Labour, port congestion, export uncertainties: Over the Hooks

This column has previously highlighted the impact on the United States red meat supply chain that the shortage of labour was having with the reduced ability of US processing plant operations to maximise throughput.

To try and rectify this same challenge in Canada, the Canadian Government has just announced that it will be revising current policy in the hiring of foreign-born temporary workers for Canadian meat processing plants. The new policy allows processors to staff up to 30 per cent of their plant staff with temporary foreign workers, triple the original limit of 10pc. The Canadian Meat Council has been lobbying for such labour reforms since it identified vacancy rates in plants of up to 40pc in Quebec and 20pc in Alberta.

The Unions have been unhappy with the change, citing plant working conditions as the real reason for labour shortages.

This new policy in Canada follows the CMC identifying more than 4000 unfilled worker positions at meat processing facilities in Canada.

That is 1000 less than the 5000 unfilled positions identified by AMIC in Australian plants.

Even the US National Pork Producers Council has been backing US processors in seeking expansion of the H-2A visa program in the US to allow year round foreign workers in meat packing plants along with providing a pathway to legal status for foreign-born workers already in the US.

It is pretty clear that the shortfall of workers in Australian red meat plants won't be filled by current Australian citizens so they will need to come from foreign labour.

The Australian Government should be considering similar sector specific programs as in North America to address this very serious short, medium and long term issue that will ultimately impact the whole Australian red meat supply chain, especially as livestock slaughter levels increase.

The chief executive officer of the world's second largest container line, Soren Skou of Maersk Line, estimated recently that somewhere between 10 and 12pc of total global ocean shipping capacity at present is tied up in port congestion.

Recent reports on the logistics challenges and congestion issues in Chinese container ports as a result of pandemic lockdowns in place there, is no doubt putting upward pressure on that figure.

Any Australian exporter shipping sheepmeat under quota last year into the European Union and United Kingdom saw delays caused by port congestion in Europe lead to close to 15pc of quota shipments missing the end of the quota year cut. Those quota shipments had to return the now unused quota certificates for 2021 entry and replace them with valuable certificates for 2022 in order to clear the product in January and Febuary of this year.

This meant essentially they had to use quota access that had been earmarked for shipments in 2022 to cover the late shipments in 2021, all because shipping lines could not keep the expected time of arrival schedules they originally advised.

This effectivley has reduced our sheepmeat quota access to the UK and EU for 2022 by that amount.

This has been a particular issue in the UK and the shipping issues don't appear to be getting any better in the short term.

China is arguably now the largest importer of all meats globally but dominated by pork, bringing in more than 9 million tonnes last year, worth close to US$32 billion, according to Reuters.

Traders tend to rely on Shanghai as China's, and the world's largest container port because of its size and ideal location for distribution around the country but the recent ongoing lockdowns have played havoc with the logistics.

Chinese ports (they have three or four of the largest container ports in the world) have become an integral part of global container shipping networks.

Ongoing delays, disruptions to container movements and port congestion affects the whole system, Australian exporters included, especially when it's a time and temperature sensitive product like red meat where quality, especially for chilled, is dependent on on-time delivery. There have also been reports from China that in some instances, current challenges have been exacerbated by additional testing in China of imported meat shipments for COVID-19 before release from the warehouse.

Major container Line Hapag Lloyd reported last week that lockdowns in China have reduced outbound volumes as well by 20 to 25pc.

When China eventually reopens and delayed exports refill the supply chain some analysts expect a surge again in port congestion in particular in US ports.

The data is suggesting that many food exporters like Brazil and the US may be holding back on some shipments to China until the current shipping difficulties are resolved.

Certainly Australian exports to China of both mutton and lamb have fallen for the four months to April despite total exports having grown over the same period. That trend is not reflected so much in beef shipments to China as yet although April was down on the previous month but was up on the same month last year.

Every exporter will be watching this aspect of the global transport system very carefully.

The US Meat Export Federation reported this week that despite a strengthening US dollar, US beef exports had risen to another value record in March exporting over 126,000 tonnes, up 1pc in volume but up 33pc in value at US$1.07 billion.

Thankfully the Australia dollar has now dropped below 70 cents to the US dollar, which will ease some of the price pressure on high cost Australian meat exports for the moment.

The US poultry sector is operating under heightened biosecurity management to offset the current outbreak of the highly infectious Avian Influenza in North America. Already over 37 million birds in 34 US States have been slaughtered in response, according to the USDA.

While not a public health issue, there will be costly implications for the poultry sector if not brought under control.

AMIC was hosting industry webinars last week to provide the latest updates for members on new requirements for certification of casings and runners for China, a major market for this fifth quarter product out of Australia.

Ausmeat has prepared a draft HAM (Handbook of Australian Meat) description and code to accommodate the urgent changes, a code that will only be used for China.

The US added another new beef supplier this week to their domestic market with the Dominican Republic regaining access to the US for fresh and frozen beef.

Plant based protein however was dealt another blow with market leader Beyond Meat reporting continued losses.

Aginfo reported national cattle slaughter increasing to 90,967 in week 19, although further rain events and flooding kept volumes suppressed. The USDA Indicator price price of 90cl imported frozen Australian boneless beef was 300 US cents/pound ex-dock on a weakening trend.

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