MEAT & Livestock Australia managing director Jason Strong appeared on national morning television program Sunrise recently, quizzed by the hosts about the lack of response in retail pricing for lamb in the face of this year’s livestock price collapse.
Rightly or wrongly, there’s clearly a growing view amongst some consumers that supermarkets are this year profit-taking at the expense of lamb and beef producers who have watched their livestock prices slashed by a half to two thirds since the start of the year.
Supermarkets have applied some modest retail price reductions on some items, but nothing like the price trend seen for livestock. But equally, supermarket retail pricing tracked nothing like the phenomenal price rises that were seen for all slaughter stock over the 2021-22 period.
“Lamb (livestock) prices have dropped up to 70pc in the past year, but it’s a different story in the supermarket, where lamb prices have only dropped by 7pc, over the last three months,” the Sunrise hosts said in their introduction.
“So when will the savings (ie cheap livestock) be passed on to us at home?” they asked.
“The main factor is about supply. The last few years has produced a 23pc increase in the size of the Australian flock – the largest in 15 years,” he said.
“We’ve had three fantastic seasons in a row, so we’ve had increased productivity, and that increase in supply is now coming onto the market. That’s the biggest driver that’s putting pressure on prices for sheep in the saleyards.”
While he did not mention the second factor (perhaps due to time), it is assumed it would have been the flat international trading environment for sheepmeat, as well as beef.
“So if lamb (livestock prices) are dropping like this in the saleyards, why am I still paying so much more for lamb in the supermarket? How long will it take to flow on?” one of the presenters asked.
‘It is flowing through,” Mr Strong said.
“But what we need to remember is that the price of the animal is only one of the component costs that contribute to the price of the product at retail.
“Even though it may seem like a smaller price reduction in price at retail, we’re seeing the increase in volume of sales, both domestic and export. There’s been an increase of more than 12pc in domestic sales volume, and more than 22pc increase in export volume.
But live animal price was only one of the components that make up the retail sticker price, Mr Strong said.
There are so many other components along the supply chain (rising energy costs, transport etc) that are now much more expensive than what they were earlier.”
“So how else can we save if we want to access cheaper lamb at the moment?” one of the Sunrise hosts asked.
“It (livestock price movement) will continue to flow through,” Mr Strong said, “but it’s not going to be at the same proportional shift that we see with the livestock price.”
“But what’s most important in times like this is the relationships we build along the supply chain. From a consumer’s point of view, it’s understanding the supplier of your retail meat – whether that’s a supermarket, an independent butcher, or direct from the farmer – because all of those people have an increase in supply.”
“It’s how the consumer builds a relationship with them that will be the best way to capture those savings,” Mr Strong said.
“And the other thing to look at is different cuts and different items. While the average retail price has come down (to some extent), the price of lamb legs has come down more than the price of lamb chops or cutlets.
“So building that relationship with your retailer, and understanding and keeping an eye on how those different cuts are shifting in price is important.
“The other option, of course, is brilliant local butchers – consumers might be able to get some savings there if it’s not being passed on at the national supermarkets,” one of the Sunrise hosts suggested.
Mixed responses from consumers, producers…
Once re-posted onto social media, the item attracted diverse, and sometimes critical views. Some clearly felt that MLA was unnecessarily defending the national supermarkets:
I buy my meat from a butcher, not supermarkets, wrote Lynette Cox
Cmon Jason! You seem to be defending the supermarkets. Don’t forget who you are meant to represent and who pays you! wrote Colin Bannerman
18 months ago, live lamb was $200+ a head. $30kg average at the store. Now a live lamb is $5-$10. $25kg average at the store. Who is making the extra $200 per lamb extra? Wholesale and retailer – not the farmer! Farmers will go broke. Beef is going the same way, wrote Troy Simmons.
Find a producer who sells direct to the consumer, suggested Dave Wheaton.
Here’s a thought. How about all of us lamb producers have a ‘GAP YEAR’ and don’t mate our ewes this year. See how that works, wrote Forrest Farm Valley.
MLA representative not wanting to support local butchers – only cares about big supermarkets wrote Regan Goddard-Borger
As a sheep producer and someone that has to pay a membership to the MLA, it would be nice to hear from this peak body directly. Now if I’m doing my maths right, a 22pc increase in sheep production to meet an increase of over 30pc of processed product does not match up to being an oversupply. Especially if we are looking at liveweight production vs processed demand. Be nice to have some real numbers to help producers understand how we are getting such a raw deal in a time when all our input costs are at record highs, wrote Rebecca Glencross
It’s always the farmer that takes the loss. No one else in the supply chain takes a loss wrote Hall Forrest Farm.
Good seasons create abundance. Markets cater for end user demand. Want less demand, make prices higher in supermarket, that then suppresses the primary producer. When primary producer cant produce in ordinary seasons, supermarkets puts prices higher. Deregulation encouraged by supermarkets and paid sponsors create this scenario, wrote Andrew Carvill.
You can buy a leg of lamb for $8.99/kg online at the moment, where a supermarket price is around $20/kg wrote Graeme McLeod.
- Woolworths board member Holly Kramer is keynote speak at MLA’s annual Updates 2023 event being staged in Bendigo on 23 November