Photo: Meat Industry Association
Meat plants across Aotearoa are struggling to match low volumes of livestock coming through with staffing levels.
New Zealand's national sheep flock and dairy herd have continued to decline in recent years, impacting the flow of livestock into meat works.
However, this has also created a competitive environment for farmers, some of whom were earning record prices for their stock, exacerbating the challenge of profitability for meat companies.
Consistently declining livestock numbers saw red meat farmer-owned cooperative Alliance Group close its Smithfield processing plant in Timaru last year.
The former Smithfield meat processing plant site, Timaru. Photo: RNZ / Tim Brown
Major red meat processor Silver Fern Farms' chief executive Dan Boulton told the Primary Industries New Zealand Summit in Ōtautahi this week, that the organisation was pulling thousands of seasonal workers off the chain to match capacity with the supply of livestock.
"We're holding on tight. We're having to reduce capacity," Boulton said.
"We have about 3,000 of our workers on seasonal layoff right now, which normally would be running full steam as we work through the back end of the cow season."
Taking capacity off, particularly for night shift workers, helped to reduce and control operating costs, but created issues of uncertainty.
"We're trying to attract workers into our sector and that uncertainty around [the] workforce is a real challenge."
He said the beef kill was down 4 percent in 2024 and the lamb culls down 9 percent, creating procurement tension among the different companies.
"Clearly a big challenge, and so on one hand we've got fantastic market returns and that's bringing profitability back into the sector, but we can't underestimate some of the livestock volumes and where they've landed particularly in the last 18 months.
Photo: RNZ / Nate McKinnon
"Those are some big adjustments that the New Zealand processing sector has to make. So clearly, we have a capacity imbalance, that's through the media and that's creating a little bit of uncertainty."
Through 2024 Silver Fern Farms recorded a $21.8 million after-tax loss, following a $24.4m loss in 2023.
Competitor, co-op Alliance Group reported an after-tax loss of $95.8m for the year ended September, just over half of which accounted for the redundancies associated with Smithfield's closure.
Meat Workers Union national secretary Daryl Carran said company profits were being affected by the record prices farmers were getting for livestock because the environment was very competitive.
He said the low livestock numbers in farming, which the union had warned meat companies about for years, were particularly acute for larger companies.
"Every year we're losing sheep farmers."
Curran said realigning capacity with the reducing livestock numbers was vital to the sector's sustainability.
"We've recently told one company to rationalise capacity because the numbers just aren't there anymore.
"We have too many sites considering the stock we have available."
Curran said further plant closures were likely in future, and meat companies should work together to address the processing network.
StatsNZ figures showed the national sheep flock had fallen 21 percent in the past decade to 23.6m sheep.
The ratio of 22 sheep per New Zealander in the 1980s was now down to 4.5.
Dairy cattle also fell by about 13 percent or 860,000 over the decade with the national herd now 5.8m.
However, beef cattle numbers were holding steady at 3.7m.
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