A few months ago we responded to a question from a reader on the diversification and access arrangements for the top five beef export markets.
That generated a similar question for sheepmeat.
Australia's sheepmeat - lamb and mutton - exports are more diversified than for beef. The top five lamb markets by volume in 2021, the US, China, the UAE (Dubai), South Korea and Papua New Guinea represent just 66.3 per cent of global exports. That figure for mutton is around 78pc. This compares with beef's top five export markets in 2021 accounting for 83pc of exports.
Market diversification however has evolved from the extraordinary transformation of the sheepmeat export sector over the past 30 years led by some visionary processors and exporters.
From Federation in 1901, Australia was exporting sheepmeat to over 16 countries but 70pc of that was to the UK. That commitment continued for the next 50 years with both world wars being catalysts for greater shipments to the UK reaching over 100,000 tonnes in some war years.
After WW2 and the completion of the 15-year meat agreement with the UK, the dominance of wool production delegated sheepmeat to a byproduct.
Total lamb exports fell to just 24,000 tonnes in 1962, essentially all frozen carcases.
While the beef industry in the 1960s was experiencing a surge in demand from the US, lamb exports were declining.
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The US had a sheep flock of close to 64 million at the turn of last century but it is a tenth of that today.
Reports of poorly prepared canned mutton from Australia fed to US marines in WW2 as well as Australian mutton being part of the US beef quota in the 1960s as a substitute for grinding beef didn't help Australia's image.
A consistent investment over decades in meeting local market requirements with a larger, higher quality carcase has helped to convert subsequent generations back to an imported lamb product.
Today its our largest single lamb export market.
While sheepmeat consumption has a fairly broad history in many parts of the world, there are few other sheepmeat suppliers with a sizable and consistent exportable surplus such as Australia and NZ's.
If we exclude the intra-country trade between the 27 members of the EU, in most global markets it is mainly Australia and NZ competing for import lamb market share. This contrasts with beef which has a much broader range of global suppliers.
The recent investment by Brazilian packer Minerva in Australian sheepmeat processing assets reflects Australia's growing dominance in the global sheepmeat trade as well as its ability to offer scale processing efficiencies for sheepmeat not available in other countries.
When the UK joined the European Economic Community in the 1970s, Australia's small lamb export shipments at the time meant we only received around 15,000 tonnes of quota into the EEC.
NZ's huge market share in the UK resulted in a sheepmeat quota of over 200,000 tonnes.
That agreement is still in place today with the NZ quota increasing to around 228,000 tonnes over the years, the most influential market access agreement on sheepmeat in the last 50 years.
The Australian quota has only increased to 19,186 tonnes.
This access gap that reflects the 1970s, was the backbone of the NZ lamb industry for the next five decades. The production gap no longer exists but unfortunately the amazing quota access arrangements negotiated in the 1970s still does.
The Australian wool market collapsed after the removal of the reserve price scheme in 1991 but a revolution was already underway in the sheepmeat processing and export sector. The full carcase trade had pushed lamb and mutton exports into bulk shipping and lower quality commodity contracts with large price, rather than quality driven endusers.
Major processor Roger Fletcher identifies that one of the biggest transformations over this time was the move away from the carcase trade into primals in cartons.
Mr Fletcher also singles out containerisation as the largest single change in how export lamb was marketed. Combined with vacuum packaging technology it allowed better targeting of more discerning customers. It also allowed sheepmeat exporters to build much greater access into markets that might not have been the case under the old technology.
What was once marketed as a full carcase in poly-stockinette to one market was now all packaged in cartons. Parts of a carcase could now end up in 20 different countries.
Fletchers no longer processes full carcase mutton or lamb for any country.
Mr Fletcher also credits containerisation with revolutionising the export of sheepmeat byproducts in cartons which has evolved into quite lucrative markets with pet food and pharmaceutical endusers.
Before that change a lot of sheepmeat byproducts in Australia just went into meat meal or blood and bone.
Australia exported 264,823 tonnes of lamb in 2021, 34pc as chilled, a stark change from the 24,000 tonnes of frozen carcases in 1962.
The removal of the price support mechanisms in NZ in 1984 saw their flock fall from a high of over 70m to just 26m today. Australia now is close to level pegging with NZ as the world's largest lamb exporter and when you add mutton, is arguably the world's largest sheepmeat exporter.
The emergence of China a decade ago has been a game changer for the sheepmeat industry.
Both Australia and NZ negotiated free trade agreements with China that reduced import tariffs to zero and both now list China as their largest single sheepmeat market.
For NZ, where the EU quotas were the basis of their lamb industry for decades, they can now no longer fill them because of Chinese demand.
Australia, however, continues to fill its small EU and UK quotas. That is beginning to change with the UK FTA now in its final stages of ratification although modernising access to the EU will be a harder task.
Mr Fletcher sees India as the next challenge where the removal of the 30pc tariff on sheepmeat, along with a modernisation of technical requirements, offers significant opportunities when the new trade agreement comes into force on December 29.
The growth in export demand has meant a higher priced but better quality product for Australian consumers. Domestic consumption has fallen as price has increased but the overall returns for the lamb industry have been worth it.
