According to Dan Boulton, general manager of supply chains at Silver Fern Farms, access to labour, the Omicron outbreak and a late kill season will have a direct impact on farm planning in the coming winter season.
Speaking at a recent Beef and Lamb New Zealand online conference about adapting to supply chain disruptions, Boulton said labour shortages were already affecting farm and processor profitability.
This time last year Silver Fern Farms employed about 6000 skilled labourers, it was now however 550 labourers short, with peak season around the corner.
“It means our ability to man the [supply] chain successfully has been compromised and has meant we sometimes actually have to stop the [production] chain,” Boulton said.
This scenario affected most abattoirs which meant that they did not have the capacity to process all cuts from each carcass, and so could not maximise the full value. Processors had to not process low value cuts like offal or bones that would contribute to overall profitability.
Such decisions were necessary to get animals off farms and keep the chain moving, Boulton said.
“It has a direct impact on margins,” he said.
“Labour has impacted our throughput by 10 percent this season. Especially as labour from Pacific Islands has basically stopped. The impact might not be felt on [supplying] farms yet as farmers are also contending with a late season [and moving cattle to slaughter facilities later],” he said.
Silver Ferns has increased its base starting wage, introduced retention incentives and introduced referral incentives. It also lobbied the Government to reconsider immigration.
Omicron was the second risk that farmers and processors had to plan for.
“Omicron wiped out meat processing capacity [globally]. Some companies have already lost 50 percent of their capacity to Omicron.”
However, some companies had already recovered from the impact of Omicron and showed it was possible to bounce back, he said.
“The third risk is that of a late kill season.”
Beef kill rates were currently 2.5 percent behind the slaughter number of 2021 for the same period, with lamb rates 9.1 percent behind. In number terms it was about 990 000 lambs behind, compared to 2021.
“Farmers will have to plan for a longer season,” Boulton said.