Meat processor needs more lambs

WA's biggest meat processor has warned that it is already short of sheep and hasn't even begun supplying lamb and mutton to China under a joint venture that includes $200 million of investment in local assets.

Peter Walsh - who runs Bunbury-based V&V Walsh with his brother Greg - said it was processing about 16,000 head of sheep and lamb a week, but it was not enough to meet existing demand.

"We are about 5000 head a week short of what we should be killing. It is a constant struggle to get the sheep we need," he said.

Mr Walsh added his voice to calls for farmers to lift sheep production as he closes in on a licence to export to China.

Securing the licence opens the door to V&V Walsh supplying huge volumes of lamb and beef to Grand Farm, China's biggest importer of red meat from Australia and New Zealand.

"We hope farmers start producing more because they will be rewarded. It comes back to supply and demand, and demand well and truly outweighs supply at the moment," he said.

"They (farmers) were not rewarded in the past, but looking forward they will be rewarded. In the end consumers will dictate how high prices go, but no matter what they produce I will never be able to fill my quota."

Mr Walsh said producers were getting about $5.40/kg for cross bred lambs and he expected the price to rise to $6/kg as supply dried up from May to August.

A deal announced last year paved the way for V&V Walsh to process an extra 500,000 lambs and 30,000 cattle a year for Grand Farm.

Grand Farm is investing $1 billion overall in boosting supply and production with the backing of authorities in Inner Mongolia, where the Walsh brothers have a multimillion-dollar stake in development of an abattoir with capacity to process 10,000 lambs a day, undercover feedlots and a research centre.

The Inner Mongolian facilities are due to start operating by September and V&V Walsh hopes to have its export licence within months.

Mr Walsh said the joint venture partners would begin looking at farm and feedlot investment in WA to boost supply once the export licence was in place.

"It is all starting to happen. We are finishing our project over there and the Chinese authorities have inspected our abattoir," he said.

"We are hoping to have our licence by July and that is when we will start looking at farms."

Grand Farm president Chen Xibin and the Walshes have flagged investing tens of millions of dollars in farms and feedlots.