Beef trade wary about Teys tie-up
“WARY without being alarmed” is how the Central Queensland beef industry is approaching the new joint venture between American multi-national food company Cargill and Australian meat processor Teys Bros.
The Teys Bros group owns a Rockhampton abattoir, employing some 900 people and slaughtering up to 1731 head of cattle a day.
With a long history in Queensland, Teys Bros was started by four brothers who learnt the butchering trade and have built the company into the largest Australian-owned beef processor, turning over more than A$1.2 billion a year.
But the company announced earlier this month it had entered into a 50:50 joint venture with Cargill Australia, an overseas conglomerate which has had interests in grain processing and handling in Australia since the 1980s.
The joint venture has sparked concerns within the beef industry over a lack of competition, especially in the Central Queensland fattening market.
Queensland’s peak beef group representative, AgForce Cattle president Grant Maudsley, said: “I think producers are fairly concerned about the effects that the joint venture might have on the competitiveness of the beef market, but with Cargill’s international links it could also provide some more opportunities in the world market.”
Both Cargill Australia’s vice-president of corporate affairs Bruce Blakeman and Teys’ spokesman Tom Maguire promised there would be no job losses as part of the deal, which includes four places on the new board for each organisation, with Alan Teys as chairman, Brad Teys in the chief executive role, and Geoff Teys in procurement.
The deal will combine both companies’ beef assets, including Cargill’s existing two processors and feedlot, and Teys’ six processors and feedlot.
But before the deal can be finalised, it must go through analysis by both the Foreign Investment Review Board (FIRB), and the Australian Competition and Consumer Commission (ACCC).
Mr Blakeman said while the FIRB and ACCC did need to approve the deal, he did not see any hiccups in the future, with Cargill’s “long background in the Australian beef industry”.
He also said there “will be no lessening of competition for Australian beef producers as part of the deal”.
Mr Maguire said: “There will be no change, it’s business as usual as far as we’re concerned, but it will take 12 to 18 months to complete the integration, and to go through the hoops with the ACCC and FIRB.”
Mr Maudsley said: “You’d imagine there is some cost reduction as part of the deal, but I think we are most concerned that the review board and ACCC remember that beef is different to other agricultural commodities.
“We don’t have forward-pricing like cotton or grain does, prices are very hand-to-mouth.
“We’ve obviously had discussion about this, but we are being wary without being alarmed at this stage – we need strong companies, but there’s a limit to how far they can go.”