WESTERN Australian sheep meat processors could be shutting their doors unless the state’s industry overcame its supply and market issues to incentivise producers, according to a former state sheep industry leader.
Reacting to recent concern from WAFarmers about sheep meat and ewe price disparities between WA and the eastern states, the former chairman of the Sheep Industry Leadership Council (now the Sheep Alliance) said the WA sheep meat trade buyers would pay what they needed to pay to attract supply.
“We’ve got to track the scenarios and see where we are going”, Mr Egerton Warburton said, referring to an Department of Agriculture and Food WA report that indicated that at current turn off levels (July 2015 to March 2016) to predict the total turn off 2015-16, the state’s flock would fall to 12.7 million head this year.
He was concerned the sheep industry would go the way of the WA beef industry, with insufficient volume to sustain itself. Action on the declining WA sheep flock needed to be taken four years ago, not now, he said.
“It’s too late, it’s done and dusted.
“My frustration is that we’ve been telling the market this for four years and they still think something miraculous is going to happen; they still think that this is just a free market.”
Mr Egerton-Warburton said the only way to grow the WA market was to grow supply, but most of the supply chain and the agro-political bodies have ignored the issue.
“I genuinely don’t think that it is going to be fixed, I genuinely think that in a few year’s time processors will be shutting their doors and the market will continue to contract.
“Those producers with 10,000-plus sheep will probably do alright, but the small producers, I don’t know, they might continue to get out.”
“The reality is that Western Australia is not a fluid market; unlike in Victoria, we can’t say NSW is paying this, we are going to ship them up there, so they (the WA trade) will pay what they need to pay.”
He said demand from eastern states ewe buyers was currently helping to drive the mutton market in WA, but a lot of lambs in the state were already finished due to the season and ready for sale.
“So the traders know that they are flush so people cannot hang onto them, so they are selling and the market will pay what they will pay.
“Ultimately, at the end of the day, the processors have to work out how many sheep they want left in the state and how much they are prepared to pay to keep them,” he said.
“I spent four years going down this line and this is still it.”
Mr Egerton-Warburton said if the WA trade wants locally-produced lamb they will need to work how to incentivise WA producers.
“Because at the moment the flock is going to continue to go down and there is nothing we can do now to stop that, unless there is a massive incentive for people to put the brakes on and start restocking.
“And that will driven by an indication that prices long-term are going to continue to increase,” he said.
“Unless something like that can happen I don’t think there is going to be any change to sheep situation.”
Mr Egerton-Warburton said the sale of WA sheep and lambs to eastern states buyers was no more or less a threat to the WA industry than it ever had been.
“Where the sheep go doesn’t matter – if the eastern states don’t buy them, Fletchers or WAMMCO will buy them.
“Ultimately the market is being driven by shortage of supply, that will continue, and that will continue to cannibalise the industry until a couple of the processors shut their doors because they can no longer compete or the industry gets so small that it collapses.”
Click here for the WA Sheep Flock Future Scenarios Report.