AUSTRALIA’S top sheep meat producer body is closely watching the latest supermarket food discounting campaign – this time initiated by Woolworths.
The supermarket on Tuesday announced that customers would be the winners as it dropped the standard shelf price for an Australian lamb leg roast drops by up to 29 percent.
From Wednesday, June 15, an Australian leg of lamb will cost $10/kg, representing a saving of up to $3.99/kg the company said.
Woolworths has said it planned price drops investment for lamb, beef, sausages and poultry represent an annual investment by Woolworths of $45 million per year into its meat category.
However, retail lamb price cuts to attract supermarket customers when quality lamb supplies in saleyards were tightening and prices to farmers were peaking failed to impress Sheepmeat Council of Australia Jeff Murray.
“Well loss leaders of course are a dead loss to us… we’ve been there in the past.
“We’ve got high value high quality product now and we don’t need to go back to loss leaders of the dark ages.”
Mr Murray was unsure using lamb as a loss leader would have the long-term effect on industry prices as has been attributed to discounted milk because of lamb’s diverse frozen and chilled markets versus fresh milk’s perishable characteristics.
“So we wouldn’t come under that sort of pressure I wouldn’t think.”
Mr Murray said cheap cuts of Merino side lamb had been used as a loss leader in Western Australia 20-30 years ago.
“It just dragged the price of all lamb down, irrespective of its quality; that would be my concern.”
Mr Murray said he hoped the Woolworths lamb price cuts would not reflect on the farmgate price of lamb.
Despite trade lamb prices dipping in some saleyards this week, SCA chief executive officer Mark Harvey-Sutton said it was too early to suggest that the Australian Competition and Consumer Commission should be examining the situation.
“It all depends on whether this is part of a sustained strategy around dropping prices and we don’t know that.
“Certainly as a peak council we will be keeping an eye on it, because the last thing we want to see is a sustained campaign against prices,” he said.
“We don’t know enough as to whether this is part of the strategy and I would have doubts if it were.
“It appears to be a marketing strategy at this point and if that’s all it is, well that is their prerogative.
“But we just need to keep an eye on it, because at the end of the day we are concerned about profitability for our members and just have to make sure it doesn’t impinge on that.”
Mr Murray said there are plenty of alternate land uses to lamb production and with the currently low sheep numbers in Australia, the SCA needs to retain industry profitability to retain the flock.
Woolworths said the lamb price saving marks just one of the big price drops this month across its meat range. A large tray of Australian regular beef mince has dropped to $8/kg from $9.99, Australian premium beef mince has dropped to $12/kg from $13.99 and Australian Heart Smart beef mince has dropped to $14/kg from $15.99. Sausage lovers have also been dropped 16pc from $6 to $5 for a 680gm pack of Australian pork or beef sausages.
Woolworths Meat Company director, Pat McEntee, said Australia is a meat loving nation and meat is one of the most expensive items in the supermarket’s customers’ baskets.
“By dropping the price of meat we are helping customers with their weekly budget and making it more affordable.
“We know that especially in the cooler months, a lamb roast dinner is a great way to bring family and friends together,” he said.
Mr McEntee said Woolworths sells 30pc more legs of lamb in winter than in the warmer seasons.
Mr McEntee was unavailable this afternoon to answer further questions.