Glance Through the Chicken Meat Industry, Inghams Under the Spotlight

Summary

• New guidelines announced for Victoria’s poultry industry call for 20 per cent staffing cut.
• Premier of Victoria urged Australians not to panic buy, as he believes the restrictions will not affect supply and demand.
• Poultry processor Inghams announced its two meat processing plants in the state of Victoria would face six-week restrictions amid lockdown in the state.

Premier of Victoria Daniel Andrews announced restrictions on Victoria's meat industry workforce; the statement was released after an alarming spike in COVID-19 cases. From August 9 midnight, abattoirs in Victoria were to reduce production by a third, with poultry farmers to operate at 80 per cent capacity.

They will have to follow strict guidelines and must implement High-Risk COVIDSafe plans to continue operating onsite.

The total number of coronavirus cases in Australia stood at 21,084 (Active cases- 8,155) as on 9 August, with a total number of 295 deaths and 11,869 recovered patients.

Andrews stated that all open businesses and services would have to enact a COVIDSafe plan focused on safety, prevention and response as coronavirus is currently being linked to the workplaces. A rapid response is required to beat the virus spread whenever it rears its head. For the industries that cannot be closed, but are witnessing a steep rise in infection cases or have emerging new risk, will have to make some significant changes to make the workplace safer for workers and their families.

The new mandate includes reductions to the number of workers onsite, especially for the meat industry which will have to operate on the minimum workforce for safety purposes. Such sites have posed a risk in Australia and also around the world; hence strict guidelines will be applied to abattoirs in Melbourne and across the state.

Notes: These statistics are extracted from the ABARES publication “Australian Commodities, March Quarter 2020” and earlier versions of this publication.
2018/19 = preliminary

Source: Australian Chicken Meat Federation (ACMF)

New Restrictions for Meat Industry

Greater Melbourne is in stage 4 lockdown until September 13, unless it is extended again. While, Regional Victoria is under stage 3 restrictions. Premier Andrews says that the overnment is not compromising on the food supply to the families while they are trying to tackle the need to flatten the curve. But while concluding the press briefing, he said, the public may not necessarily get exactly the cut of meat they want.

Andrews is adamant on implementing severe restrictions at food processing and distribution centres on staffing levels, and he believes this will not lead to national food shortages.

Meat processing plans are believed to be a source of Victoria's recent outbreak.

Chicken processing plants will have to work at 80 per cent staff capacity because of different life cycle of poultry. Meat-producing sites, having fewer than 25 employees, will not have to implement Victoria's workforce reduction requirements.

Concerns over Panic Buying

During March, when the coronavirus pandemic was in an early stage, the country saw a rush by consumers to panic buy essential products like toilet paper and hand sanitisers. To curb such colossal demand, supermarkets had to force limitations on a number of products per family. Now with the new announcement on the imminent reduction in meat production, Victorians may be tempted to hoard meat and poultry products to stock up.

Andrews urged the residents to show restraints while purchasing meat and poultry products on their upcoming trip to the shopping centres. He added that there are enough products and no need to panic buy three months' meat stock because this will eventually make it hard for others who have not purchased. Plus, \overnment is confident that they will continue with the production level to meet the demand of the Victorian community.

Initially, Victoria had announced poultry farms to reduce staffing levels at two thirds, but they received complaints from the industry leaders. After which the Premier changed the decision to allow chicken producers to lower staffing by only 20 per cent instead of 33 per cent. The industry leaders’ complaint about having hundreds of thousands of birds killed but not processed.

Poultry Player Inghams Under the Spotlight

Poultry processor Inghams Group Limited (ASX:ING) announced recently that its two meat processing plants in the state of Victoria would face six-week restrictions, after the Victorian Premiers announcement on state 4 level lockdown measures for the meat industry. Inghams’ statement said that the restrictions would impact its operations at its two facilities in Somerville and Thomastown.

Though the restrictions do not apply to Inghams’ other assets and facilities which are integrated into their supply chain, hatcheries, farm, feed mill or logistics operations will run as before. Inghams processing plant in Thomastown reopened on August 3 after a two-week prolonged shutdown.

The company said, in the coming few weeks as they realign operations, it will be apparent if the staffing restrictions have any impact on supply and consumer demand.

As on August 10 2020 (2:31 PM AEST) , Inghams’ stock traded at 3.230 with a market capitalisation of 1.2bn.

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