If you want to cook a bit of lamb on your barbecue as the weather warms up, you might finally get those cutlets a little cheaper as prices fall in the supermarkets.
Key points:
- The full effect of lower saleyard prices for lamb is months away at supermarkets
- Complex market arrangements slow down the flow-on to consumers
- Some producers are selling directly to consumers to get a better return
Farmers nationwide have seen some sheep and lamb categories fall by 70 per cent in the saleyards in the last 12 months.
The industry is struggling, but when it comes to those of us eating it, the price has barely fallen.
While the sheep prices have been sliding for months, in the past couple of weeks, they have fallen to levels not seen in many years.
This has resulted in a dramatic downturn in fortunes for sheep producers, who less than three years ago were celebrating record lamb and mutton prices.
Despite the big drop at saleyards, new data shows the price of lamb has dropped by just 7 per cent at the supermarket or butcher.
Meat and Livestock Australia (MLA) says it will take up to eight months for the full price decline to flow through to consumers.
Meanwhile, some farmers are selling their meat directly to consumers online to make money.
The question remains: When will consumers start to see lamb prices on the shelves reflect the dramatic decline at saleyards?
Why isn’t lamb cheap at the supermarket?
Livestock prices are one part of the puzzle when it comes to the prices paid at the supermarket. Producing red meat requires a lot of input, from energy to transport and freight costs, labour costs, retailer and processor margins.
All these have increased in price over the last year, delaying the flow-through from consumers to the saleyard, but now prices are falling.
Meat and Livestock Australia market information manager Steve Bignall said that during the last lamb market downturn, it took many months for prices to completely flow through to the supermarket shelf.
“There have been two data points, back in 2012 and 2016, where lower livestock prices did flow through to lower retail prices and, on both those occasions, it took on average eight months to flow through,” he said.
“When they did drop, those low prices at a retail level stayed down for around nine months.”
In the past 12 months, Australians have eaten the most lamb they have in four years and, with declining prices, Mr Bignall expects that consumption to continue.
“We can see that over 190,000 tonnes of lamb meat were consumed in Australia last year, which was the highest since 2018.”
Crisis meeting
Peak sheep farmer bodies will hold a crisis meeting this week to thrash out ways to help producers suffering through a rapid fall in prices and looming dry conditions.
Wool Producers Australia president Steve Harrison said they were advocating shire rate subsidies and a pause or reduction on compulsory farmer levies such as the one paid to Meat and Livestock Australia.
“We’ve certainly got to look at something because the current (prices) for sheep and lambs are pretty abysmal,” Mr Harrison said.
Selling lamb directly to consumers
While consumers might want their meat cheaper, producers would like better prices at the farm gate.
With dry conditions in some areas and an oversupply of sheep, prices have fallen to as low as $2 a head.
Some sheep had even been returned to the farm because they could not attract a buyer.
That has led to some farmers coming up with solutions they hoped would benefit them and their customers.
Farmer George Beck runs prime lambs on his property, Lynwood Park, in Pleasant Park in South Australia’s south-east.
He recently decided to sell his lambs directly to consumers to avoid low saleyards prices and to help the local community get a good deal.
“We had some good lambs that were left over … we’d planned to put them into the market hoping it would correct itself, but it’s continued to slide,” Mr Beck said.
Selling both boxed whole lamb or half lambs through his local football and netball club for about $12 a kilogram, Mr Beck said he would not be making a large profit on the sales.
But selling 100 lambs in the first three hours of sales, the community was pleased to be able to buy directly.
“I thought with customers still feeling the heat with the cost-of-living stuff, it was an opportunity to put some lamb back into the local market,” Mr Beck said.
“It was sort of a short-term win situation for everyone and a bit of a cost-recovery exercise for us.”
Mr Beck said he was not planning to sell directly to consumers long-term, but it all depended on how the market went.
“I don’t think it would be a long-term plan for us. It is quite time-consuming,” he said.
“But if the market’s going to be tough for 12 or 18 months, it could be another little side outlet for us to siphon some of the better-quality lambs off.”
Trying online marketing
Rob Fraser produces prime lambs in the Southern Tablelands of New South Wales.
He has recently come up with an online sales concept in the hope of reducing marketing and transport costs.
He launched Abblamb, an online marketing platform that gave a dollars-per-head price on lambs before they left the farm.
“I felt lamb producers needed a platform where marketing costs can be reduced,” Mr Fraser said.
“Physical markets can be so erratic on the day with one pen of the same article differing $10 side-by-side.
“We can be more of a price-maker, not taker … because it costs so much to pass them in and bring them home.
“With this system, we can pass them in, open the gate, and they’re still here to market another day. We haven’t lost money until we sell them.”
