Sheep drought takes toll on markets

29 Jul, 2010 12:01 AM
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PROCESSORS are struggling to make ends meet as they continue to compete with the live export industry for a limited supply of sheep.

Hillside Meats principal Peter Trefort said things were terrible for processors in the current environment and it was taking its toll on export markets that had taken years to establish.

Hillside Meats is currently only operating two days a week, while Narrikup processor Fletchers recommenced production on Wednesday.

"We're all under a lot of pressure from a lack of numbers," Mr Trefort said.

"When you have a lack of numbers, you haven't got throughput and it makes things very difficult.

"This is the normal quiet time but it is the worst I've ever seen it.

"There's nothing you can do, we're competing with live shippers and other processors for a very limited number of sheep.

"When you've developed markets in many countries and then haven't got the product to supply them, it's embarrassing."

Mr Trefort said he hoped no long term damage was being done to those overseas export markets and most had been reasonably understanding.

But he said at the end of the day, those customers being sympathetic did not help them if they were trying to run a butcher shop with no meat in it.

"So far we've been able to maintain a nucleus of the stronger customers with product we can sell them, because what they want is different to what we want here on the domestic market," Mr Trefort said.

"We've been able to continue on with the smaller-type lambs for export, it's the bigger-type lambs that are really important to us for the domestic market and they're the ones everyone is chasing."

Mr Trefort has spent a lot of time and effort creating export relationships with many overseas countries, which he said had given them a good spread of customers taking all different types of lamb.

But he said whereas five years ago if supply in one area was tough he could supply different product into another market, now everyone was battling for the same sheep.

"It's very difficult," Mr Trefort said.

"The other thing that is causing us a lot of concern, and I know farmers think we use it as an excuse, but a lot of us have contracts which we do in advance so we can plan our work.

"So the volatility of the Australian dollar has been terrible for us.

"We've also got ongoing costs that keep going up, just like every other household, and we can't pass those extra costs on to the customer."

From a consumer perspective, Mr Trefort said he believed lamb prices had gone up too quickly and people had not had time to adjust.

He said figures from Meat and Livestock Australia showed a slight drop in lamb consumption at about half a per cent, which although did not sound like much, could easily snowball.

Mr Trefort said he was concerned that lamb may become a meat that was chosen only for special occasions rather than every day consumption.

"Lamb at $30 a kilogram plus is pret

ty expensive when household costs have also gone up, so a lot of people are looking at how many times they eat lamb," he said.

"They are still eating it, the butcher shops are still selling a fair quantity of it, but at the end of the day we have to match what the consumer wants and if they see lamb as being too dear and choose something else, it will take them a while to come back."

Mr Treforts said chefs had become more creative with their lamb dishes in an effort to make use of cheaper cuts.

He said there were more menus featuring dishes with lamb shanks and diced lamb because old favourites such as rack of lamb and backstrap had become too expensive.

Fletchers managing director Greg Cross remained upbeat about the sector and said although supply was still an issue, he was confident things would change for the better.

Mr Cross said being a company that usually sourced a lot of older ewes, they had noticed more producers choosing to hold on to their ewes for longer.

"There aren't a lot of older ewes coming through because there aren't many available because they have all been processed or exported in the last couple of years," Mr Cross said.

"Also with the record prices being paid and the numbers being down, it's injected a lot of excitement and confidence into farmers to get out there and rejoin some of the ewes they would traditionally move on.

"But it's a good thing, we need this.

"It's surprising just how quickly the numbers can turn around. We experienced that in 2001-2002, with a couple of good seasons and record lambing percentages.

"It has to happen because it's getting to the stage where if too many producers get out, it would have a major effect on the processors."

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READER COMMENTS

crocodile tears
29/07/2010 6:51:31 AM, on Farm Weekly

It is hard to feel to much sympathy for Hillside, Fletchers, etc. when a blind man could see this day approaching. Years (two decades) of unprofitable prices for mutton and wool have been taking their toll on graziers all over Australia and it surprises me that the processors and exporters are only just recently acknowledging this.
Live export is cruel
29/07/2010 6:59:10 AM, on Farm Weekly

Would the sheep drought be because the greedy selfish live exporters have sent every sheep they can overseas to the brutal Middle East? This vile trade has cost AU over 40000 jobs and closed many slaughterhouses. And still the farmed animal industry supports a business even though it is destroying it.
ex sheepo
29/07/2010 1:32:10 PM, on Farm Weekly

Processors have only themselves to blame because of their lack of effort to give reasonable returns for growers over the past decade. No return on investment, no new investment and withdrawal from the non performing sector. I was continually ridiculed when I made this point prior to exiting the sector two years ago by those now short of stock. Long term sustainably structured contracts with processors and their customers are the only way the modern farming businesses can justify a reinvestment in this industry.
THE FARMER
29/07/2010 3:49:33 PM, on Farm Weekly

Live export please explain why a live exporter is greedy and a meat packer is not .Surely they both like to make money ?Peter Trefort may have been better served making relationships with farmers then keeping them far away as he could .If we didnt have live boats we would still have $20 sheep but not for long.My cousin when offered 30 cents a kilo less by woolworths 2 years ago when grain prices jumped asked how he was supposed to make money, woolies said not my problem, maybe buy your feeder steers cheaper.Hows the guy i buy from make money , again Mr woolies said not my problem .Now it is their problem, as far as sheep go .

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