Processors refute sheep price claims

27 Apr, 2012 02:00 AM
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Sheep processors have defended their prices at the saleyards saying it is about ensuring the abattoirs' long-term viability.
Sheep processors have defended their prices at the saleyards saying it is about ensuring the abattoirs' long-term viability.

SHEEP processors have defended themselves and the prices they have paid at the saleyards, against claims they are not paying enough for sheep.

In a recent letter to Farm Weekly in this week's letters pages, Ken Earnshaw, Katanning, has accused WA sheep processors of cutting back on shifts to "cause a glut of lambs so they can force the price down".

Mr Earnshaw said Katanning farmers were having to send lambs to abattoirs in Bunbury where they could kill them in a week but, in doing so, were paying increased freight costs.

He went on to say that if WA increased its sheep numbers - as is the plan with the Sheep Industry Leadership Council's (SILC) More Sheep initiative - it would make the problem worse and drop lamb prices to $50 and mutton to $30.

"Remember in the mid-1970s an old ewe paid for a tonne of super ($18) now you need to sell 12 (all other farming costs have done the same)," Mr Earnshaw said.

"It won't happen, but we would need to get $216 to have the same buying power.

"This rubbish about breeding one million more lambs a year would take us back to the early 1990s.

"The goose that was laying the golden eggs (farmers) was nearly killed but in the last three years or so it started to lay again.

"It has stopped now because it got constipated with all the lies, regulations and rubbish it has been fed."

But WAMMCO and Fletchers have hit back saying they are processing as much as they can to stay open during the winter months.

Both admitted it was all about staying viable for the longer term.

WAMMCO chief executive Coll MacRury said the company was processing about 11,000-12,000 head a week.

"What it is, is that I can't kill anymore than that because I can't make money out of it from the price I am paying farmers," Mr MacRury said.

"So the only way I can keep the price up to where it is at the moment is to manage the kill so that I only satisfy our best high-paying markets.

"Otherwise if we had to do more than that, we would have to drop the price back to about $4.20 a kilogram and there would be an uproar (from farmers)."

He said currently WAMMCO was offering $4.60/kg.

"It is more or less a medium to short-term thing and it won't be long term but it will have to work its way out, and until that happens we will have to manage kills," he said.

"What is happening with the international market is there is a glut of lamb from Australasia and even from the domestics up north - there is plenty of lamb around - so what that means is there is a lot of frozen meat being kept in stores that is waiting to be sold at the moment.

"We are just doing it so we don't lose too much money otherwise we would be buried."

He said the amount of sheep being processed was totally market driven and it was the first time he had seen it this bad for a long time.

"You can basically only kill to what you market," he said.

"It is certainly a modern philosophy that you can only market what you process, which is a total reverse to what it has been in the past where it has been production-driven."

Fletcher International general manager Greg Cross said the company only had enough stock to process for three days a week.

"We don't have enough to do a four or five day week otherwise we would be out of sheep," Mr Cross said.

"It is a balancing act and it's called responsible management and that's the bottom line.

"It is a matter of steady as she goes to keep her afloat otherwise we are going to do a Titanic.

"If we go full steam ahead we will hit a proverbial iceberg and that's not what we want to do."

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