MEAT and Livestock Australia’s 2008 Sheep Industry Projections have underestimated the decline in lamb production this year, according to Q Lamb Alliance chief executive officer Reg Crabb.
The projections were released in Brisbane earlier this week by MLA’s chief market analyst Peter Weeks, who said lamb slaughters for 2008 were expected to drop by 8pc across Australia.
But Mr Crabb said he believed that estimation was “way off the mark”.
“I believe the drop will be closer to 20pc compared to last year,” Mr Crabb said.
“I don’t have a handle on lamb numbers over east but WA is going to be very volatile come autumn and winter.
“I cannot see how, after so many years of drought across the country that the numbers are going to be out there.
“Farmers who have had the rain in the east are going to be holding on to second-cross ewe lambs to build up flocks because they have been so decimated.
“A lot of them also sent stock to slaughter last year that they would normally keep and that means the slaughter figures were inflated in 2007.
“Conversely, it means the slaughter figures for 2008 will be deflated and even if those figures only drop 2pc or 3pc it really makes it 6pc such was the increase in 2007.”
Mr Crabb said the amount of lamb produced in WA would have to be less than other years because of a combination of dry conditions in the north of the state and high grain prices.
“It is scary how many farmers in areas that used to hold a lot of sheep are going out of sheep,” Mr Crabb said.
“You talk to carriers and they say they are not moving stock.
“At the moment lamb prices are not reflecting the increased cost to produce a quality grain-fed lamb.
“The price of lamb at the moment does not reflect the significant increase in the cost of inputs.
“If you look at lamb prices for February going back the past three years and it doesn’t differ too much.
“Basically there has been very little or no movement in the February price of lamb over the past three years, yet the price of grain has doubled.
“That is why producers are not committing to putting lambs in the feedlot because they are going to lose money.
“Producers would need a minimum of $3.40 per kilogram right now and $3.60/kg by Easter and $4/kg by July/August to consider feeding lambs.
“If those prices are not there, lambs will go on boats instead.
“We are a different market to the east because producers have the option of sending lambs to live export if the price for finishing them isn’t right.
“If you are going to get $25 more for spending $26 or $27, no one will do it.”