Record beef prices spur $11 million loss for Australia’s largest meat cooperative

While beef producers with Australia’s largest meat cooperative enjoyed record prices last year, it resulted in a massive hit to the processing business.

The Casino Food Co-op in northern NSW, formerly the Northern Co-operative Meat Company, has reported a $11m loss in the 2022-23 financial year to its members, up from a $7.91 million loss last year.

It is the largest loss in Simon Stahl’s time in charge of the cooperative, and while the chief executive said it was not a great result it was not unexpected.

“We had forecast at last year’s AGM that these last 12 months would be tough trading with record cattle prices and that’s how it turned out,” he said.

The record cattle prices were driven by lack of cattle supply due to strong producer demand for restocker animals since 2020 following the last drought.

Mr Stahl said they were also still experiencing a “hangover” from China’s suspension of its meat exports in May 2020 due to a labelling issue.

That loss of access to China came at the start of the restocking process.

“So when we lost 1,000 cattle we just didn’t have cattle that we could find to replace them, and that has continued for the last couple of years,” he said.

“The plant’s been operating at well below capacity, even at times as low as 30 per cent of capacity, and we’ve held onto our staff to make sure when the cycle turned we were ready to take advantage of it.”

He said it was a significant downturn and the longest transition from a strong supply of cattle to restocking that he had seen in his time in the industry.

“The herd’s got up to 29 million, which would be as high as it’s been in 30 or 40 years, from a low of 24 million,” Mr Stahl said.

With the weakened demand for restocker cattle, prices have more than halved since January, paving the way for improved profitability for processors.

“At the same time meat prices across the globe were dropping quite substantially, and it wasn’t until about May-June until we saw some profitability come back into processing,” he said.

Another of the contributing factors was the supply chain costs rising over the 12-month period across all aspects of the business.

“From transport, chemicals that we use in our tanning process, chemicals for cleaning, cardboard, plastics, you name it. It’s everything,” he said.

The co-op’s pork processing plant at Booyong, north of Lismore, did deliver a small profit.

“It certainly had some difficulty early in the year, particularly following the floods of last year where we lost a lot of the workforce, and that was around housing. That took some time to stabilise and we have done that,” he said.

Mr Stahl said its tannery also had a difficult trading year.

“A lot of that was due to slow demand across the globe in terms of leather products as interest rates and cost-of-living pressures hit household budgets,” he said.

With a decline in cattle prices he said the co-op’s outlook was positive.

“It’s a known fact, unfortunately, that when cattle producers are doing terrific, like they have in the last two to three years with those record prices, we perform poorly,” he said.

“Then the shoes on the other foot — when supply becomes too plentiful the abattoirs start to make some money.”

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