SEVERAL lamb processor plants have been forced to slash their throughput capacity as inflated sheepmeat prices cripple companies.
Low stock numbers and high livestock prices have been blamed for the imminent closure of Manildra Meat Company’s Cootamundra processing plant last week, forcing 150 permanent employees and 70 casual staff out of jobs when the plant ceases processing on Friday (February 24).
“We cannot continue to maintain a viable business in the current industry environment, particularly given the record high livestock prices and the inability of our customers to absorb these price increases,” Manildra Meat Company’s general manager, Jason Graham, said.
It is the same catalyst which forced processor Southern Meats Goulburn to indefinitely slash capacity by nearly half, from five full processing days to less than three.
The southern NSW abattoir, owned by Western Australian Meat Marketing Co-operative Limited (WAMMCO), can process 25000 sheep a week but difficult trading conditions will mean only 15000 will be processed from this week.
WAMMCO chief executive Coll MacRury said many east coast plants would be operating at a loss.
“… The more you kill the more you’re losing so we are trying to contain our costs,” Mr MacRury said.
“There is an overcapacity of lamb processing sites and it is has taken away the ability to manage inputs.
“There is hot demand for the limited livestock which has inflated prices to historically high levels.”
WAMMCO mainly exports meat to Asia, North America and the European Union, while 10 per cent of its production is domestic and includes a lamb contract with Costco Australia.
“The international market isn’t too bad at the current time but livestock costs are not lining up with the consumers level which is what’s hurting,” Mr MacRury said.
“We’re targeting our better paying markets. If the market continues there will be other players who feel the pinch.”
The largest processors have also been bruised by the extraordinary prices with all believed to have substantially shed quotas.
Major supermarkets have attempted to manage lamb retail prices by slashing livestock purchases last week.
Livestock agents have observed the exodus of numerous prime lamb buyers from saleyards as domestic processors become “badly wounded” by challenges procuring livestock.
The caveat on the current sheep market, Elders livestock manager Ron Rutledge said, was a price resistance at the consumer level.
“Processors are struggling with lamb procurement and selling – they’re really feeling the pressure,” he said.