A rotary knife assembly includes a rotary shaft, a flange, a rotary knife of an annular shape and a resilient member. The flange includes a radially-outwardly protruding flange portion having opposite end faces and a reduced diameter portion disposed adjacent to the flange portion. The rotary knife has opposite faces and is fitted on the reduced-diameter portion of the flange with one of the opposite faces directed toward one of the opposite end faces of the flange portion. The resilient member is mounted on the flange for urging the rotary knife toward the flange portion. There is also provided a shifting mechanism mounted on the flange for shifting the rotary knife in a direction away from the flange portion against the urging force of the resilient member.