BUTCHERS have begun slashing lamb purchases as shop owners struggle to pass on unprecedented price rises.
While short supply is expecting to continue to thrust the sheepmeat market higher through winter and spring, independent butchers are reeling from consumers’ resistance to the extraordinary price increases this year.
Since the end of last year, the Meat and Livestock Australia’s (MLA) national trade lamb indicator has rocketed 28 per cent higher, or 137 cents per kilogram, to close the week at 634c/kg.
While many independent butchers had absorb the profit hit, veteran Victorian butcher Peter Bouchier said the big price rises had put the squeeze on margins in the industry and sparking warnings that shoppers were about to feel the dramatic increases.
“We won’t go much longer until all lamb prices go up,” Mr Bouchier said.
“People will buy less, end of story.”
Mr Bouchier, who has several Melbourne outlets, warned some expensive cuts of lamb would disappear from display windows and replaced with cheaper proteins such as chicken.
Australians are among the highest sheepmeat consumption in the world, eating about 9.5 kilograms of lamb and 0.7kg of mutton per person last financial year, according to MLA estimates.
Australian Meat Industry Council SA retail chairman Trevor Hill, who owns five independent butcher shops in the state, believed portion size be impacted.
“For the sake of the industry, prices need to remain high,” Mr Hill said.
“Australians have historically eaten an excessive amount of meat and I believe with the high prices will reduce consumption to a healthier level.”
MLA reported domestic lamb retail prices in 2016 averaged just 10c shy of the record high set in 2011, at $14.51/kg, while per capita consumption has increased 8pc higher in the five years.
“In 2011, lambs went from 450c/kg to hover above 600c/kg,” Mr Hill said.
“It took two years to get lamb back to a reasonable level in dollar value but it still hasn’t returned in volume.
“Prices are becoming damaging to the protein itself – if it is too high for too long, we lose the taste for lamb.”
In the past three months, Mr Hill’s butcher chain has had a 22pc decrease in lamb sales profits.
He has been forced to slash lamb carcase purchases from 120 per week to less than 50 and had to get creative with his offerings to remain profitable by buying in pre-cut carton meat to save on labour.
“Instead of trimming heavily and presenting a beautiful product, the tail is a centimetre longer,” Mr Hill said.
“We haven’t reduced the quality but not trimming means we can achieve a similar margin but the customer is paying for more waste.
“Because we aren’t selling as many, we’ve had to buy in cartons to reduce the labour content – there is a whole knock on economic effect right throughout the community.”
And the SA butcher is not expecting the market to ease any time soon with the national flock falling to century lows and struggling to meet domestic and international demand.