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Farmer Colin Harper was fed up with being a price taker — and not a price maker — when it came to selling his lambs.
Key points:
- The Riverina farmer is now processing and marketing his own lamb in order to set his own prices
- The National Trade Lamb Indicator has dropped almost $2/kilogram year-on-year
- Livestock agent Harry Morton says farmers are disappointed with the price gap between the saleyards and retail at supermarkets and butchers
To solve the problem, the southern New South Wales farmer decided to step away from the saleyards to process and market his own lamb direct to the consumer.
"We are the first link in the chain, we should set the price and [supermarkets and butchers] should work it out from there, but it's never worked like that," Mr Harper said.
The lamb and grain producer from Ariah Park in the Riverina said the price point for lamb in major supermarkets did not properly reflect costs in the supply chain.
"Any chance they get they bump the price up, even when the price of lamb drops at the saleyards, they find some reason for them to stay where they are," Mr Harper said.
He said claims of wage costs, electricity price hikes and rent rises were a convenient excuse for retailers to lift lamb prices.
"That's just hype, it's easy to say and makes a good story," Mr Harper said.
Hold them or fold them?
Livestock agents, who are at the coalface of marketing farmers' lambs, are also perplexed at the current price gap between the saleyards and retailers selling lamb.
The market at Australia's largest sheep and lamb selling centre, Wagga Wagga, has been unpredictable.
"A cheaper sale at the start of June and forecast rain led to farmers sitting out last week's market," Wagga Wagga agent Harry Morton said.
There were 20,000 lambs penned, down 12,000 head on the week prior.
Mr Morton said the reduced supply led to an uptick in prices, in particular for trade-weight lambs favoured by supermarkets, which lifted $30.
Those lambs averaged about $160 to $165 a head, about $6.40 per kilogram, carcase weight.
But Meat and Livestock Australia's National Trade Lamb Indicator shows the price of lamb has dropped almost $2/kg year-on-year.
Mr Morton said some farmers were upset and confused as to why they were being paid so much less than lamb was retailing for.
In Wagga Wagga, this week a pack of seven lamb cutlets was priced at $32.47 ($43/kg).
"[Farmers] work hard for their product and they go and see them in the butchers and supermarket with a fair bit of mark-up, so it is annoying for them," Mr Morton said.
"They want reasons why that's the case, and to be honest I couldn't tell them why."
Farm-to-fridge supply chain
Mr Harper currently sells his lamb products weekly at the Riverina Producers' Market in Wagga Wagga.
"It's really great to know where your food is going, and for people to know where their food is coming from and that it is healthy, grass-fed and nutrient-dense lamb," he said.
Mr Harper has not raised the price of his lamb products since he entered the retail market just over two years ago.
"I base my price on the saleyards and not what the stores are selling lamb for," Mr Harper said.
"I know my cost of production, I am not looking to break records every week, I priced it competitively when we started and have just been able to keep prices there."
Mr Harper is so confident money can be made from meat that he has just bought his local butcher shop in Temora.
"The more people you can take out of the loop makes for more profit," Mr Harper said.
"It's really reassuring you can set your own price, rather than be dictated price by a meat buyer who buys your pen of lambs in 10 seconds at the saleyards, despite you putting 12 months' work into them," Mr Harper said.
No avoiding rising costs
Established butcher Alicia Close said reduced livestock prices would have little impact on the cost of running her Muswellbrook business.
"You've got electricity rising, you've got rent going up every year … our insurance and our workers comp — everything's gone up, even our dry goods that come into the store," Ms Close said.
"Everything went up like crazy and we wore a lot of those costs. We held [out] as long as we could before we had to move on those prices."
Ms Close said if the price of beef continued downward, she may adjust her pricing, but there was no margin to bring down their price for lamb.
"Absolutely not — it's the older stock, like mutton and hogget, that have come back in price," she said.
"We don't provide that in our shop because it's just not quality. People wouldn't come back if we sold that."
'Highly competitive' environment
Major supermarkets Coles and Woolworths were contacted for comment about their lamb prices.
A Woolworths spokesperson said its supermarkets operated in a "highly competitive" market.
"We work to deliver the best value possible to our customers and fair prices to our farmers," they said.
"Meat and Livestock Australia's current reported livestock price is on an overall average and does not reflect the actual price paid for premium lamb in our supply chain.
"This week we're … offering our customers lamb leg on special at $12 per kilo."
Woolworths also noted its lamb was predominantly sourced from valued, long-term supply partners and pricing tended to be set on a weekly basis, with some seasonal contract pricing.
A Coles spokesperson said there were many factors that influenced retail shelf prices, including the price of livestock.
"We continue to invest in value for our customers in lamb," the spokesperson said.
"This week, we have dropped and locked the price of our Coles Whole Lamb Leg Roast from $15 to $12 per kg, which is a saving of 20 per cent."
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