HARMONY Agriculture and Food Company (HAAFCO) has become the latest business and first exporter to suffer the consequences of a changing live export market, with its board deciding to re-focus solely on domestic processing.
The decision comes in the wake of what HAAFCO describes as “a particularly unsettling year for the Australian livestock and food supply industry”.
HAAFCO managing director Steve Meerwald said the company still had contracts with clients in the Middle East and China to service which it would do when the opportunity arose but it was no longer the main focus of the business.
Mr Meerwald said a planned organisational restructure would have flow-on effects for staff in its Melbourne and Perth based offices and for those on its two farms listed for sale – Mt Fyans (Victoria) and Rancho East (WA).
He said the company would try to keep job losses to a minimum and work to ensure that existing staff were offered the opportunity to be retained by the new owners of the properties.
“It is with deep regret that we have made the decision to sell these properties and reduce staff and overheads, a direct result of the change in strategy, however it is critical that the Harmony business stays aligned with market opportunities, which are quite different now to those on which the business was founded,” Mr Meerwald said.
He said the decision by the board and its new approach would better suit market conditions and was being implemented this week.
HAAFCO’s ongoing strategy and investment would broadly be redefined to focus on its wagyu and grain-fed branded beef programs and concentrate on building market presence, developing high quality beef brands, with product processed domestically for local and export markets.
“Focussing on domestic programs that we have substantial control over will reduce volatility and provide a stable base from which the business can continue to develop” Mr Meerwald said.
There have been a number of factors that have led to the company’s reassessment and ongoing strategy, including the pace at which Chinese live cattle markets were developing, leading to challenging trading conditions over the past 12-months; changing Chinese regulatory and economic conditions, which have limited capital movements and availability to the business; uncertainty associated with the sheep trade continued to influence market conditions locally and overseas.
HAAFCO’s subsidiary Phoenix Exports has also been under investigation by the Department of Agriculture and Water Resources after the loss of 46 cattle on a shipment from Fremantle to China in June.
While the initial reports were that the deaths were “related to a respiratory issue” the investigation was conducted after the mortality rate went above one per cent.
Phoenix Exports sent 3180 Angus and grainfed slaughter cattle on the 15-day voyage aboard the livestock vessel Dareen to Lianyungang in northern China on June 1.
Mr Meerwald said the situation was an “anomaly” and the company would assist the department in its investigation.
In July the company withdrew from the live sheep trade due to the lack of clarity around the regulations introduced under the McCarthy Review.
Going forward HAAFCO will finalise the purchase of Dimboola Feedlot (Victoria) and retain Westbeef (WA) and invest in on-site water infrastructure to provide secure supplies for current and future feedlot operations.
“The refined business model concentrates our resources on intensive feeding programs and the assets that support them,” Mr Meerwald said.
“This aligns much more favourably with the board’s strategy, allowing these two excellent grazing properties to be available to cow calf producers or backgrounders who will be able to maximise the significant potential of each farm.”