WA Meat Marketing Co-operative in ‘good position’ with record $50.5 million profit

WA Meat Marketing Co-operative has delivered a record a pre-tax net profit of $50.5 million for the 2021-22 financial year after record international lamb sales backed by strong Australian livestock supplies. The consolidated turnover of WAMMCO’s Katanning and Goulburn plants was a record $493m, up by 27.7 per cent, both processing 1.84 million stock units for 2021-22. The co-operative paid out an average price of $216.65/head of lamb or $8.96/kg to producers. In August, WAMMCO paid out a pool bonus of $8.4m or 80 cents per kilogram for qualifying lambs and 40¢ per kilogram for qualifying mutton. Chief executive Coll MacRury said WAMMCO had completed its most financially successful season in the history of the organisation. “Logistical issues around shipping and labour supply was caused by COVID-19 — all was not smooth sailing,” he said. “Despite these challenges, other key financial drivers such as record international lamb sales and strong Australian livestock supply due to favorable seasonal conditions ensured we were able to run two processing plants efficiently and profitably.” Mr MacRury said international lamb and mutton markets showed remarkable resilience as they powered back into life in the spring of 2021. “After two years of market turmoil, we saw our important lamb markets hungry for naturally reared healthy proteins, and lamb aligns with this requirement extremely well,” he said. “All significant international lamb markets were prepared to pay some of the highest prices ever experienced during our high-volume spring processing period.” Mr MacRury said there were also challenges in the food service sector and restaurant trade. “Consequently the retail supermarket trade remained a strong focus,” he said. “WAMMCO was well-placed to satisfy retail demand, given its previous efforts with its in-market development and investment with major international retail businesses.” He said the gradual recovery in the food service sector had helped contribute to further robust business. Mr MacRury said the 13-year strategy to develop a premium chilled lamb sector in North America had paid strong dividends. “Our in-market processing facilities in one of the biggest and wealthiest markets in the world protected WAMMCO from being a second-tier price-taker,” he said. “In WA, the Katanning plant drove record kills through the spring, however, we did experience staff shortages from April onwards. “As a result, the plant was forced to drop its daily throughputs, by about 30 per cent.” Mr MacRury said WAMMCO continued to be well-positioned for future growth in the high-end lamb business. “North America, the Middle East, South-East Asia, China and the EU will continue to offer WAMMCO the best opportunities for lamb and mutton returns in 2022-23,” he said. “Our vital co-marketing with The Lamb Company — with the ‘Big 3’ New Zealand meat processing companies is forecast to achieve significant growth in the next five years.” Mr MacRury said WAMMCO would continue to contend with restricted and slow shipping and airfreight logistics to achieve the best outcomes. He said because of Katanning’s crippling rental vacancy and the challenges to attract and retain quality offshore labour, WAMMCO had plans to invest in its own accommodation complex in or near the town for up to 120 people. “Immediately, we are going to buy the Jumbuck Motel to house workers,” Mr MacRury said. “Our plan is to construct our own managed accommodation facility to help incentivise hardworking employees to WAMMCO,” Mr MacRury said. Also in the pipline, WAMMCO will be investing $20m on new freezer and storage spaces at the Katanning plant., to be completed in the 2023-24 season. WAMMCO marketing manager Damien Giumelli said while there were strong lamb sale values in the core markets, the company was still faced with shipping logitstical challenges. “Consumers were back after COVID-19, wanting to dine out which resulted in a huge jump in the price of lamb racks — up by 60 per cent, as compared to two years ago,” he said. “North America lamb sales values increased by 20 per cent in the past year.” Mr Giumelli said China lamb sales values were up 11 per cent, and the Middle East jumped a “whopping” 45 per cent as tourism had picked up. “Shipping and logistics have had some extreme challenges with some improvement in airfreight but the cost is out of sight — at about three times the previous cost,” he said. “Sea freight is about double the cost, it’s a battle to get enough containers and space on vessels to get product to market on time. “Sailing times of 30 days have blown out to 60 days.” Mr Giumelli said customers continued to look for products that were important to them. “They are looking for healthy products — grassfed, pasture raised, free of anti-biotics and no hormones,” he said. “The low Aussie dollar has helped with our selling price to foreign markets. “The war in Ukraine has resulted in inflation pressures — rising interest rates and increased cost of living as we experience a global slow down.” Mr Giumelli said the UK free trade agreement had been delayed, but when it does happen, Australia will have another 25,000-tonne access to the UK.