![Processors are tightening grid specifications and increasing penalties to out-of-specification carcases to better reflect customer demands. Processors are tightening grid specifications and increasing penalties to out-of-specification carcases to better reflect customer demands.](/images/transform/v1/crop/frm/9kyzP9Zutm5XFVsqvLWUBX/f1574f70-80f1-41ac-82e9-965f67b50eb7.jpg/r0_0_2209_1404_w1200_h678_fmax.jpg)
A WARNING has been issued of a significant increase to price penalties for overweight lamb carcases as “irresponsible” processor grids fail to reflect global market signals.
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The country’s largest meat processor JBS Australia has flagged penalties from 80 up to 100 cents a kilogram in the new year for lamb carcases which exceed 30 kilograms.
“The export lamb industry has been really irresponsible in sending global signals by having a grid that has a weight range of 18 to 32 kilograms,” JBS Australia southern livestock manager Steve Chapman said.
“The biggest problem is that processors have accepted where the grid is at and everyone has been so broad which doesn’t reflect market demands.”
Mr Chapman said export specifications, which target 22 to 26 kilogram carcase weight, need to follow domestic supermarkets when publicising consumer requirements.
“Supermarkets send signals which say exactly what they want but if you ask laymen ‘what is an export lamb?’ there is a misconception it is 30kg and above,” he said.
“If the product is too heavy and out of specifications, it is hard to market that product global.
“Lamb is the biggest niche market in the world - it is not a necessity - if we want to maintain high levels and high returns we need to step up to the plate and give the market what it wants, not what you think it wants.”
The average carcase weights were the heaviest on record in October, with the 2016 average sheep carcase estimated to be 23.7kg per head, according to Meat & Livestock Australia (MLA) 2017 sheep industry projections.
While there has been a growing proportion of lambs processed weighing 14 to 16kg/head, there were more lamb carcases averaging towards the heavier end of the spectrum at about 26kg/head.
Processors tightening of grid specifications to better meet customer demands is forecast to temper the long-term incline in average carcase weights.
MLA’s report expects the national average lamb carcase to be 22.4kg/head in 2017, before slowly rising through to 2020.
As a consequence, Mr Chapman said there would be increased penalties for carcases which were above 30kg.
“Purely and simply we will have an emphasis on buying mid-weight range and will be putting a heavy penalty on heavy lambs,” he said.
“We can handle a 30kg lamb but at a lower price because we receive a discount in the marketplace.
“It is irresponsible for us to pay the same price per kilograms for heavy lamb than one that is the right weight because it is not sending appropriate signals.”
Mr Chapman said heavy lambs’ often yield lower than their smaller counterparts.
“It would be negligent for the industry to pay the same amount for meat as we do fat,” he said.
“It is no good a being a country that is really, really good at producing a product the world doesn’t want.
“Previously lamb has been cheaper and more marketable, but with lamb at these prices and other proteins cheaper, our lamb market is exposed.”
In the new year, market analysts forecast a flurry of heavy lambs as producers capitalise on grass and cheap grain.
While this year 18 to 20 kg trade lamb and 24-26kg export market weights both averaged 568c/kg, Mr Chapman warned of poor margins on export lambs in autumn.
With cheap grain and surplus grass tempting producers to background to higher weights, NSW Department of Primary Industries senior principal research scientist David Hopkins said processor grids which promote yield over fat were necessary.
“Consumers don’t want fat – that has to be the underlying signal,” Dr Hopkins said.
“The temptation at the moment with a lot of cheap grain around – and based on past performance – producers will keep these animals and feed them grain which will make them too heavy.
“A warning about a more sophisticated grid pricing is fair so producers don’t grow them until 35kg carcase weight when they end up fat score five.”
With lamb carcases averaging nearly 23kg nationally, Dr Hopkins said there would significant numbers exceeding that weight in the new year.
“The industry will have to deal with those,” he said.
“If they want to deal with this with realistic price signals based on carcase yield, leaner carcases should be better priced than those that are fat score four or more.”
“The size doesn’t need to be a restriction, as there are options for new smaller cuts, but it is the relationship between weight and fatness which you need to deconstruct.”