July 2016
Economic value of Victoria's chicken meat industry
Final Report
Department of Economic Development, Jobs, Transport and Resources
This report has been prepared by:
RMCG
135 Mollison Street, BENDIGO VIC 3550
PO Box 2410, BENDIGO DC VIC 3554
P: (03) 5441 4821
E: [email protected]
W: www.rmcg.com.au
ABN: 35 154 629 943
Offices in Bendigo, Melbourne, Torquay, Warragul and Penguin (Tasmania)
Project Contact
Will Henderson
M: 0420 588 940
E: [email protected]
Document review and authorisation
Job Number: 69-D-05
Doc. Version
Final/Draft
Date
1.0
Draft
22 March 2016
2.0
Final
09 June 2016
2.1
Final
20 June 2016
2.2
Final
26 July
Document1
Quality check
Release
approved by
Issued to
P. Mawson
C. Thompson
K. Noonan
J. Morison
W. Henderson
W. Henderson
K. Noonan
NA
NA
W. Henderson
K.Noonan
NA
NA
W. Henderson
K. Noonan
Author
Reviewed by
S. Fargher
J. Morison
W. Henderson
C. Thompson
S. Fargher
W. Henderson
W. Henderson
W. Henderson
J. Morison
Economic value of Victoria's chicken meat industry
Draft Report
Contents
Abbreviations
1
Executive summary
2
1
5
Introduction
1.1
1.2
1.3
2
The chicken meat industry in Victoria
2.1
2.2
3
3.3
3.4
3.5
5
17
Gross regional product ............................................................................................................ 17
Employment ............................................................................................................................. 17
Victorian economic impact
5.1
5.2
5.3
11
Overview of the method ........................................................................................................... 11
Data collection ......................................................................................................................... 11
3.2.1 Primary production
11
3.2.2 Processing
11
Economic modelling ................................................................................................................. 12
Overview of economic concepts .............................................................................................. 12
3.4.1 Economic activity
12
3.4.2 Indicators of Economic activity
12
3.4.3 Categories of economic activity in the chicken meat supply
chain
13
Assumptions ............................................................................................................................ 15
3.5.1 Geography
15
3.5.2 Expenditure
15
3.5.3 Regional production
16
Regional economic impact
4.1
4.2
7
Global and national context ....................................................................................................... 7
Victoria ....................................................................................................................................... 8
Method
3.1
3.2
4
This project ................................................................................................................................ 5
Scope ......................................................................................................................................... 5
This report .................................................................................................................................. 6
19
Primary production sector ........................................................................................................ 19
Processing sector .................................................................................................................... 20
Chicken meat industry as a whole ........................................................................................... 21
Appendix 1: Producer’s survey
Appendix 2: Processor’s survey
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Economic value of Victoria's chicken meat industry
Draft Report
Abbreviations
ABARES
Australian Bureau of Agricultural and Resource Economics and Sciences
ABS
Australian Bureau of Statistics
DEDJTR
Victorian Department of Economic Development, Jobs, Transport and Resources
DEPI
Former Victorian Department of Environment and Primary Industries (now DEDJTR)
FTE
Full-time equivalent
GRP
Gross regional product
GSP
Gross state product
I-O
Input-output
RISE
Regional Industry Structure and Employment
SA2
Statistical Area 2
SA4
Statistical Area 4
VCMC
Victorian Chicken Meat Council
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Executive summary
Introduction
The Department of Economic Development, Jobs, Transport and Resources (DEDJTR) engaged RMCG
and EconSearch to estimate the economic value of the chicken meat industry in Victoria. Analysing the
industry and its linkages across an economy can assist policy makers to understand the economic
significance to Victoria and regions and assist with decisions that influence the productivity and
profitability of the industry.
The chicken meat industry in Victoria
The Victorian chicken meat industry is clustered around three locations: Geelong, Bendigo, and the
Mornington Peninsula. There are three main business forms in the sector:
1.
A small number of very large producers who are vertically integrated from production, to processing
and wholesale. There are four large processors in Victoria: Baiada Poultry, Ingham Enterprises, Turi
Foods, and Hazeldene’s.
2.
A large number of small contract growers, who own and operate the majority of the meat chicken
growing farms. They grow out the chickens for the major processing companies. The processing
companies provide day-old-birds, feed and support services to the growers. There are around 200
contract growers across Victoria.
3.
A value adding sector that purchases dressed birds for further processing – boning and other value
adding activities.
Method
The estimates of regional economic impact presented in this report are based on a combination of data
collection and economic modelling:

Data collection. We surveyed chicken meat farmers and processors to understand at a detailed level
the expenditure and production patterns in the industry. This was scaled up to industry level with
secondary data from the Australian Bureau of Statistics.

Economic modelling. EconSearch’s input-output model, RISE (Regional Industry Structure and
Employment), was used to convert expenditure estimates into estimates of economic impact.
Economic activity in this report is described by the following indicators:
Gross regional product (GRP): is a measure of the contribution of an activity to the regional economy.
The direct GRP of an industry is measured as value of gross output (business revenue) less the cost of
goods and services (including imports) used in producing the output.
Gross state product (GSP): is the same concept as GRP, however, it is applied to the state economy
(Victoria).
FTE: is an indicator of employment and measures a worker's involvement in a project or industry activity.
An FTE of 1.0 means that the person is equivalent to a full-time worker (40 hours per week), while an
FTE of 0.5 signals that the worker is only half-time, i.e. 20 hours per week.
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Regional economic impact of the chicken meat industry
In 2014/15, the total contribution to GRP was $297 million in the Mornington Peninsula, $246 million in
Geelong, and $176 million in Bendigo. The total employment contribution was 2,641 FTE jobs in the
Mornington Peninsula, 2,079 FTE jobs in Geelong and 1,692 FTE jobs in Bendigo.
Table 0-1: Regional economic impact of the chicken meat industry
Measure
Bendigo
Geelong
Mornington Peninsula
GRP, total ($m)
176
246
297
Share of region (%)
1.4
1.2
1.0
Employment, total (fte)
1,692
2,079
2,641
Share of region (%)
1.8
1.4
1.2
Comparisons are made with four other agricultural industries and their associated processing sectors:
grains, pigs, grape and wine production, and dairy, as well as the tourism industry.
Table 0-2: Total economic contributions for selected industries in regional Victoria
Chicken meat a,b
Grains a,b
Porka,b
Wine a,b
Dairy a,b
Tourism b
Bendigo
176
630
80
80
830
410
Geelong
Mornington
Peninsula
Employment (fte)
Bendigo
Geelong
Mornington
Peninsula
246
180
30
50
90
670
297
70
30
70
370
530
1,692
2,079
4,100
1,300
600
200
1,200
400
6,700
800
3,200
5,000
2,641
500
200
800
3,800
4,300
GRP ($m)
a
For each agricultural industry the estimates include both farming and processing activity in the region.
b
For both GRP and employment the estimates represent the sum of direct industry effects and the effects created
in flow-on industries.
Victoria-wide economic impact of the chicken meat industry
Primary production
In 2014/15, the primary production sector was responsible for the direct employment of an estimated
1,202 FTE jobs, with flow-on activities creating further employment of around 912 FTE jobs in Victoria.
This created a total employment contribution of 2,114 FTE jobs. A contribution to GSP of $211 million
was generated in Victoria in 2014/15 by the primary production sector; $86 million by the primary
production sector directly, and $126 million generated in other sectors in the Victorian economy.
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Processing
In 2014/15, the processing sector was responsible for the direct employment of an estimated 3,615 FTE
jobs, with flow-on activities creating further employment of around 2,999 FTE jobs in Victoria (Table 5.2).
This created an additional 6,613 FTE jobs.
A contribution to GSP of $724 million was generated in Victoria in 2014/15 by the processing sector, $338
million by the processing sector directly and $386 million generated in other sectors in the Victorian
economy.
Total industry
The chicken meat industry as a whole represents the combination of the economic impact of the primary
production sector and the processing sector. In 2014/15, the Victorian chicken meat industry was
responsible for the direct employment of an estimated 4,817 FTE jobs, with flow-on activities creating
further employment of an estimated 3,910 FTE jobs. This resulted in a total employment contribution of
8,727 FTE jobs by the chicken meat industry in Victoria.
The total chicken meat industry-related GSP in Victoria was an estimated $935 million: $423 million
generated by the chicken meat industry directly and $512 million generated in other sectors of the
Victorian economy.
Table 0-3: Victoria-wide economic impact of the chicken meat industry
GSP ($m)
Employment (FTE)
Primary production
86
1,202
Processing
338
3,615
Total direct
423
4,817
Flow on impact
512
3,910
Total impact
935
8,727
Share of state (%)
0.27
0.36
Direct impact
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1
Introduction
The Victorian chicken meat industry generates employment and economic output in regional and rural
communities across the state. This includes the direct activity generated through the production of
chickens on-farm, the downstream processing of chickens, and the flow-on activity the chicken meat
industry creates in sectors such as transport, retail/wholesale trade, and health and agricultural services.
1.1
This project
The Department of Economic Development, Jobs, Transport and Resources (DEDJTR) engaged RMCG
and EconSearch to estimate the economic value of the chicken meat industry at both the regional and
state levels. This assessment considers the direct and flow-on economic contribution the industry makes
to gross regional and state product and employment.
In 2015, the Victorian Chicken Meat Council (VCMC) released a strategy for the industry for the next 10
years. This strategy sets out VCMC’s view of potential growth for the chicken meat industry in Victoria,
identifies a range of barriers to future development, and makes a number of recommendations for
industry action.
There is a lack of information regarding the economic impact of the industry. In a recent Victorian Civil
and Administrative Appeals Tribunal (VCAT) decision, VCAT noted that there was no independent
economic or social assessment to quantify or verify the number of direct and indirect jobs and increased
spending as claimed in the planning application.
Analysing the industry and its linkages across an economy can assist policy makers understand the
economic significance to Victoria and regions within Victoria. In particular, it can assist with policy
decisions that may impact the productivity of the industry and provide policy makers with an appreciation
of the further impacts within the economy through disruptions to flow-on activity.
The purpose of this study is to provide an updated statement of the economic contribution of the chicken
meat industry for each core chicken meat region in Victoria, and for Victoria as a whole. This will provide
the Victorian chicken meat industry with greater certainty of the importance of the industry to regional
economic activity and employment, as well as providing information that can be used to inform policy and
decision-making relating to the chicken meat industry.
1.2
Scope
The scope of the project is as follows:

The production of chicken meat. The project excludes the production of eggs for retail sale, and
other poultry meats such as turkey and duck meat.

Breeding and hatching activities undertaken by the major processors are included. The importation
of genetic stock is not included. This is a relatively minor activity in employment terms and is carried
out interstate.

Primary production that is undertaken on broiler farms.

Primary processing. The project includes processing for retail consumption undertaken by the major
processors, for instance the impact includes Ingham’s further processing plant in Melbourne, but
excludes retail sales of chicken meat products.
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
Further processing. Processors who value-add to existing processed chickens are also included.
This includes firms that buy whole processed birds and produce portions or crumbed products for
retail. This part of the industry is made up of smaller firms with mostly less than 100 employees.

Flow-on impacts for Victoria only will be included; flow-on impacts for other states and
jurisdictions were not estimated.

Retail and distribution are not included.
1.3
This report
The remainder of this report is structured as follows:
Section 2: The chicken meat industry in Victoria provides an overview of the industry in Victoria.
Section 3: Method provides a guide to the method and the key concepts involved in this economic study,
including economic activity, key indicators and categories of economic activity in the chicken meat
industry supply chain. This section also provides an introduction to economic impact modelling in addition
to the data and assumptions applied for this study.
Section 4: Regional economic impact describes the economic impact in terms of employment and
contribution to GRP for each core chicken meat industry region in Victoria.
Section 5: Victorian economic impact describes the economic impact in terms of employment and
contribution to GRP for Victoria as a whole.
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2
The chicken meat industry in Victoria
2.1
Global and national context
The consumption of chicken meat in Australia has risen rapidly and is now by far the most consumed
meat per person, with an annual consumption of 40kg per person.
45
40
35
30
POULTRY
25
BEEF
20
PIG
15
SHEEP
10
5
0
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
Meat consumption per person (kg)
Figure 2-1: Meat consumption in Australia1
The quantity of chicken meat consumed per person in Australia is only surpassed by US and Israel.
Meat consumption per person (kg)
Figure 2-2: Meat consumption per person by country2
1
2
100
90
80
70
60
50
40
30
20
SHEEP
PIG
BEEF
POULTRY
10
0
Data source: OECD (2016), Meat consumption (indicator). doi: 10.1787/fa290fd0-en (Accessed on 02 June 2016)
Data source: OECD (2016), Meat consumption (indicator). doi: 10.1787/fa290fd0-en (Accessed on 02 June 2016)
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2.2
Victoria
The Victorian chicken meat industry largely supplies the Victorian domestic market. The quantity of
interstate and international trade is small, but growing, with Victorian being a net importer. Victoria
produces around 21% (240,000 tonnes) of Australia’s chicken meat, down from a peak of 30% in 2003.
Figure 2-3: Chicken meat production by state3
Chicken meat produced (tonnes)
400,000
350,000
300,000
250,000
NSW
200,000
Vic
150,000
Qld
Rest
100,000
50,000
2015
2010
2005
2000
1995
1990
1985
1980
1975
1970
-
The Victorian chicken meat industry is clustered around three locations: Geelong, Bendigo and the
Mornington Peninsula. There are three main business forms in the sector:
1.
A small number of very large producers who are vertically integrated from primary production, to
processing and wholesale. There are four large processors in Victoria, Baiada Poultry, Ingham
Enterprises, Turi Foods, Hazeldene’s, which collectively operate six processing facilities in Geelong,
Bendigo, Mornington Peninsula and Melbourne. Processing plants employ large amounts of labour
and thus are located near population centres.
2.
A large number of small contract growers, who own and operate the majority of the meat chicken
growing farms. They grow out the chickens for the major processing companies. The processing
companies provide day-old-birds, feed and support services to the growers. The farms are
independently owned, with the exception of some of Hazeldene’s farms, which are owned by the
processor. There are around 200 contract growers across Victoria. Contract growers are generally
located within 100km of the processing plant 4.
In 2014/15 there were approximately 225 chicken meat farms in Victoria. With overall production of
131 million chickens, this means that average production per farm is 580,000 chickens per year.
However, the average farm size is growing, with a typical new farm being considerably larger than
the current average. A new farm typically has eight sheds holding approximately 40,000
chickens/each5, and can therefore produce 1,700,000 chickens per year over 5-6 batches.
3.
There are smaller processors that purchase undressed chickens from larger processors’ growers.
There are also a number of small companies that purchase dressed birds for further processing –
boning and other value adding activities.
3
Source: ABS (2016) 7215.0 Livestock products, Australia
ACMF (2013) Location of farms and processing plants (http://www.chicken.org.au/page.php?id=3)
5
ACMF (2013) Growing meat chickens (http://www.chicken.org.au/page.php?id=6)
4
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The chicken meat supply chain includes the pre-production of inputs such as feed, on-farm production
(breeding farms, hatcheries and broiler farms), and chicken meat processing and distribution.
The chicken meat supply chain is highly vertically integrated. Processors are fully or partially involved in
all stages of production from feed mills, breeding farms, hatcheries and grow-out farms, through to the
processing. The broiler farm work is contracted out to farmers (although Hazeldenes also own and
operate farms). Generally speaking, processors supply feed and advice to growers to ensure the
chickens are raised to the standard they require.
The chicken meat industry value chain and ownership is shown below in Table 2-1.
Table 2-1: Chicken meat supply chain and ownership
Activity
Function
Ownership
Feed mills
Produce animal feed
Small number of specialist feed mills/processors
Breeder farms
Produce fertile eggs for growing on
Aviagen/consortium of processing companies
Hatcheries
Incubate fertile eggs until they
hatch
Four large processors
Broiler farms
Grow day old chicks to maturity
Large number of small-medium enterprises.
Growers are contracted by the four large
processors. Some growing farms are also fully
owned by processors.
Processing
plants
Slaughter birds and prepare meat
products for sale
Processors (large and small)
Further
processing
plants
Purchase dressed birds from the
processors and value-add
Large number of small and medium companies.
Some involvement by large processors
The location of Victorian processors and their grow-out farms is shown in Victorian supply chain is shown
in Figure 2-4.
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Figure 2-4: Location of chicken meat farms and processing plants in Victoria
The number of farms and processing plants for each location is shown in Table 2-2.
Table 2-2: Location of primary production and processing6
Activity
Broiler farms7
Processing plants
Geelong region
81
1
Bendigo region
54
1
Mornington Peninsula region
90
1
Melbourne region
0
3
6
7
The further processing (boning and value-adding) sector is not included in this table; this sector is located mostly in Melbourne.
Estimate based on the regional split of production. Assumes that the average farm size in each region is the same.
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3
Method
3.1
Overview of the method
The estimates of regional economic impact presented in this report are based on a combination of data
collection and economic modelling:

Data collection. We surveyed chicken meat farmers and processors to understand at a detailed level
the expenditure and production patterns in the industry. This was scaled up to industry level with
secondary data from the Australian Bureau of Statistics.

Economic modelling. EconSearch’s input-output model, RISE (Regional Industry Structure and
Employment), was used to convert expenditure estimates into estimates of economic impact.
Further detail on the method is provided below.
3.2
Data collection
3.2.1
Primary production
Data on primary production were collected through the Australian Bureau of Statistics (ABS) and
interviews.
ABS data included information on the overall scale of production for each region. Two main data items
were used:

Gross value of production

Number of birds on hand at 30 June
Nine chicken meat farmers, who were broadly representative of the range of farmers in terms of size and
location, were surveyed. The survey was used to gather more detailed information about primary
production that is not already publicly available:

Enterprise-level production in terms of gross value and number of chickens produced

Breakdown of expenditure by business inputs

The geographic source of inputs (local region, Victoria-wide or outside Victoria)
The detailed information from the survey was scaled to the industry level using the ABS data on:

The number of chickens turned off from farms

The number of chickens processed by processors.

The quantity of chicken meat produced by processors.
3.2.2
Processing
Similarly with primary production, data on the processing sector were collected through interviews and
ABS.
ABS data provided the overall scale of the industry. ABS data used were:

Number of chickens slaughtered

Quantity of chicken meat produced

Value of poultry slaughtered
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More detailed data collected through the processing survey included:

Enterprise-level production in terms of gross value and number of chickens slaughtered

Breakdown of expenditure by business area (hatchery, broiler farm or processor) and by business
inputs associated with each business area

The geographic source of inputs (local region, Victoria or outside Victoria)
As with the primary production sector, the detailed information from the questionnaire was scaled to the
industry level using the ABS data.
3.3
Economic modelling
The estimates of regional economic impact presented in this report use a model known as the RISE
model (Regional Industry Structure and Employment). The RISE model has been developed by
EconSearch over the past decade and is based on an extension of the conventional input-output method.
Input-output (I-O) models are widely used to assess the economic impact of existing or changing levels of
economic activity8, such as regional agriculture. I-O models are available at the national, state and
regional levels. The RISE model provides a comprehensive economic framework that is extremely useful
in the resource planning process, particularly for regional economic impact applications 9.
RISE models have been constructed for the Victorian Government at both a state and regional level. To
assess the economic activity of the chicken meat industry in Victoria a RISE model was constructed for
each of the core chicken meat regions and Victoria as a whole.
While this report demonstrates that significant economic impacts are associated with chicken meatrelated activity, measurement of these impacts does not, per se, constitute an economic evaluation of the
industry. Such an evaluation is possible only through a comprehensive cost-benefit analysis of the
industry, which would include as one input the direct and indirect impacts of the industry as recorded in
this study.
3.4
Overview of economic concepts
3.4.1
Economic activity
Economic activity indicators: the primary focus of this report is the generation of economic activity
resulting from the chicken meat industry. The key economic activity indicators considered in the analysis
are gross regional product (GRP) and employment. Gross state product (GSP) is used in place of GRP
when discussing the economic activity of Victoria.
3.4.2
Indicators of Economic activity
Gross regional product (GRP): is a measure of the contribution of an activity to the regional economy.
The direct GRP of an industry is measured as value of gross output (business revenue) less the cost of
goods and services (including imports) used in producing the output. In other words, it can be measured
as the sum of wages and profits10. It represents payments to the primary inputs of production (labour,
Called an ‘exogenous shock’ in economic modelling terminology.
For this analysis RISE models were constructed for each core chicken meat Industry region in Victoria and for Victoria as a whole.
10
Or more correctly, the sum of household income, gross operating surplus and gross mixed income minus payments to owner
managers and taxes less subsidies on products and production
8
9
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capital and land). Using GRP as a measure of economic impact avoids the problem of double counting
that may arise from using value of output for this purpose.
Gross state product (GSP): is the same concept as GRP, however, it is applied to the state economy
(Victoria).
FTE: is an indicator of employment and measures a worker's involvement in a project or industry activity.
An FTE of 1.0 means that the person is equivalent to a full-time worker, while an FTE of 0.5 signals that
the worker is only half-time.
3.4.3
Categories of economic activity in the chicken meat supply chain
A useful way to think about economic activity and economic impact (as measured by GRP and
employment) is to refer to the supply chain.
Pre-production
(e.g. feed
production)
Breeding farms
Hatcheries
Broiler farms
Processing
(includng boning
and further
processing)
Distribution
and retail
Figure 3-1: Chicken meat industry supply chain
Broadly speaking, each economic indicator has four levels of economic impact across the economy. For
example, with respect to employment:
1.
2.
3.
Direct employment – this is employment in those firms, businesses and organisations that are
directly engaged in chicken meat activity. Typically this will include:
a)
Hatcheries
b)
Breeding farms
c)
Broiler farms
d)
Processing firms
First round employment – refers to employment in firms that supply inputs and services to the ‘direct
employment’ businesses, i.e. those categorised under #1 above.
a)
Farm-input sectors including all inputs used by agriculture such as fertiliser, transport and
storage services
b)
Agricultural service sectors including grain growing and feed mill production
c)
Packaging for chicken meat processing
d)
Business support services
e)
Other inputs.
Industrial-support employment – is the term applied to 'second and subsequent round' effects as
successive waves of output increases occur in the economy to provide industrial support, as a
response to the original chicken meat industry expenditure, i.e. the activity in sectors that provide
goods and services to those businesses that supply directly to the chicken meat industry. This
category excludes any employment associated with increased household consumption.
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4.
Consumption-induced employment – is the term applied to those effects induced by increased
household income associated with the original chicken meat industry expenditure. The expenditure
of household income associated with all three categories of employment (direct, first round and
industrial-support) will generate economic activity that will in itself generate jobs.
In this report we use the terms ‘direct’, ‘production-induced’, ‘consumption-induced’, ‘flow-on’ and ‘total’ to
describe the economic impacts across the economy:

‘production-induced’ = the combination of the first round impact and the industrial support impact
(2+3)

‘consumption-induced’ = the consumption-induced impact (4)

‘flow-on’ = the combination of the consumption-induced and production-induced economic impacts
(2+3+4)

‘total’ = the combination of all the economic impacts in the economy, i.e. the combination of the direct
and flow-on economic impacts (1+2+3+4)
These categories are illustrated in Figure 3.2 below.
Figure 3-2: Levels of economic impact across the economy
For each of the core chicken meat regions the total economic impact (GRP and employment) is provided.
The economic impacts reported for the regions are also aggregated. This is to protect the confidentiality
of producers and processors in the chicken meat industry.
For Victoria, the direct, flow-on, and total impacts are provided. The economic impacts are also
disaggregated into industry sectors (primary production, processing and industry as a whole) as, at the
state-wide scale, no confidential information is revealed about those within the industry.
The economic consequence of the presence of the chicken meat industry will be felt in many aspects of
activity in the regions, ranging from levels of regional output, income and employment, to land prices
(including residential, commercial and industrial land), house and building prices, local government rates,
supply and demand of labour, demand and supply of urban infrastructure and so on. Unfortunately, fully
comprehensive models that include all aspects of regional economic activity and economic phenomena
have not been satisfactorily developed for impact analysis at a regional level in Australia.
Since this study is concerned solely with economic impact, it omits analysis of non-economic impacts of
the industry such as social and environmental impacts.
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3.5
Assumptions
3.5.1
Geography
To produce regional results, the economic activity of the chicken meat industry in each core chicken meat
region – Geelong, Bendigo and Mornington Peninsula – was mapped. Because the farms cluster around
processing plants, it is reasonable to define the industry geography in this way.
Boundaries for the three chicken meat production regions were constructed from ABS poultry production
data at the Statistical Areas Level 2 (SA2) level. As the poultry data included a variety of poultry species,
known chicken meat region data at the LGA level were used to cross check the ABS data to ensure the
regional boundaries were defined correctly. This chicken meat region data was sourced from DEDJTR.11
When determining the boundaries of each chicken meat region the aim was to keep the region tightly
defined but, at the same time, include as much of the industry as possible. This trade-off meant that the
locations of a small number of broiler farms were omitted because of their distance from the core group of
farms in that region. To include the areas where these farms are located would have greatly expanded
the economic region and thereby diluted the significance of the chicken meat industry.
The process was to include the activity of the “omitted” broiler farms as if they were located in the defined
regions. This meant that a small percentage of the reported impacts would occur outside of the defined
regions.
The LGAs that make up each region are shown in Table 3-1.
Table 3-1: Chicken meat region definitions
Geelong region
Bendigo region
Mornington Peninsula region
Golden Plains (S)
Buloke (S)
Baw Baw (S)
Greater Geelong (C)
Greater Bendigo (C)
Cardinia (S)
Melton (S)
Greater Shepparton (C)
Casey (C)
Moorabool (S)
Loddon (S)
Frankston (C)
Queenscliffe (B)
Moira (S)
Latrobe (C)
Surf Coast (S)
Northern Grampians (S)
Mornington Peninsula (S)
Wyndham (C)
Strathbogie (S)
Nillumbik (S)
Swan Hill (RC)
Yarra Ranges (S)
3.5.2
Expenditure
The breakdown of primary producers’ and processors’ expenditure, collected through the primary
production and processing surveys respectively12, was used to establish the expenditure costs in each
region. In the survey, each producer and processor provided a breakdown of recurrent expenditures in
their business. These data, together with Victorian chicken meat production figures, enabled estimation of
itemised costs in each region. It was assumed that the sample was representative of businesses in the
regions as a whole, enabling expenditure breakdown derived by the survey to be scaled up to the
regional level.
11
Victorian Land Use Information System, location of broiler farms across Victoria
The questionnaire used in the producers survey is reproduced in Appendix 1 and the processing survey is reproduced in Appendix
2.
12
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3.5.3
Regional production
The ABS chicken meat processing data were used to estimate the quantity of chickens produced in each
chicken meat region. As little information was available on the movement of chickens between regions, it
was assumed that the majority of chickens were produced in the regions in which they were processed.
This assumption was based on information from processors, the strong vertical integration of the industry
and the location of processing plants to hatcheries and broilers. Some information was also provided by
processors about the percentage of chickens they sourced from outside Victoria. This information was
used to estimate the quantity of chickens processed in Victoria that originated outside the state.
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4
Regional economic impact
This section reports on the economic impact of the chicken meat industry in the core production regions
in Victoria: Bendigo, Geelong and Mornington Peninsula. The economic contribution of the chicken meat
industry is reported for several economic indicators, namely contribution to GRP and employment. To
protect the confidentiality of producers and processors results at the regional level are aggregated across
the production and processing sectors. These aggregate figures also combine the direct contribution
made by the chicken meat industry and the flow-on economic activity the industry creates in other parts of
the economy (e.g. transportation, retail/wholesale trade and health services).
4.1
Gross regional product
The total contribution to GRP of an industry, including flow-on effects, is measured as value of output less
imported goods and services used in producing the output, plus the effect of increased household
income. In 2014/15, the total contribution to GRP was $176 million in Bendigo, which is 1.4% of the
regional economy, $246 million (1.2%) in Geelong, and $297 million (1.0%) in the Mornington Peninsula
as shown in (Table 4-1).
Table 4-1: Total contribution to GRP of the Victorian chicken meat industry, 2014/15
Total GRP ($m)a
Share of region (%)
Bendigo
Geelong
Mornington Peninsula
176
1.4%
246
1.2%
297
1.0%
ᵃTotal GRP represents the combination of direct chicken meat industry effects and the effects created in flow-on industries.
Source: EconSearch analysis
The total contribution to GRP is a reflection of the output generated in the region which is directly related
to the volume of chicken production that occurs within the region. As the Mornington Peninsula has a
greater number of chickens produced and processed we would expect the region’s total contribution to
GRP to be highest.
4.2
Employment
Employment is a measure of the net FTE jobs involved with an activity or industry to the region or state
economy, in this case the chicken meat industry to core rural areas in Victoria. Employment is a key
indicator of both regional economic activity and the welfare of regional households.
In 2014/15, the total employment impact was 1,692 FTE jobs in Bendigo, which is 1.8% of the regional
employment, 2,079 FTE jobs (1.4%) in Geelong, and 2,641 FTE jobs (1.2%) in the Mornington Peninsula,
and. The results are shown in (Table 4-2).
Table 4-2: Total employment impact of the Victorian chicken meat industry regions, 2014/15
Total employmenta
Share of region (%)
Bendigo
Geelong
Mornington Peninsula
1,692
1.8%
2,079
1.4%
2,641
1.2%
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ᵃ
Total employment represents the combination of direct chicken meat industry effects and the effects created in flow-on
industries.
Source: EconSearch analysis
4.2.1
Industry Comparisons
To provide perspective on the impact the chicken industry has in Victoria’s regional economies, the
estimates of GRP and employment were compared to the corresponding estimates for other sectors in
the economy (Table 4-3).
Comparisons are made with four other agricultural industries and their associated processing sectors:
grains, pigs, grape and wine production, and dairy, as well as the tourism industry.
Table 4-3: Total economic contributions for selected industries in regional Victoria
Chicken meat a,b
Grains a,b
Porka,b
Wine a,b
Dairy a,b
Tourism b
Bendigo
176
630
80
80
830
410
Geelong
Mornington
Peninsula
Employment (fte)
Bendigo
Geelong
Mornington
Peninsula
246
180
30
50
90
670
297
70
30
70
370
530
1,692
2,079
4,100
1,300
600
200
1,200
400
6,700
800
3,200
5,000
2,641
500
200
800
3,800
4,300
GRP ($m)
a
For each agricultural industry the estimates include both farming and processing activity in the region.
b
For both GRP and employment the estimates represent the sum of direct industry effects and the effects created
in flow-on industries.
Some care should be taken when comparing the chicken meat industry estimates to the estimates
presented for other industries. The estimates developed for the chicken meat industry are based on
chicken industry survey data while the estimates for the remaining industries have been developed within
the generalised RISE model database (which relies on a combination of published and modelled data).
Consequently, more confidence can be expected in the chicken meat industry data in comparison to other
industries.
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5
Victorian economic impact
The following section looks at the economic impact of the chicken meat industry for Victoria as a whole.
At the Victorian scale it is possible to have more disaggregation without revealing any company-specific
information. Consequently, the following data are split by sector (primary production and processing) and
the economic contribution presented as the direct impact of the chicken meat industry, the flow-on
impacts generated and the total impact within the economy (direct effects + flow-on effects).
5.1
Primary production sector
The primary production sector represents the pre-processing activity that occurs within the chicken meat
industry. This includes the activity of breeder farms, hatcheries and grow-out (broiler) farms.
In 2014/15, the primary-production sector was responsible for the direct employment of an estimated
1,202 FTE jobs, with flow-on activities creating further employment of around 912 FTE jobs in Victoria.
This created a total employment contribution of 2,114 FTE jobs.
A contribution to GSP of $211 million was generated in Victoria in 2014/15 by the primary-production
sector: $86 million by the primary-production sector directly and $126 million generated in other sectors in
the Victorian economy. These other sectors included professional, scientific and technical services,
education and training, health and community services and retail trade.
The results for the primary production sector are shown in Table 5-1.
Table 5-1: Primary production economic impacts, Victoria, 2014/15
Direct impact
Primary production
Flow on impacta
Personal & other services
Retail trade
Prof. scientific tech services
Health & community services
Education & training
Wholesale trade
Other food products
Food & beverage services
Road transport
Construction services
Pharma & other chem products
Poultry
Admin support services
Finance
Other agriculture
Insurance & other financial services
Electricity supply
Cultural & recreational services
Transport support & storage
Communication services
Otherb
GSP ($m)
Employment (fte)
86
1,202
11
11
7
5
5
5
5
3
3
2
2
4
2
9
4
3
3
1
2
3
37
159
124
55
49
48
46
44
42
31
21
19
19
19
16
16
15
14
12
12
11
141
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Total flow-onc
Total impactc
Share of state (%)
GSP ($m)
126
211
0.06%
Employment (fte)
912
2,114
0.09%
ᵃ
Flow-on impacts of the top twenty sectors, defined by employment impact.
ᵇ
The ‘other’ category reflects the aggregate flow-on impacts of the other 58 sectors in the 78 sector RISE model.
ᶜ
Totals may not sum due to rounding.
5.2
Processing sector
The processing sector represents the processing activity that occurs within the chicken meat industry.
This includes boning, further processing and distributing. It does not include the economic impact
generated by retail trade, food service outlets and exports directly linked to the chicken meat industry.
In 2014/15, the processing sector was responsible for the direct employment of an estimated 3,615 FTE
jobs, with flow-on activities creating further employment of almost 3,000 FTE jobs in Victoria (Table 5.2).
This created a total employment contribution of 6,613 FTE jobs.
A contribution to GSP of $724 million was generated in Victoria in 2014/15 by the processing sector: $338
million by the processing sector directly and $386 million generated in other sectors in the Victorian
economy. These other sectors included wholesale trade, retail trade, road transport services,
administration support services and education and training.
Table 5-2: Processing sector economic impacts, Victoria, 2014/15
Direct impact
Chicken processing
Flow on impacta
Personal & other services
Retail trade
Education & training
Health & community services
Prof. scientific tech services
Food & beverage services
Wholesale trade
Road transport
Construction services
Admin support services
Finance
Insurance & other financial services
Cultural & recreational services
Communication services
Transport support & storage
Rental hiring real estate
Motor vehicles and parts
Other machinery & equipment
Electricity supply
Other food products
Otherc
Total flow-ond
GSP ($m)
Employment (fte)
338
3,615
59
27
17
16
21
11
18
15
6
7
30
10
4
10
5
9
2
3
6
3
188
386
860
315
177
177
165
157
155
132
87
64
56
54
45
39
36
32
32
31
28
24
710
2,999
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Total impactd
Share of state (%)
GSP ($m)
724
0.21%
Employment (fte)
6,613
0.27%
ᵃ
The direct value of output of chicken meat processing has been modified to exclude the farmgate value of chickens processed
in the state. This has been done so the value of production attributed directly to chicken processing is shown and the value of
production attributable to chicken primary production is excluded.
ᵇ
Flow-on impacts of the top twenty sectors, defined by employment impact.
ᶜ
The ‘other’ category reflects the aggregate flow-on impacts of the other 58 sectors in the 78 sector RISE model.
ᵈ
Totals may not sum due to rounding.
5.3
Chicken meat industry as a whole
The chicken meat industry as a whole represents the combination of the economic impact of the primary
production sector and the processing sector. In 2014/15, the Victorian chicken meat industry was
responsible for the direct employment of an estimated 4,817 FTE jobs, with flow-on activities creating
further employment of an estimated 3,910 FTE jobs. This resulted in a total employment contribution of
8,727 FTE jobs (0.36% of the jobs in Victoria) by the chicken meat industry in Victoria.
The total chicken meat industry-related GSP in Victoria was an estimated $935 million (0.27% of the
Victorian economy): $423 million generated by the chicken meat industry directly and $512 million
generated in other sectors of the Victorian economy (Table 5-3).
Table 5-3: Chicken meat industry economic impacts, Victoria, 2014/15
GSP ($m)
Employment (fte)
Household
income ($m)
86
338
423
1,202
3,615
4,817
35.0
166.3
201.3
70
37
21
22
29
23
13
18
8
10
39
13
8
5
13
7
12
8
5
3
1,018
439
225
225
220
201
199
163
108
83
72
69
68
57
49
48
42
42
41
40
59.8
28.4
18.9
20.9
25.5
15.8
10.4
12.9
7.6
9.3
10.0
8.7
5.7
3.2
4.9
3.2
5.6
2.8
2.8
2.4
Direct impact
Primary production
Chicken processing
Total directa
Flow-on impactb
Personal & other services
Retail trade
Health & community services
Education & training
Prof scientific tech services
Wholesale trade
Food & beverage services
Road transport
Construction services
Admin support services
Finance
Insurance & other financial services
Other food products
Cultural & recreational services
Communication services
Transport support & storage
Rental hiring real estate
Electricity supply
Pharma & other chem products
Motor vehicles & parts
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GSP ($m)
Employment (fte)
Household
income ($m)
147
512
935
0.27%
500
3,910
8,727
0.36%
35.9
294.6
495.9
0.25%
Otherc
Total flow-ona
Total impacta
Share of state (%)
ᵃ
Flow-on impacts of the top twenty sectors, defined by employment impact.
ᵇ
Totals may not sum due to rounding.
ᶜ
The ‘other’ category reflects the aggregate flow-on impacts of the other 58 sectors in the 78 sector RISE model.
5.4
Summary
The total chicken meat industry-related GSP in Victoria was an estimated $935 million: $423 million
generated by the chicken meat industry directly and $512 million generated in other sectors of the
Victorian economy.
Table 5-4: Victoria-wide economic impact of the chicken meat industry
GSP ($m)
Employment (FTE)
Primary production
86
1,202
Processing
338
3,615
Total direct
423
4,817
Flow on impact
512
3,910
Total impact
935
8,727
Share of state (%)
0.27
0.36
Direct impact
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