DESPITE the 2020/21 season being a difficult one for WAMMCO International on a couple of fronts, it was still a successful one for the co-operative.
After recording a disappointing result in 2019/20 on the back of COVID-19, WAMMCO rebounded strongly last season.
In the 2020/21 fiscal year it posted a net pre-tax profit (before pool bonus) of $8.1 million that came from a consolidated turnover of a record $390m, which was up 20.2 per cent on the prior season.
WAMMCO chief executive Coll MacRury, who addressed the co-operative's annual general meeting at Katanning online from New Zealand, said this was a strong result for the co-operative in a year where it continued to face difficult market and logistic issues.
"We achieved a good profit and turnover compared to the previous year," Mr MacRury said.
"The team did a very good job to achieve this result through a very difficult period.
"We still faced issues around COVID-19 and there were a lot of shipping issues, so it was very pleasing to return the result we did."
This strong result allowed WAMMCO to pay a pool bonus of $2m last financial year to its members, which brought the total bonuses paid in the past eight years to $22.85m.
The bonus last year equated to 20 cents a kilogram for qualifying lambs and 10c/kg for qualifying mutton.
Mr MacRury said WAMMCO was pleased and proud to be able to pay some consistent rebates to its producers.
"We hope to be able to continue in the same way going forward," he said.
In other good news for producers and highlighting just how strong the lamb market has been over the past 12 months, Mr MacRury said WAMMCO's average price paid to producers for lamb last season bonus inclusive was $174.31 a head.
"This was a very good effort and we were able to support producers with these prices due to the work we have put in in terms of our value adding, our processing sites in North America and the work we have done with China and other markets," Mr MacRury said.
It was a challenging start to the season for WAMMCO exacerbated by the dry conditions in WA in 2020, which saw the sale of more than one million head of sheep and lambs to the Eastern States and this in turn meant there were less stock available for processing in WA.
Despite this, WAMMCO ended up processing 1.75 million stock units for 2020/21 at Katanning and Goulburn, New South Wales, which was up quite a bit on the year prior, Mr MacRury said.
He said the Katanning plant had very strong throughputs last season and it broke many throughput records.
"The addition of the new mutton boning room and a new agreement we made with the union meant we were able to get our best-ever processing numbers out of the plant," Mr MacRury said.
"The strategy to develop the mutton room and work it in conjunction with the lamb boning room meant we were able to lift daily boning capabilities by more than 20pc last year and that is significant for any processing plant.
"Even though the margins were tighter last season by being able to do the numbers that offset the high prices.
"By having the mutton boning room it has allowed us to process a higher volume of added value lamb through the lamb room."
When it came to the Southern Meats plant at Goulburn, New South Wales, processing numbers lifted by 30pc there last season.
Mr MacRury said having the two plants worked well and gave WAMMCO much more strength of supply in the market.
While WAMMCO had no problems processing product last season, world shipping delays and logistics continued to be a thorn in the side of the co-operative.
Mr MacRury said despite the challenges in this area they were managing to get the product to market.
"We are utilising just about every major port in the east coast," He said.
"With the Fremantle port reasonably limited we are having to use most of the big ports on the east coast to get our chilled lamb product to market on time and in a way our customers expect."
Mr MacRury was also happy to announce that after some delays installing the DEXA x-ray unit over the past 18 months at Katanning, the installation was finally completed in August.
"Rob Davidson, Graham Gardner from Murdoch University, Scott Technology and the team at Katanning are fine tuning this equipment," he said.
"It is only the tip of the iceberg with what we are trying to achieve in terms of implementing new technologies in the plant.
"With the DEXA x-ray unit we have only really started out on that journey and we are looking forward to taking it to the next level.
"It will allow us to deliver some important and accurate information to producers going forward and then the next step will be to potentially get into robotic cutting.
"The robotic cutting side of things is not a small project and if we do go down that line it will be two to three years away but we do have to start planning for it in the next 12 months.
"I believe we have to head down that path seriously.
"It is the way of the future and it's a way we can extract some even better yields from our high value cuts.
"It will also help us with our health and safety focus and looking after our employees as this technology will do a lot of the hard work which has traditionally been done by manual labour."
Mr MacRury said he believed international lamb and mutton prices would remain very robust through this coming season.
"Livestock prices will remain strong, as long as the market forces remain where they are at present and I think we will see WAMMCO set a new procurement record this season," he said.
"We are right on track to do that if we look at the prices we are paying now.
"I think we might see a small drop in price in November but those prices will still be at historic high levels.
"It has been a long time since we have seen market forces work together so well.
"Livestock, processing and marketing are all performing highly and the only challenges we look like having are shipping and logistics and, probably, labour.
"There are always challenges in this industry and you are never without a challenge but the most important thing is our key market forces are aligning quite nicely."
One of those markets which has been extremely encouraging for WAMMCO in the past 12 months is the North American market, where WAMMCO has invested heavily in the Lamb Company.
Mr MacRury said this model in North America was continuing to drive revenue of WAMMCO's top end cuts.
"Our investment and control of this market cannot be understated and it will continue to deliver superior revenues for us,'' he said.
"Retail lamb demand has grown 10pc in Canada and 19pc in the US on a year ago.
"What we are starting to see in this market is the younger brigade being interested in cooking lamb and the health attributes which come with it.
"Health is a big one for consumers now and it is why we go on about antibiotic free, grassfed, pasture-raised.
"This is the big push in the international market now and it is where we are going to get the biggest growth.
"If we want to continue to see the returns we are seeing now, we are going to have to transition more and more lamb into that market.
"They want fresh, antibiotic free, grassfed, pasture-raised lamb.
"It's absolutely demanded now and in the North American market it is very difficult to get the same price for conventional lamb.
"There is very much a two tiered pricing market and we are only going to see the gap open up in this market even more in the years ahead."
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