I guess the answer to this is still to be determined, but there is one company playing everyone on a break.
Chinese meat processing company, Hengyang Group purchased the then successful processing operation of Tabro Meats, Lance Creek and Moe, back in 2014. Since then there have been numerous articles and stories about the future of this organisation.
Originally, I was optimistic about the future of Tabro Meats, but now I am taking a pessimistic approach, after conversations with Jim Abrecht, one of the company’s many creditors.
It was only just over twelve months ago that their then chief executive Jack Jiang said the company would be moving away from its more traditional core business of manufacturing beef to the Chinese market. At that time, China’s consumption of manufacturing beef was around 7.8 million tonnes and it was expected to rise by 3.8 per cent each year.
“We will be downsizing this market, and heading toward more of the high-end beef market,” Mr Jiang said.
However, their current performance would indicate that their current situation could not be further from this statement.
Several disgruntled creditors held a recent meeting with the owners, seeking when they might be paid for cattle supplied some back in January and February. The current promises have been broken, and a new payment date of late June was offered. Monies owed individually are currently in the hundreds of thousands, according to Mr Abrecht.
Mr Abrecht is concerned the money owed to suppliers is being used to fund the ongoing weekly wage bill.
Mentioned to me a couple of months ago, which was in order to keep their Chinese accreditation, Tabro Meats has to fill certain slaughter requirements, which is why the company is still keeping its buying and office staff on the payroll. It is also my understanding that the original agreement regarding the final payment for the Moe export works, is still uncompleted, and is, or was, as of last week, now outside the settlement date.
Away from anything else, the non-operation of this once highly regarded export processor is creating a big hole in our industry.
Tabro Meats is designated as a 640 head a day processing plant, and that is just the Lance Creek operation. Working at full capacity that equals 3200 head per week.
I rang the office of Tabro Meats, only to find the CEO had returned to China and was unavailable for comment. I sent a number of questions to Mr Jiang via email, which he responded that he would answer my questions when he returned. I have also sent a request to the Australian Department of Agriculture to query the existence of any compliance capabilities regarding damaging competition due to lack of operation. Just imagine how vibrant our cow markets could be if Tabro Meats was in full operation?
Just two weeks ago I mentioned the potential profit margin is for processors servicing the US 90CL grinding beef market. It is interesting to note that the FAS price continues to rise, while our market price declines.
Obviously, there is some intent to continue business, while the company continues to pay its employees, but we will have to wait and see.