Australian lamb shortage drives up prices, but consumers not biting

Australia’s largest meat processor is to stand down over 200 of its staff in its abattoirs due to a lamb shortage in Australia causing lamb prices to jump.

Reports in Australia state that JBS Australia recently announced that 260 of its staff were to go and lamb production would be halved at two of its abattoirs.

According to Meat and Livestock Australia (MLA), total sheepmeat exports to the European Union for March 2015 were down 19% from February this year.

The figures from MLA show that exports of chilled sheepmeat in March were down 39% and exports of frozen sheepmeat were down 5% from February.

Some 18 months ago the company spent millions upgrading its Bordertown factory and took on an extra 180 staff.

Chief Executive of JBS Australia, John Berry, told Australian news website ABC that these are unfortunately the challenges the processing sector owners face.

We continue to adapt our business to changing conditions, whether it’s contraction or expansion.

Fletchers International, another processor, shut down one of its plants for a week saying that there was a shortage of sheep.

Richard Harvey of the Rural Marketing Agents Association said that these closures reflect challenges faced by the whole Australian lamb industry.

Usually short supply translates to higher prices for farmers and processors, but Harvey said international demand was so poor that overseas buyers would not pay extra.

Harvey said processors across Victoria, NSW and SA were also struggling to find supply and that he can see processors having extended shutdowns.

The only ramification of that for them is that your workforce element is a big factor and if they are long-term shutdowns people just move and go to another job or work somewhere else where they can keep the cashflow going.

John Berry said that they had to make this call and that hopefully the company can be back processing to full capacity as soon as possible.

“People have got to understand, and I’m sure producers do, that even with a spread of domestic and international customers, lamb internationally is still a niche product in demand terms,” Berry said.

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