

Closure of plants has not solved capacity problems in the past. New buyers appear, and purchase the plant at a reduced price. They are then able to compete with the remaining plants, because they are not bearing the full historical costs of the facility. To avoid this situation, it is preferable for plants, which are closed to be demolished, and the capacity retired. This requires that somebody must fund the purchase. Unless this is done as part of a Government policy, it is unlikely to occur, and the capacity will remain. In some countries, attempts to reduce industry capacity have been made based on directing activity to the more efficient plants. The funds generated by their operation at full capacity could then be used to finance the purchase and demolition of the less efficient plants.

As has been seen, abattoir capacity originally followed the population (the large metropolitan abattoirs), then the livestock (with decentralization). In the most recent shift, with abattoirs being sited next to feedlots, the plant location is determined by the availability of stock feed. The centre of gravity of the industry may well move back towards the south over time. TOP

Single Species Plants
Originally, the only single species plants in Australia were in the Queensland export sector. However, the increasing specialization of firms has resulted in a much clearer separation between the beef and mutton sectors. All new capacity being built is for single species operations. Single species plants are more economical to build but require a bigger stock catchment area. In some cases, they are being built adjacent to a feedlot designed to keep them fully supplied.

Processing of multi species requires a more complex building, necessarily two stories to maintain separation between clean and dirty areas, and with chillers of different sizes for different types of stock. More complex stock holding pens are necessary. Additionally, staff is not interchangeable between areas, due to their different skills, and the same levels of activity can not necessarily be maintained between species, due to different supply conditions.

Economies of Scale
Economies of scale are difficult to achieve in the meat processing industry. The inspiration for the modern assembly line is said to have been the Chicago meat packing plants, with each task subdivided down to a very simple component. A slaughter line is an "inverted" assembly line, with the whole animal being resolved into its component parts. The history of labor relations in the Australian meat industry, with strong unions securing the "tally" system, with work being number-related rather than time-related, has resulted in a very rigid system. As numbers are increased, the labor force stays in a fixed relationship, so no economies are achieved. Job descriptions remain constant. It is notable that, in the rendering operations, large improvements in productivity have been achieved, because the tally system does not apply.

The very large plants which have existed (and Homebush at its peak was operating on a much larger scale than any contemporary plant) were in general terms unprofitable, and never exhibited any economies of scale. They were not able to trade in meat, and were solely dependent on service fees. They also exhibited very rigid labor relations. Mere size is irrelevant. Economies of scale are achievable when the long term cost curve falls in response to an increase in production. In the meat industry, returns to scale appear to be constant. The case noted above, of profitable operation between 70 and 100% capacity, is in fact an example of an economy of scale. It is one of the very few available to the industry.

The American economist Stigler suggested a test for the identification of economies of scale, based on survival. If the number of firms in the industry, studied at five year intervals, is reducing, the large are tending to get larger, and the small tending to disappear, then it is likely that economies of scale exist in that industry. Application of this test to the Australian meat industry suggests that the returns to scale have in fact been constant. However, since the advent of enterprise agreements, firms have been able to establish non-tally agreements, and to move to two-shift operation. This reduces the impact of fixed costs. Over the past two years, there has been a marked tendency to concentration in the industry. The average plant size is increasing markedly, and the number of firms is reducing. The number of abattoirs in NSW has fallen by 15% in the past year.

There are now a number of plants processing over 1 000 cattle per day. Some plan to raise this towards 3 000. It is probable that the Australian industry could be reduced to a small number of much larger plants (say 15) doing the bulk of the export beef trade, with the fewer small plants which survive being in the domestic sector. To some extent, this has already occurred in the sheepmeat sector. Small firms are under increasing pressure. Those without a share of the supermarket business are confined to a shrinking retail sector. The larger plants, with high utilization of their capacity, have more incentive to invest in specialized equipment. They can thus continue to grow. TOP

The Saleyard System
The meat industry has traditionally purchased its stock at auction through the saleyard system. In the nineties, the industry has exhibited a strong preference for purchases "over the hooks"(OTH), and saleyard activity has fallen sharply. The meat companies argue that they can see what they are buying, and bruise trims and condemnation are at the seller’s risk. The stock avoid the stress associated with saleyards, and arrive in better condition, spending less time in transit. The causes of pesticide residues are easier to trace.

The proportion of stock going through saleyards has fallen by about 50%. Small sales are tending to close, and large regional sales (Dubbo, Forbes, and Wagga Wagga) have got bigger. Some are now conducting sales on more than one day per week. This means that buyers have to do less travelling. Large sales can maintain the physical facilities a good deal more efficiently, reducing the possibility of stock bruising damage from poor races, gates and fences. Bigger capacity vehicles (B Doubles and road trains) are now allowed to deliver to Dubbo, vastly increasing the stock catchment it serves and reducing costs.

Sales will be more for store stock ("farmer-to-farmer" sales). Computer aided livestock marketing (CALM) accounts for about 2.5 % of sales, but may have a greater effect on price setting. Feedlots have tended to move towards contracted sales to the meatworks, by-passing the saleyard system. Greater proportions of feedlot sales are under contract to the supermarkets, and this is now running at record levels

It seems probable that the system may evolve to provide stock with "passports" which give the life history of the animal, recording any exposure to risk elements such as pesticides, and increasing buyer security. TOP

Hygiene Standards
An increasing number of export plants are seeking both EC and USDA licensing. The standards are becoming increasingly demanding, and the costs are continually rising. The standards demanded by the American authorities appear to be more rigorous than those imposed on their domestic operations. The slaughterhouse sector has been substantially eliminated, and Australia’s domestic needs are now met from abattoirs. The gap in standards between domestic and export plants is narrowing.

Containerization
Originally, location at a port conferred some advantages in shipping, and most major plants had their own cold storage facilities at the port. The growth of containerization changed this. With the introduction of specialized container ships, the cost of diverting a ship became much higher. It was therefore desirable to centralize the trade onto one port, and to move the containers to it. This resulted in the closure of some outlying plants, and the decay of the cold stores (which were now irrelevant). The agreement reached with the shipping conferences meant that all shipments were to be made through designated container ports (Brisbane, Sydney, Melbourne, Adelaide and Perth).

Plants such as Wyndham, which had its own port, were now required to transfer their product to Perth. Katherine shipped its product through Adelaide. This had large implications for plant location. Plants that had decentralized towards the stock in isolated areas now found that was little advantage to be gained from their location. Wyndham, Broome, Derby, Alice Springs, Point Stuart, Tennant Creek, Mt. Isa, and Pentland all closed. TOP

The Chicken Industry
It is not possible to understand the meat industry, without taking account of the impact, which the chicken industry has had on it over the period. Consumption habits change as a result of rising per capita income, the change in age distribution, perceptions of health issues, and increasing urbanization. All of these influences operate in Australia. Consumption of chicken has risen rapidly.

In 1951, Australia produced 3 000 tonnes of chicken meat. By 1996, this had risen to 450 000 tonnes. This is an entirely domestic industry, with only 1-% of its output exported. This market has therefore been entirely grown at the expense of a corresponding reduction in the consumption of red meat.

Why has the chicken industry been such an effective competitor? Firstly, it has adopted a system of vertical integration (referred to in the chicken industry simply as "integration" and the operator is known as an "integrator"). In this system, the chicken company owns the whole process, from the breeding and hatching of chickens, the supply and delivery of feed, catching and transporting of birds to the slaughter plant, the slaughtering, and the further processing and distribution of the carcass.

The growing out of the bird, from day old to slaughter weight, is usually in the hands of contractors, because of the high capital costs of this stage. By contracting this out, the integrator conserves his capital, and can build a larger overall operation. He is able to exercise a high level of control over the contract grower.

By controlling every stage of the process, the integrator eliminates stages, which could extract an excessive price for their function. The whole operation can be fully planned and controlled by the integrator. The slaughter plant can be run constantly at full capacity, which has been pointed out above as the most profitable level of activity. Costs can be reduced. The chicken industry has steadily reduced its prices as it has expanded, further stimulating demand. The producers have been able to achieve economies of scale as they have expanded.

Secondly, the growth of the chicken industry is a worldwide phenomenon. There is a free exchange of information between countries. Its suppliers have become multi-national operators, because of the large market available to them. They now almost universally supply slaughter lines, veterinary medicines and nucleus breeding stock. Just nine companies breed Ninety per cent of the world's birds. Because of the scale on which the breeders operate, and the vast range of stock from which they can choose, firms have to use them. In return, they have been able to access the remarkable improvements that the breeders have been able to make in the bird’s genetics.

The critical parameters are (a) the time [in days] taken by the bird to reach slaughter weight and (b) the amount of feed taken to do so: the Feed Conversion Ratio (FCR). In 1966, it took 102 days for a NSW bird to reach 2.0 kgs liveweight, and it consumed 13.5 kgs of feed in doing so. By 1996, this had fallen to 42 days, and 4.0 kgs of feed. That is, FCR fell from 6.25 to 2.0. This rate of improvement has allowed the chicken industry to keep reducing its prices.

In the same period, the companies supplying the slaughtering equipment have been able to increase the capacity of their lines. In 1966, it took 75 men to operate a plant killing 50 000 per day. By 1995, this had fallen to 5. The output per man has risen from 2 000 kgs of meat per day to 28 000. In the same time, the output of a man on a mutton chain has risen about 20%, to 1 300 kgs per day. More importantly, the manufacturers have funded the development work, and so is an "external" economy for the chicken producer. Improvements are developed and promoted by the manufacturers, who generate pressure on the integrator to adopt the latest available technology. Each increase in plant capacity forces him to increase every other stage of the productive process, because of its highly integrated structure.

The small body size and relative uniformity of chickens has made them very suitable for the mechanization of slaughtering processes. Their reproductive capacity (high egg laying performance, short time between generations) has aided in the rapid genetic improvement. They have the best FCR of any animal (chickens 2.0, pigs 4.0, cattle up to 13.0). All of these factors have contributed to the growth of the chicken meat industry.

By contrast, the red meat industry has not been able to use the same degree of vertical integration, except in the case of those plants connected to feedlots. They are not able to achieve the same rate of genetic improvement as the chicken growers. The machinery suppliers have not been able to effect the same rate of improvement in productivity. (The meat industry’s ill-starred Fututech project, designed to automate cattle slaughter, cost $33 million before it was abandoned. The inherent technical problems and the smallness of the potential domestic market defeated it). The interests of the beef producers and the processors are inimical; producers distrust the processors. In the chicken industry, the producers are the processors. There is no conflict. TOP

Ownership
As has been noted, there was a degree of British ownership in the industry before 1957. Vesteys became established in Australia before World War I, and developed a large abattoir in Darwin. At the same time, Vesteys had acquired large pastoral holdings in the Territory. The abattoir failed, largely due to poor industrial relations. The Administrator recommended to the Commonwealth Government that it consider selling the Territory to the Company! [A plant set up in 1922 at Wyndham by the Western Australian Government was able to operate satisfactorily for about 66 years].

In the late 1980’s, a far-reaching rationalization of the Queensland meat processing industry was carried out by Elders, with much of the capacity being brought into a single company, Australian Meat Holdings. The British companies ( Vesteys and Borthwicks) stayed outside the arrangement. A number of plants were closed. When Elders experienced difficulties, the company ( comprising 10% of the export industry) was sold to the American Company, ConAgra, with a small Australian equity ( around 10%).

Borthwicks fell into difficulties, and the largest Japanese operator, Nippon Meat Packers, bought its remaining plants. Nippon had already bought the Oakey works from the Keong family. It later bought the Anvic works at Wingham, NSW

Adelaide Steamships accumulated a large number of plants, partly by the takeover of publicly listed firms including the Metro plants in South and Western Australia. It owned Gosford, Wyong, Cootamundra, Orange and Wagga Wagga in NSW, and several large sausage manufacturers (Presto and Dandy) as well as Queensland plants. The Queensland interests went into AMH, the sausage plants were sold to Nippon, and most of the NSW plants were closed. The residual plants were eventually sold to a Chinese "red chip" company, which continues to operate them.

Some firms (e.g. Gilbertson) entered into partnership with Japanese firms to secure entry into the Japanese market. Gilbertsons eventually sold the balance of their shares to the partner. Some Japanese firms entered directly into the industry by buying out existing plants (Mitsubishi at Macksville, Hannan at Forbes). Japanese interests built the new abattoir/feedlot complex at Rockdale, in the Riverina.

When Vesteys failed, the Australian Smorgon family, who had a long history in the industry, bought their interests. However, they decided to quit the industry, and the plants at Townsville and Riverstone were closed and demolished.

The Rockhampton plant was sold to the Packer/ Tancred Company, Consolidated Meats. A Russian firm acquired the publicly owned Samcor, in Adelaide. Wagga Wagga has been bought by the US Cargill, who have recently, taken over the Tamworth municipal abattoir.

In all this rationalization, control of the larger firms in the industry has largely passed to overseas interests. Where there was a substantial public sector in the past, this has virtually disappeared, with the break-up and privatization of the Queensland government plants and the collapse of those in NSW. Overall, the capacity of the industry has remained the same, with some of the remaining plants increasing their capacity.  TOP

The Live Cattle Trade
Over a century ago, Australia attempted to establish a trade in live cattle with the Philippines, Singapore and Hong Kong. This would have increased the viability of the northern cattle industry. The trade failed, largely due to Red Water fever in the stock, and also to the limited purchasing power of the people in those countries. The trade developed very little in the next 90 years. As has been noted, attempts to set up a meat processing industry in the north had also been largely unsuccessful until the 60’s, except for Wyndham.

In the 90’s, a prosperous middle class developed in near Asia, supermarkets began to grow, and feedlotting of cattle became possible, with the availability of offsets from the developing agribusiness sector ( reject bananas from export, pineapple pulp from canneries, chicken litter, sugar by-products). Local cattle numbers were insufficient to meet the demand. Governments in Indonesia, Malaysia and the Philippines reduced tariffs on feeder stock to low levels, and Australia was for the first time able to integrate into the Asian production system. Shipments of live cattle developed rapidly, mainly feeder steers, with a preference for cattle with an infusion of Bos indicus blood.

By 1997, the level of shipments had risen to over 800,000 head. The bulk of the shipments were out of Darwin, with additional numbers being shipped through the Gulf port of Karumba, and Kimberley cattle through Wyndham. At a time when the rest of the meat industry was depressed, this served as a useful safety valve, siphoning off surplus stock. Shipments were also made from Townsville, Cairns and Weipa. Stock was drawn from eastern Queensland. For the first time, Northern territory stock was price leaders in the trade, and the northern pastoral industry enjoyed a period of prosperity. Stock could be turned off at lower ages, and the turn-off increased.

The Asian economic crisis caused a sharp downturn in the trade, with shipments in the current year sharply reduced. Shipments to the Middle East had commenced when EC subsidies to Ireland were reduced, and stock was attracted from Victoria and Tasmania. As stock has become available from the north, more Bos indicus infused cattle have gone to Libya and Egypt. Markets are being sought in Vietnam, and shipments to China appear possible in the future.

Live shipments have been mainly of feeder cattle, and as such can not be said to have reduced the throughput of Australian cattle abattoirs. That is, they were not competing with our meat exports, but rather opening up markets which would not otherwise have been available. The cheap feeds available in Asia were not available in Australia. TOP

Export From Domestic Plants
In late 1996, the Federal Minister for Primary Industry announced that export from Australian domestic plants would be possible in instances where the recipient country specifically accepted the standards of those plants. With the adoption of the "Australian Standard" of construction, the premises are theoretically of a similar standard to export plants. Procedurally, it would be necessary for the principal inspection authority of the recipient country to agree in writing to some procedural changes, and to waive the requirement for veterinary ante mortem inspection of the animals.

This could open up additional markets for the domestic sector, but has resulted in very little development of trade. The most promising area would appear to be in the sale of offal, for which there are limited markets in this country. However, the existence of prior agreements with major potential buyers to only ship product from accredited export plants has prevented the development of this opportunity. The existing meat exporters are apprehensive of competition from the domestic sector in established markets, reducing the price because of lower costs. They claim that they are able to service all of the available markets. If the opportunity were confined to offal, it could serve to increase the viability of the domestic plants, and open a market for materials, which are currently often consigned to rendering into chicken feed.

Technology
The industry is labor intensive, and heavily reliant on operator skills. The major advances in technology were from the adoption of rail dressing and mechanical aids in the late 50’s (hide pullers, rise and fall platforms, pneumatic cutters) and the development of continuous rendering. Australia has made technological advances in styrene insulation and its use as a structural element, refrigeration, and in low-cost wastewater treatment systems. Further mechanization has been retarded by the small size of Australian plants. TOP

Conclusion
The meat industry is a large earner of export income, and it is subject to a wide range of external influences. While Australia has become the world’s largest meat trader, this really means that we have a relatively small population, and produce more than we can eat. Comparatively little meat is traded across borders. Along side China or the United States, we are comparatively small producers. While our position in sheepmeat is stronger than in beef, we are still small.

The industry has suffered from the competition of subsidized beef from the EEC, from periodic restrictions on its access to markets in the US, and from the downturn in the Japanese market, aggravated by American competition. The Korean market has been sharply reduced by the slump in the Korean economy. At the same time, domestic meat consumption has been steadily eroded by competition from the chicken industry. To some extent, the impact has been cushioned by the falling Australian dollar.

The industry has undergone almost constant structural change, and appears to be in the process of reducing to a much smaller number of significantly larger plants. Foreign-owned firms have become the dominant operators in the export sector. Where once many of the largest operators were listed Australian public companies, there is now only one listed company in the industry.