Harvey upbeat about beef future

29 Jan, 2010 01:00 AM
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The Harvey Beef plant.
The Harvey Beef plant.

WA’S biggest beef processor is alive and kicking and well poised to take advantage of any recovery in the beef markets.

Harvey Beef has been pretty much keeping behind the scenes since it was taken over seven months ago by private equity group Harmony Capital, which bought out former partners Elders and Stark Investments.

Along with the change in ownership came a new chief executive officer, Mike Jackson, who typically exemplifies the company’s ethos of working smarter, efficiently and without fanfare.

But this week Mr Jackson, a former chief executive officer of Queensland-based Stanbroke Beef, broke his silence in an exclusive interview with Farm Weekly to assure producers that the processor is committed to helping them achieve the best prices possible for their cattle.

“A lot has been said about Harvey Beef since the changeover, but it’s a free country and people can say what they want,” Mr Jackson said.

“What I will say is that we are determined to make this an operation from which everyone in the supply chain can benefit.”

Since well publicised problems early in 2009, Harvey Beef has instigated changes aimed at making the company more productive and cost-efficient and more responsive to prevailing market conditions.

“We are managing costs, revenues and cash flow tightly, and aiming to lift productivity by looking at ways of handling the seasonality and labour shortages as best as we can,” he said.

“As well, we are committed to maintaining the highest food safety standards and working to strict occupational health and safety guidelines.”

Harvey Beef turns over more than $100 million a year, employs more than 300 people and processes between 120,000-130,000 head of cattle annually. It sells roughly equal amounts of product to both export and domestic markets.

“We’re here to stay, and will not rest on our laurels,” Mr Jackson said.

“We understand that in the long-term, we must pay producers the best possible money.

“We are cognisant of the fact that prices could be better.

“But the beef industry at the moment is a low margin, high risk one that has been affected by the global financial crisis.

“Our major buyers, such as Japan, Korea, and Middle East countries, aren’t buying as much and our revenue per head is a lot less now when compared to, say, 2008.

“Globally, we are a largely a price-taker for beef and we can’t afford to pay prices for cattle that will cause us to lose money, it’s simple business.

“It’s a good business, but it must be a good business for everyone,” he said.

Mr Jackson said Australia was the world’s second biggest beef exporter – behind Brazil – and that Australian produce was in demand because of its safe, green image.

“The market will turn around, and when it does, we will be in a good position to reap the rewards,” he said.

Mr Jackson said the domestic market was holding up well, with Harvey Beef supplying supermarkets and butchers.

“We just need the global market to improve,” he said.

“At the moment, all beef processors in Australia are doing it extremely tough with many big players drastically reducing throughput as they weather the storm.

“Contrary to some viewpoints, the WA beef industry is not a basket case.

“Our beef is sought after, the quality is excellent; our priority now is to get our business fundamentals right. We have a very positive view on the future of the industry.”

Mr Jackson said that Harvey Beef was currently flat out “processing everything we can”, with the operation limited only by a shortage of labour and capacity constraints.

He said the seasonality of cattle supplies in WA made it difficult to retain workers during the lulls.

“We can’t crank production up or down as we please,” he said.

Mr Jackson said it was not his place to tell producers how to manage their operations, but said it was clear that anyone who managed to provide cattle when there was a shortage of supply would get the higher prices.

“This is usually the June to August period, but I fully understand that there are management issues particularly the availability of feed which hamper this possibility,” he said.

“It’s basically a boom or bust scenario, but if we can somehow manage to extend the availability of cattle slightly at either end of this period, it would certainly be beneficial.

“There is no magic wand, but we continue to look at solutions and work with what we have.”

Mr Jackson said the company engaged regularly both informally and semi-formally with several major participants in the cattle supply chain and was very impressed with the calibre of these stakeholders and their understanding of the whole value chain.

“It is fully intended to extend this process to include a larger representation of its supply base,” he said.

Harvey Beef was represented on the committee which produced the recently released Beef Stocktake report, which identified pathways to reform for the beef industry in WA.

“We’re happy with the outcome as it was by consensus,” Mr Jackson said.

One of the recommendations in the report called for protection of long-standing beef industry businesses from the arm of regulation.

“Harvey Beef has been and will be here for the long haul and we welcome the protections recommended by the committee.,” Mr Jackson said.

Mr Jackson said he remained optimistic about the future even though no-one could predict when global demand would pick up again.

“This has already been the longest downturn we have experienced, and as yet there is little sign of the turnaround,” he said.

“Rest assured, however, that when this happens, the cattle and beef industries will be in a position to make the most of the good times when they return.”

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