WA meat processor WAMMCO announced a significant loss in the last financial year at its AGM in Beverley last week.
WAMMCO suffered a loss of $885,000 largely due to the co-operative processing lamb rather than mutton.
WAMMCO chief executive Coll MacRury said the business had an obligation to its shareholders and needed to process lamb despite more profit to be made in processing mutton.
Mr MacRury also said the aquisition of Goulburn processing facility in New South Wales last year stemmed the flow for what was a tough year for processors.
"The first half of the year was pretty solid in terms of market price and what we were able to pay the producers," Mr MacRury said.
"We saw a very quick turn around from that from about January/February onwards, where the market was inundated with lamb from the Eastern States and New Zealand.
"With the European and US economies weak, the price of lamb just got out to a too high a level and consumers backed right off eating it and started eating chicken, fish and other proteins which were cheaper.
"So subsequently lamb hasn't improved its position to date and we are still in a very subdued market."
Mr MacRury said the Goulburn facility, which is coming on 15 months of operation, had been a welcome addition to the co-operative.
"We have made some really big changes there and we have got our lamb processing going there," he said.
"They didn't do much lamb processing in the past, they focused on mutton but we have done a lot of work in getting that to be more efficient.
"At the moment we are processing a fair few mutton through there but that will move back into lamb in the New Year when a lot of lamb comes back on the market."
Mr MacRury predicted the lamb price in the east could drop to as low as $3/kg next year.
"That's a guess but when you consider you can buy lamb at the moment in pockets that are $3.40-3.50/kg and we haven't seen any real push with supply for kill yet, you would have to think the way the world market is at the moment you are going to at least see $3," he said.
"There will still be some decent lamb kills from WA from January to about March but I think it will tighten a bit then.
"I can't see the money over here tracking to those levels but we have to be realistic and we have to survive and I can't guarantee that it will be any better than it is now."
He said WAMMCO would ideally like to offer around the $4/kg mark but was currently offering about $3.70/kg
"Given the exchange rate and where it is with the current market, everything is against us and everything is against the whole primary industry at the moment."
He said WAMMCO was processing at full capacity with overtime everyday plus Saturdays.
He said it would most likely continue through to Christmas.
