MEAT smallgoods businesses are starting to look at replacing beef products with chicken and pork alternatives on the back of supply difficulties.
Cattle supply in Australia has dropped to a 30-year low, pushing prices to unprecedented levels and that is flowing through to higher wholesale beef prices.
Food manufacturers for whom beef is a key ingredient say they are now paying around 25 per cent more for cuts across the board and there is limited scope to pass that onto customers.
Smaller businesses have even reported not being able to get what they need, regardless of price.
Chair of the Australian Meat Industry Council’s smallgoods council Franz Knoll, who runs Adelaide’s respected Barossa Fine Foods, described the situation as ‘a big deal’.
“It is possible to do some reshuffling of primals to compensate for what we can’t source and to prepare differently in order to still have an article to sell,” he said.
“But that is limited - as is our ability to recoup higher input costs at the retail end.”
More and more chicken and pork products were likely to start appearing, he said.
“Depending on outcomes of the sale of these products, businesses may not shift back when more beef becomes available,” Mr Knoll said.
“If they’ve been able to make a product acceptable to consumers they may not need to return to beef.”
Mr Knoll said smallgoods manufacturers were spending a lot more time trying to source beef and quality also became an issue when there was a shortage.
“However it’s not just tight cattle supply in Australia that can cause supply shortages for us,” he said.
“If the Americans are buying a lot of mince, for example, it affects us greatly.”
Most smallgoods made in Australia are sold domestically, however Sydney’s Spiess Australia Smallgoods is famous for its bresaola, which is mostly exported.
Managing director Tony Klausner said he had never before seen a beef shortage of this degree.
“The prices we are paying for beef have been continually rising for 18 months,” he said.
“Apart from some spices and salt, beef topside is the sole ingredient in bresaola and we are now paying $11.50 a kilogram for that, compared to $9/kg last year.
“While the low Aussie dollar has helped, there is not much room to increase the end price in export markets which are very competitive.”
Mr Klausner said he was also sourcing much larger volumes of Australian topside for a big Switzerland-based bresaola company but could no longer get that supply so the company was shopping elsewhere.
Other food manufacturers, particularly pie companies, said the expectation of higher beef prices was well forecast and they were able to stockpile early.
Few have reported having to make changes to their product lines away from beef at this stage and said that decision would not be taken lightly.
However, the margins were certainly tightening and many said summer would probably herald ‘serious decision time’ if there was no relief.
Kings of the quick service game McDonalds, a company which only uses Australian beef in its restaurants, pointed to the long-term relationships it had established with suppliers as its safeguard.
Last year McDonald’s used 25,000 tonnes of Australian beef locally and sourced a further 38,000t for use in overseas restaurants.
Tracey Monaghan, director of supply chain for McDonald’s Australia said: “As one of the largest purchasers of Australian beef there is no doubt we are impacted by market conditions.
“However our long term relationships with our supplier community has meant we currently have assured supply.
“McDonald’s and our franchisees always strive to offer our customers great value; restaurant pricing takes in to consideration a range of factors and is unlikely to be directly impacted by the current price of beef.”
