High prices are well deserved

Dr Kelly Manton-Pearce, Yealering sheep and cropping farmer, 2012 Nuffield Scholar and Sheep CRC and Murdoch University researcherCountryman

Without a doubt, 2011 was a very positive year for sheepmeat and wool producers and the sheep industry overall.

High prices for wool and meat were well above 2010 and, honestly, in the vicinity of what sheep farmers deserve and should be paid.

On the downside, the high prices continue to challenge meat processors and the very high livestock prices are perhaps not sustainable across the whole supply chain.

Despite the high prices, sheep and lamb numbers remained very tight in the west in 2011, but the improved seasonal conditions were a contributing motivator for farmers to start rebuilding their flocks.

Another positive was an increase in export demand for chilled and frozen lamb and sheepmeat from Middle Eastern countries and the United States - our largest export markets.

In the short to medium term, the rise in the Australian dollar appears to have had a minimal but positive impact on lamb demand and price.

Demand was upheld and continued restrictions on supplies maintained high lamb prices.

A big industry plus was that the high prices and demand encouraged increasingly more young WA farmers to view sheep as a valuable part of their enterprise mix.

Besides providing financial security, sheep will also play an important integrated weed management role into the future to help tackle issues relating to herbicide resistance.

We're observing strong rebuilding intentions and I believe the high prices for restocker Merino and crossbred ewes will continue to do so for quite some time.

In 2012, WA producers will face the challenge of balancing the short-term gain of turning off enough lambs and mutton sheep to capitalise on the firm prices with the long-term requirement to produce enough mothers to fulfil future demand.

In addition, many farmers have debts accumulated during the drought that they need to service.

The question is - how are we going to meet the growing world demand for sheepmeat if farmers cannot afford to restock or choose to capitalise on high prices and get out of sheep?

I believe these issues are also on the minds of the WA meat processing industry and WA-focussed live sheep traders.

Certainly, Merino-Merino matings are up as farmers try to boost their Merino ewe numbers. This has implications for the number of slaughter lambs available in the 2011-2012 season.

WA has a strong wool mentality but the high lamb prices should encourage more terminal and maternal sires being mated to Merino ewes in 2012.

Over the years, there has been a shift from wool to meat production on WA farms and the high wool price could possibly reverse this trend.

I strongly believe that the outlook for lamb and sheepmeat is very positive into the future.

In the following years, I don't believe any major price reductions should be expected due to the continued global demand growth.

It is very likely, however, that the eastern states will rebuild sheep numbers more quickly than WA. If so, their lower priced lamb will be sold into the same markets as WA product, which will put WA processors under further pressure.

But the lamb industry will need to continue working hard to keep lamb popular among domestic and export consumers, especially while supply is low enough to keep prices high.

Domestically, the humble lamb chop is no longer a staple on the Australian dinner plate, rather a special treat.

In both domestic and export markets, we are already seeing signs of strong consumer resistance to the high prices.

Lamb consumption has dropped in the European Union and the US, with a likely link between the high cost of lamb and the global financial crisis.

As farmers, where do we want the lamb industry to head? Do we want lamb to become a high-value niche product or would we prefer it to remain as an Australian staple and encourage greater consumption of lamb in our export markets?

To do so we must be prepared to differentiate our lamb product. Lamb is an expensive purchase and consumers want value for money.

By farmers working together to maintain high lamb eating and carcass quality, we will be able keep lamb differentiated from our competitors - beef, pork and chicken.

In WA we have very relevant and exciting sheepmeat and wool research being conducted through the CRC for Sheep Industry Innovation.

Producers will soon be able to use new breeding values for improved eating quality, such as intramuscular fat, to balance against selection for increased lean meat yield, ensuring demand for the lamb and eating quality continue in parallel.

Recently, I have heard New Zealand continues to ship short of its quota into the EU.

I find this frustrating because demand is not being met, yet Australia cannot change its quota size into the EU. Hopefully, there may be an opportunity for Meat and Livestock Australia to negotiate the purchase of quota parcels from NZ or Argentina.

I think we also need to invest more to get farmers better skin prices. We have a valuable asset in our skins and while we only receive a fraction of what farmers receive in the eastern states for skins, we are not getting optimal prices for our lambs.

Restocking and rebuilding *

My husband Alan and I are very interested in increasing our sheep numbers through both restocking and rebuilding but accept it is a slow process. Were developing a shedding maternal composite ewe line using surplus Border Leicester ewes from our stud mated to White Dorpers. In addition, we've increased our Merino ewe numbers with the aim of producing larger numbers of first-cross Border Leicester-Merino ewes to sell at premium prices to the eastern states.

Get the latest news from thewest.com.au in your inbox.

Sign up for our emails