• Kangaroo Island
Case Study:

Kangaroo Island meat processing facility

08 August 2019

Heather Bailey, Senior Economist, BDO Australia |

Kangaroo Island (KI) has long held a position among the best of Australia’s premium produce regions. Foodies flock to the island for its pure honey, fresh seafood, outstanding wines and myriad of culinary experiences.

Similar to the premium attached to fine wine regions, produce of KI origin carries a reputation of quality, excellence and in many cases, attracts a premium price point.

For the island’s meat producers, however, maintaining that regional integrity in the supply chain process is extremely difficult.

With no meat processing facility on KI, the majority of livestock is transported off the island for processing elsewhere. For those producers with branded products or who provide a ‘paddock to plate’ experience in their restaurants, the only option is the use of custom processing services on the mainland.

These custom processing services are becoming increasingly difficult to source and the use of off-island facilities has producers concerned about the risk to traceability, i.e. ‘getting the wrong product back.’

In addition, the meat of animals transported off KI for processing can be affected by the release of adrenalin during the stress of the sea crossing – with negative impacts on the taste.

Given all these challenges, members of the KI agricultural community approached the Primary Industries Minister for support for establishing a small meat processing facility on the island.

This approach resulted in Primary Industries & Resources South Australia (PIRSA) and Livestock SA jointly engaging BDO EconSearch to conduct an economic assessment of options for such a facility on KI.

BDO EconSearch consulted with the KI community and key stakeholders, particularly those involved in the meat supply chain, to better understand the issue and determine the key requirements and potential roadblocks for the facility.

The Kangaroo Island Council, Agriculture KI, individual producers, stock agents, retail outlets, KI Food & Wine Association, KI Industry and Brand Alliance and BioSecurity SA were among those involved in the process.

The BDO EconSearch team also undertook a small survey to gauge potential demand for locally-processed products and a discounted cash flow analysis to determine the return on investment of a processing facility on the island.

As a result of this initial analysis, the BDO EconSearch team found that a small, permanently located facility on the island may be viable, and has significant community support, with no significant technical or regulatory barriers.

“As a next step, the state government would welcome interest from any industry and interested stakeholders, who may wish to pursue options to develop a small processing facility,” said Minister Tim Whetstone.

Livestock SA CEO, Andrew Curtis, added “this report provides some valuable information for those producers keen to explore premium markets that recognise KI’s unique attributes.”

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