IRONING out the extreme highs and lows that have long played havoc with the ability of all along the red meat supply chain to stay profitable is the main driver of a new direction for Teys Australia.
The 70-year-old operation, which operates six beef processing plants and three cattle feedlots across Australia’s eastern seaboard, is leading the charge down the road of value based marketing.
General manager corporate services Tom Maguire says every dollar made along the beef supply chain comes from the people consuming meat.
“Our collective job is to give them exactly what they want, every time,” he said. Teys’ value based marketing (VBM) vision was about being able to communicate to the people who grow the animals what the value is to the people Teys sells to.
Mr Maguire gave an inspiring presentation at this year’s Angus National Conference which very much put in perspective just how important it is for Australian beef to meet consumer demand.
High cattle prices, he said, should be celebrated.
In order to continue to command those high prices, however, the industry would have to evolve. He cited energy costs as just one example, saying if Teys does nothing over the next 12 months to offset this issue, it expects a whopping $10 million - or $8 a head - to be added to its power bills.
Australia’s processing costs were around $300 a head. By contrast, in China it was $120/head.
“Beef today has the distinction of being four times the price of chicken,” Mr Maguire said.
“Beef becomes more of special occasion item and those type of items have to perform very well.”
“Meat plants are the worst asset anyone can own if you can’t get stock in them,” he said. “This year, we will process about 1.2m head, down from the 1.5m we normally do. We’ve had to cut shifts back 20pc and we currently have 500 employees less than we were at five years ago.”
“More and more money is being invested in this industry by people who want stable returns - they don’t want to ride the roller coaster with us,” Mr Maguire said.
“These VBM initiatives are about flattening that curve so we can all get a decent return over time.”
Figuring out the quality and yield of a carcase and multiplying it together provided the value.