MAJOR supermarket Woolworths’ temporary 20 percent retail price drop for some lamb cuts this week has been welcomed by Agriculture Minister Murray Watt.
However, Victorian Farmers Federation Livestock Council president Scott Young said the cynic in him wondered whether the supermarket had announced the cuts to deflect attention in the coming Food and Grocery Code Review.
Woolworth today announced it would cut the price of 26 Australian lamb products by 20pc from 8 November until 27 December 2023, as part of its Prices Dropped for Christmas program to give “more Christmas savings to help customers spend less this festive season.”
Woolworths expects to sell 1.7 million kilograms of lamb leg roast this Christmas season.
The lamb product price cuts come after comments in the past two weeks from Mr Watt that he wanted a “reduction” between the rates livestock producers receive at the farmgate and supermarket prices.
Mr Watt also told Sheep Central on 18 October that despite the coming Food and Grocery Code review, “supermarkets don’t have to wait until that review is finalised to do the right thing – our farmers deserve to make a living while helping to feed the country.”
Mr Watt said the the Woolworths’ lamb price cuts were good news “and it’s now up to other big retailers to follow.”
“When farmers are getting lower prices due to oversupply & impending drought, consumers should see some cost-of-living relief on the shelves,” he said.
“Looking ahead, our Food & Grocery Code review will take a good look at the level of transparency that producers and others get in our food supply chain.”
The latest Woolworths lamb price cuts come after rises in the past two months of 411c/kg to 482c/kg in the saleyard trade lamb indicator and of 445c/kg to 508c/kg in the export lamb indicator. The trade lamb indicator has fallen from 770c/kg in early March and the heavy export lamb indicator fell from 805c/kg in the same period.
Meat and Livestock Australia recently said, based on previous price fluctuations in 2012 and 2016, that it took an average of eight months for lower prices to flow through to the retail level, and Mr Young said there is a need for more transparency in the lamb supply chain.
“The cynic in me is thinking that they (Woolworths) have put this price down obviously to take a pressure off them around things like that (the eight-month price flow through) because I think those larger retailers realise there is an investigation coming and they are perhaps trying to deflect some attention away from themselves.”
Mr Young said producers have to look at themselves as to what they are prepared to do about the situation.
“Do we no longer sit back and let the larger supermarkets do that for us — are we prepared to produce a product and market it ourselves?”
Mr Young said he and his mixed farming neighbours had realised they could no longer take $5-$6 a kilogram/cwt for their lambs.
“We’ll have producers leave the industry because our costs of production have just risen that much — we need $7/kg (for lambs) now to run livestock on our properties.
“I don’t think we will be at $7 in the next six months, but I think going forward …. $5-$6 doesn’t add up anymore,” he said.
“My rates and insurance have doubled in the last six years.”
He encouraged lamb producers to participate in the Food and Grocery Code review and share their costs, margins and required price levels.
Woolworths claims leg roast price is lowest since 2017
Woolworths said the price cuts would apply to favourite cuts of lamb, including lamb leg roast, forequarter chops and cutlets.
The supermarket said its new price for lamb leg roast at $8 per kilo is the lowest promotional price on lamb leg roasts since February 2017 and the lowest regular price on lamb since June 2013.
Woolworths Supermarkets managing director, Natalie Davis, said the business understood the budget challenges many customers are experiencing and was looking for every opportunity to pass on savings on to them.
“Lamb is popular with many of our customers during Christmas and for summer barbecues, and customers can now pick up their favourite cuts for 20 percent less this season.
“This great offer is in addition to the more than 150 Christmas staples we have already dropped the price on,” she said.
“Along with our thousands of weekly specials and Low Price products, customers will be able to find great value across every part of our store this Christmas.”
The Woolworths lamb price cuts include:
- Lamb leg roast – was $10/Kg, now $8/Kg
- Lamb forequarter chops – was $16/kg, now $12.50/kg
- Lamb mince 500g – was $7ea, now $5.50ea
- Lamb cutlets – was $43kg, now $34/kg
- Lamb midloin chops – was $28/kg, now $22/kg
Woolworths said of the lamb products included in the offer, four of the products including lamb leg roast, lamb leg steak (540g), lamb shank and lamb mince, were already reduced as part of the Prices Dropped for Spring program, so the new prices represent a further reduction on already dropped prices. Lamb leg roasts have come down from $15/kg in June 2023, representing a $7/kg reduction or drop of more than 45pc since then.
Industry lamb prices don’t reflect those paid to Woolworths suppliers
A Woolworths spokesperson said the reported industry-wide average livestock prices do not reflect the actual price the group paid its direct suppliers for premium lamb.
“We value our long-term relationships with farmers and livestock agents who work with us to manage volatility in the market.
“We honour the price commitments we make to them and we don’t jump to take advantage of lower spot prices,” the spokesperson said.
“In addition to livestock prices, there are a range of other costs involved in delivering quality lamb to our customers – from feed costs to primary processing, secondary manufacturing and supply chain logistics.”
“We are currently working with our long term lamb suppliers to forward-contract into February/March to ensure they have confidence to feed their lambs over Christmas and the drier periods.”
The spokesperson said Woolworths had dropped the prices on a number of red meat products in recent months.
“For the majority of our lamb, we partner directly with our farmers and preferred livestock agents to agree fair livestock prices that reflect the high quality of their lamb, welfare standards and market dynamics.
“Only a small portion of our lamb comes from saleyards.”
In August, Woolworths dropped the price of 45 different red meat products. It said other costs in the red meat supply chain have increased over the last 12 months, alongside a deflated export market.
Food and Grocery Code reviewer reappointed
The Albanese Government has reappointed Mr Christopher (Chris) Leptos as the part-time independent reviewer of the Food and Grocery Code for a three-year period.
The code was introduced in 2015 to lift the standard of commercial conduct between the major supermarkets, wholesalers, and their suppliers. On 3 October 2020, further amendments were introduced to improve the operation of the code, that included enhancing dispute resolution processes available to suppliers by requiring signatories to appoint code arbiters with the authority to resolve supplier complaints and issue binding compensation orders of up to $5 million. Woolworths, Coles, Aldi, and Metcash are signatories to the code and are bound by it.
A government-appointed independent reviewer role was also established to review complaints to ensure that suppliers are afforded due process throughout the dispute resolution process.
Mr Leptos was appointed as the Independent Reviewer of the Code in August 2021. During this time, he has worked collaboratively with the signatories, code arbiters, industry peak bodies and individual suppliers to promote compliance with the code. His annual survey of suppliers and signatories, as well as his annual report has helped to shine a spotlight on instances of poor conduct so that they can be addressed before such problems become systemic, the government said. Further information on the role of the Independent Reviewer can be found at grocerycodereviewer.gov.au.
The government has commenced the 2023-24 review of the code provisions to ensure they remain effective in fostering a vibrant and competitive food and grocery sector in Australia. Have your say and become involved in the public consultation process by visiting treasury.gov.au/review/food-and-grocery-code-of-conduct-review-2023.
Assistant Minister for Charities, Competition and Treasury Andrew Leigh said if suppliers have concerns regarding the conduct of processors or supermarkets the recently reappointed Independent Food and Grocery Code reviewer, Chris Leptos, may be able to assist.
“His annual survey of suppliers and signatories, as well as his annual report has helped to shine a spotlight on instances of poor conduct so that they can be addressed before such problems become systemic.
“Further information on the role of the Independent Reviewer can be found at grocerycodereviewer.gov.au.”
Mr Leigh said he released the terms of reference for the review of the Food and Grocery Code on 3 October.
“There will be an opportunity for stakeholders to become involved in the consultation process for the review, which will be announced by the appointed reviewer.
“If you have suggestions on changes to the code, I would recommend making a submission.”