Abattoir on a knife-edge

More than 100 employees are in limbo after Shark Lake abattoir went into voluntary administration last week.

The local meat processor will close for two weeks, saying the company’s future was in jeopardy, after what it described as the most difficult time in the meat industry in living memory. 

Administrators Philip Newman and David Charles Quinn, from Melbourne-based insolvency firm PCI Partners, were appointed on Friday, February 24.

The slaughterhouse sources animals from a number of local farms and processes livestock such as cattle, sheep and goats.

Melbourne-based Rami Koyu co-owns and runs the company with Esperance-based directors John Wildberger and John Reed.

Mr Koyu said record lamb and beef prices had resulted in a difficult time for the privately owned company.  

According to Mr Koyu, Shark Lake Food Group is one of the largest employers in region, with around 50 full-time and up to 60 casual workers. 

“Most of them are locals and some of them are working holiday casuals,” he said. 

He said directors and stakeholders had done everything in their power to find a solution to their soaring running costs as a result of the high livestock prices.

Director Philip Newman said it was too early to tell the future direction of the company.  

Mr Newman will travel to Esperance on Wednesday, March 8, to conduct the first creditors meeting, which is required to be held within eight business days of appointment. 

The second meeting of creditors is ordinarily held within 25 business days after the appointment of administrators. 

A report will be distributed to creditors a week prior to the decided date. 

“By that time, there will have been an assessment of the company’s affairs,” Mr Newman said.  

At the second meeting Shark Lake’s future will be decided as either the administration will come to an end; a deed of company arrangement, if proposed, will be accepted; or the company will be placed into liquidation. 

Workers were informed on Friday, February 24, that the facility would be closed for two weeks. 

Mr Koyu said there was no guarantee when work would continue. 

“We are working with some investors, local and international, for a solution,” he said. 

Mr Koyu said administration was necessary after two years of difficult trading conditions. 

“Basically beef and lamb prices are at an unprecedented high, putting our business under enormous financial pressure,” he said.

“We have been facing both shortage of supply and increased livestock prices over a long period now along with the rest of the meat processing Industry.

“This is the most difficult time in the meat industry in living memory.

“Whilst we recognise it's important for our farmers and suppliers to receive good prices for their livestock we haven't been able to pass these higher costs into our global meat customers.”

Mr Koyu said he was optimistic there would be a positive outcome and would continue to work through a strategy to ensure the future of the company. 

“Our priority is to ensure the viability of the Shark Lake Food Group and be able to provide a local service to the Esperance farming community and also continue to function as a large employer in the local community,” Mr Koyu said. 

“I want to make special mention of our loyal staff and farmers that have continued to back our business over many years now.”

WA Farmers Esperance-Ravensthorpe zone president Mic Fels said the announcement was disappointing for farmers, managers, staff and the community.

“Currently there isn’t enough competition in the market and taking away one player is only going to be a bad thing for farmers,” he said.

He said farmers in the region needed a local processor as they were already geographically isolated and freight prices would swallow an potential profits. 

“If we lose the abattoir it will be a great shame for graziers,” he said. 

Mr Fels said only time would tell what the future of the company would look like and that concerns would remain until the verdict was handed down, after the second creditors meeting.