May 5, 2010

Australia's meat processing sector faces difficult times

The meat processing industry in Australia is undergoing trying times with weak export market demand, an appreciating Australian dollar and constraints on livestock supply.

Reduced volumes of livestock slaughtering have slowed meat production, dropped export volumes and left many processing plants operating below capacity. The volume of meat production has been expected to decline from 2005-10 by an average of 0.1% a year, while the value of meat exports will have declined by an average of 3% a year.

Domestic consumption of red meat has remained relatively stable over the past five years, increasing the importance of export markets to industry growth. In 2009-10, total revenue for meat processors is expected to drop by 6.8% to reach US$12.7 billion. Revenue has also been expected to decline by an average of 1.5% a year from 2005-09/10.

Based on the Australian Bureau of Agricultural and Resource Economics data, a modest increase in average meat production of 1.4% a year is forecasted over the next five years. Domestically, there is expected to be only modest growth in the volume of red meat consumed, and real prices are forecasted to decline with increases in production. From June 2010-15, industry revenue is predicted to grow by 2.4% a year to reach US$14.3 billion.