05 October 2023

Insight from: Robbie Sefton

What a difference a few years make. This time two years ago, Australian sheep and lamb producers were enjoying record high prices at the saleyards, but since the start of 2023, prices have dropped alarmingly, falling by between 60 and 80 per cent and leaving many producers considering their options, particularly as drier conditions start to bite in many regions.

The only good news to come out of this dire situation should be for consumers, who you would expect would be enjoying a price break on their favourite lamb cuts at the supermarket. But, this drop in prices has failed to materialise, leaving many asking why? Prices in the saleyards have been dropping for months and yet, the market experts tell us that at the end of the supply chain, in supermarket fridges, prices have fallen on average only about 5pc.

It’s an equation that doesn’t add up and is only contributing to the frustration of producers whose only consolation at this point should be a spike in lamb consumption due to far more competitive prices. And, rightly, is raising the question of who’s benefiting financially from current prices? Certainly not farmers or consumers.

It has prompted renewed calls for the competition watchdog, the ACCC, to investigate and, where necessary, take action to rectify this pricing anomaly. The need for tougher competition policy around agricultural commodities is not a new concept. Advocacy groups and organisations have been pleading for more stringent monitoring of our supermarket giants for years. The virtual duopoly that exists currently has been widely criticised for short-changing both producers and consumers.

Guyra lamb producer and former NSW Farmers president, James Jackson, was recently interviewed on ABC radio about the situation, and on the issue of retail prices for lamb, he summed it up this way: “There is serious food inflation in this country and one of the reasons for that is failed competition policy.”

Consolidation of meat processors was also another competition concern, Mr Jackson said, and a contributor to high retail prices. It’s not only red meat, of course, that has come into the spotlight. Milk and the prices farmers receive compared to the prices on the supermarket shelf have long been a source of contention.

MLA has said it will take up to eight months for the full price decline around Australian lamb to flow through to consumers, but with prices falling rapidly since the start of the year, surely by now we should be seeing more significant drops at the checkout? One wonders too if, hypothetically, the current situation did result in far lower retail prices for lamb, and then prices started to rise again, would it take more than six months for retailers to pass on the higher costs to consumers? Food for thought.

And the cause for enormous frustration within the industry as it deals with mounting challenges both here and abroad. There’s a lot of factors at play here, there’s no doubt: a possible oversupply of lambs, wariness around current weather patterns, volatility in overseas markets to name a few. But, producers are used to having to deal with all this, and don’t expect a lot in the way of assistance from policy-makers. It shouldn’t be too much to ask then that regulators fulfill their obligations across the whole of the supply chain to ensure it’s a level and transparent playing field for everyone.

To read this article in The Land newspaper, visit Lamb producers feel pain of falling prices, but little impact on retail price prompts tough questions | The Land | NSW

 

The only good news to come out of this dire situation should be for consumers, who you would expect would be enjoying a price break on their favourite lamb cuts at the supermarket. But, this drop in prices has failed to materialise, leaving many asking why?