Industry update: meating global needs

During 2006-07, the bacon, ham and smallgoods manufacturing industry achieved revenue of $2769.3 million, representing a growth of 4% per year over the past five years.

As domestic production recovers from drought and pork imports continue to grow, thus increasing competition on the domestic market and decreasing input prices, IBISWorld has projected that industry growth will continue at a rate of 2.7% per annum over the five years to June 2012.

A rise in health conscious consumers opting for low-fat, low-salt diets, as well as an increase in convenience food consumption, has impacted on the consumption of smallgoods and meats in recent years.

Food scares associated with smallgoods and meat products have significantly increased consumers’ awareness of food safety standards.

Over the next five years, bacon, ham and smallgoods manufacturers are likely to face greater regulatory restraints in relation to product labelling and food safety, due to lobbying from consumer groups.

As a result, smallgoods producers are likely to compete on the basis of whether or not they are accredited members of the Australian Pork Industry Quality Program.

Beef

With drought affecting the industry during 2002-03 and 2006-07, resulting in increased turn-off of production during these periods, and declining volumes in the year immediately after as farmers rebuilt their herds, meat production industries have become more reliant on imports during the past year.

However, the export market is the primary outlet for Australian processed meat including beef, lamb and pork, accounting for approximately 62% in 2006-07, down from 82.7% in 2000-01.

While drought resulted in volatile production volumes and subsequent fluctuating prices, the industry has benefited from outbreaks of disease in other meat producing countries such as the US, which have increased the demand for Australian beef exports.

Although Australia produces 3.6% of the global beef supply, it is the second largest beef exporter in the world.

The meat processing industry achieved revenue valued at $12.7 billion during 2006-07, an increase of 4.1% from the previous year.

Future outlook

IBISWorld has predicted that the meat processing industry will achieve moderate growth over the next five years.

Factors including reduced demand in international markets and increased competition, decline in local red meat consumption, supermarket buying power, increased import competition and recovery from drought will see industry production experience a decline of 3.5% over the next year.

Value-added products are expected to provide the largest opportunity for raising revenue in coming years, with Australian processors expected to raise quality standards and tailor more meat cuts to the needs of different market segments, for example the development of ready-to-cook seasoned roasts to meet increased demand for convenience.

Industry at a glance: bacon, ham and smallgoods

Industry revenue: $2769.3 million (4% growth)

Export revenue: $8.6 million (12.8% growth)*

Import revenue: $12.7 million (3% growth)*

Major players: Food Investments, KR Castlemaine Foods, Hans Continental Smallgoods, Primo Meats*

Estimated figures Source: IBISWorld

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