CONTINUED international demand for red meat in the past 12 months has again seen WAMMCO International post strong results for the fiscal year and again provide bonuses to growers.
In the 2018/19 fiscal year it posted a net pre-tax profit result of $4 million that came from a consolidated turnover of $331m after processing just short of two million stock units at Katanning and Goulburn, New South Wales.
While the results were back on last year's record breaking figures, WAMMCO chief executive Coll MacRury, speaking at the co-operative's annual general meeting last week, said these were still strong returns for its members and allowed the co-operative to again pay a pool bonus to its members.
Mr MacRury said these results allowed them to pay a pool bonus of $2.75m last financial year which equated to 30 cents a kilogram for qualifying lamb and 15c/kg for qualifying mutton and it bought the total bonuses paid in the past six years to $18.85m.
"While our average price paid for lamb last season, bonus inclusive was $6.97/kg, I don't think any other operator in WA would be near that on an average basis throughout the 12 months," Mr MacRury said.
"We had very strong livestock throughputs last season at Katanning which resulted in its workforce enjoying very strong work cycles and there were massive amounts of overtime worked.
"However in terms of Goulburn it operated on restricted numbers from January onwards due to a Chinese license suspension which hurt WAMMCO a bit and it meant we had to manage the processing numbers there.
"We had to minimise and manage the numbers we processed, to ensure we could produce a reasonably good profit for everybody, because there is only a certain amount of off cuts you can produce for the other markets in the world'.
Mr MacRury said WAMMCO was also continuing the drive to develop both key assets in Katanning and Goulburn to provide great efficiencies,
In September WAMMCO completed the new mutton boning room at Katanning and Mr MacRury said they were already seeing great throughput increases and a far better management of the product mix.
"We are very hopeful that the room will present some very good opportunities for us in the future," Mr MacRury said.
"We will also probably put some simple cuts of lamb through this room in the future as well and that will give us a boost to our lambing boning production as well.
Another improvement, which has been in the pipeline at Katanning for more than 12 months is the installation of a new DEXA X-ray unit.
Mr MacRury said the installation of this machine was meant to be completed by now but unfortunately Scott Technology, the key robotic organisation, was unable to do all three Australian installations in the past 12 months.
WAMMCO is now looking at a February installation of the machine and it hopes to have it up and running by May to link in with the following season.
Mr MacRury said the machine would be a good bit of equipment not only for WAMMCO but also producers in terms of their feedback.
"It will also show us where we are going with our lamb carcases in WA," he said.
"New technologies are always at the forefront of our minds and we will continue looking to see how we can make the plants better and more efficient.
"We will also continue to focus on developing our key human assets for key roles and we are also looking to boost Katanning employee numbers.
"In two weeks time we will have 15 Tongan workers coming to Katanning and they will go into our boning rooms and slaughter board and will be quite instrumental in helping us get more out of the carcases and lift our numbers even further especially through our new boning room."
When it comes to WAMMCO's markets, North America, is a major market.
WAMMCO's market development and ownership model in North America is driving a lot of revenue, particularly for top end cuts and it will continue to deliver superior revenue over other options.
Mr MacRury said investment WAMMCO made into the North American Co-operative, The Lamb Company, of $1m, 16 years ago, is now certainly paying dividends for WAMMCO and its shareholders.
The Lamb Company is made up of WAMMCO and three big New Zealand companies that make up about 70 per cent of the New Zealand lamb and beef industry.
The company is the leading grassfed lamb and beef marketing and distribution company in North America and has the infrastructure to deliver premium fresh and frozen branded products across the market and lamb goes into the major supermarkets throughout North America including Lodblaws, Costco and Sysco.
"At the time it was a very good calculated risk but it has turned out to be a brilliant decision," Mr MacRury said.
"At that time you could never foresee what was going to happen and when we invested our share in the company, it was about 5pc.
"It was a very smart move at the time to go in with these New Zealand companies because we got on the back of them and co-branded into the market.
"As it has worked out WAMMCO is now punching way above its weight, as we have made an effort to drive our shareholding.
"With it being a co-operative, the more you put into it the bigger your share percentage becomes.
"Every three years they do a realignment of your input (total weight) and now our share is at 20pc.
"We are by far the smallest company out of the four involved but we are actually just off second in terms of size and volume supplied."
In addition to the North American market Mr MacRury said the Middle East and China were absolutely vital to WAMMCO's current marketing mix.
"The Middle East's locality to WA gives us an advantage over New Zealand and eastern Australia," he said.
"We do well in that market and have achieved some very good sales there over the past 15 years and the market has developed with certain key customers.
"In terms of China it is the key reason lamb and mutton prices have remained as firm as they have over the past couple of years.
"It has lifted the lower to mid-range cuts to all time highs and with the current swine flu issues this doesn't look like changing in the near future."
In terms of Europe and the United Kingdom, Mr MacRury said these markets were still important to WAMMCO but the fallout from Brexit was still to be fully understood and this could mean a reduction in what WAMMCO was going to be allowed to export to Europe."
Looking forward Mr MacRury said WAMMCO didn't see international lamb and mutton prices coming off and they would remain strong throughout the season.
"Skin and runner prices are poor in China and the forecast remains poor in the immediate future and it has been Swine flu which has been the real driver of the high Chinese protein prices.
"We believe livestock prices will remain at historical high levels based on demand and strong international ovine prices."
Mr MacRury said seasonal challenges would be significant on both sides of the country this season.
"We will be forced to buy a lot of stock in Victoria for the Goulburn plant, as Victoria and South Australia are the two States which have got out of this winter in reasonably good nick," he said.
"Northern and Western NSW are not good while southern NSW and where we are at Goulburn is not too bad but it will definitely be a challenge later in the season.
"In terms of WA I think we will face challenges in terms of numbers in late autumn and early winter next year given where we are at the moment."
