Future Trends in Lamb and Beef Markets: Expert Insights with Angus Gidley-Baird
Angus Gidley-Baird, Senior Analyst - Animal Proteins at Rabobank, joins us this week to share his expertise on the sheep and beef industries across Australia and New Zealand. Angus helps us understand market dynamics, global demand and the impact of seasonal conditions on the market. In this episode we cover the:Current state of the Australian and New Zealand sheep and beef marketsImpact of drought and seasonal conditions on supplyGlobal demand for lamb and beef, particularly from China and t...
Show Notes
Angus Gidley-Baird, Senior Analyst - Animal Proteins at Rabobank, joins us this week to share his expertise on the sheep and beef industries across Australia and New Zealand. Angus helps us understand market dynamics, global demand and the impact of seasonal conditions on the market. In this episode we cover the:
Current state of the Australian and New Zealand sheep and beef markets
Impact of drought and seasonal conditions on supply
Global demand for lamb and beef, particularly from China and the US
Future of the sheep industry in Western Australia in light of the live export ban
Trends in lamb carcass weights and consumer preferences
Potential for marketing premium lamb products and objective quality measures
From changing lamb prices driven by consumer demand to the effects of market shifts on land prices, Angus does a great job of explaining the various challenges and opportunities within the livestock sector, both on a trans-Tasman scale and globally.
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Show Transcript
WEBVTT
00:00:01.260 --> 00:00:02.785 Welcome to the Head Shepherd podcast.
00:00:02.785 --> 00:00:10.060 I'm your host, mark Ferguson, ceo here at NextGen Agri International, where we help livestock managers get the best out of their stock Before we get started.
00:00:10.060 --> 00:00:14.752 Thank you to our two fantastic sponsors for continuing to sponsor this podcast.
00:00:14.752 --> 00:00:22.990 Msd Animal Health is perhaps better known as Cooper's Animal Health in Australia and for their Allflex range across the world with a comprehensive suite of animal health and management products.
00:00:22.990 --> 00:00:26.289 Heinegger is a one-stop shop for wool harvesting and animal fiber removal.
00:00:26.289 --> 00:00:33.170 The Heinegger team have a deep understanding of livestock agriculture, backed by Swiss engineering and a family business dedicated to manufacturing the best.
00:00:33.170 --> 00:00:38.847 We are grateful to our sponsors for their support, helping us bring Head Shepherd to you each week, and now it's time to get on with this week's episode.
00:00:39.880 --> 00:00:40.841 Welcome back to Head Shepherd.
00:00:40.841 --> 00:00:45.228 This week we've got Angus Keeley-Baird from Rabobank along to talk markets.
00:00:45.228 --> 00:00:47.512 It was recorded a few weeks ago, prior to Lamex.
00:00:47.512 --> 00:01:02.886 Actually, before we get into that, there's an article we put up on the hub this week which was in response to Hamish Thompson, I think, ringing or emailing me about IMF and sort of wanting to understand the biology of it a little bit more, and I've sort of told him snippets over time and he wanted to clarify that in his head.
00:01:02.886 --> 00:01:07.751 So I sort of started tapping it out for Hamish and I thought this would actually make a decent article for everybody.
00:01:07.751 --> 00:01:13.376 So that's on the hub this week, kind of talking about the metabolism that goes on behind IMF.
00:01:13.376 --> 00:01:32.171 I don't pretend to be a meat scientist or a biochemist by any stretch of the imagination, but trying to pull together some of the known literature around sort of why, when we selected for growth and muscle, we ended up taking IMF out of animals and so why some of the high IMF animals sort of lack muscle but kind of the muscle type differences.
00:01:32.171 --> 00:01:33.465 So, yeah, I enjoyed writing it.
00:01:33.465 --> 00:01:35.147 Hopefully you'll enjoy reading it.
00:01:35.147 --> 00:01:37.085 Yeah, so that's on the hub.
00:01:37.085 --> 00:01:42.819 Get there and have a read and, yeah, by all means, ask your questions or post your comments.
00:01:42.819 --> 00:01:46.143 That's what, uh, that's what the hub's all about.
00:01:46.143 --> 00:01:52.128 So I would love to hear what you think and you might have had a different experience or something that you can contribute, which would be great.
00:01:52.429 --> 00:01:57.028 Uh, this week, yeah, angus skidley bed is is a uh, he's an analyst with arabo, based out of sydney.
00:01:57.028 --> 00:02:10.971 He basically looks at and talks about the, the markets, um, it's sort of like guessing what the future is going to be, or predicting the future, I suppose, and we all want these sort of people to tell us rosy things, and largely he does tell us some rosy things around the market.
00:02:10.971 --> 00:02:16.768 It's recorded a few couple of months ago, so some of the well, all of what he said will still be holding true.
00:02:16.768 --> 00:02:18.260 Yeah, but it's.
00:02:18.820 --> 00:02:36.210 I guess we don't want to focus too much on this sort of stuff in Head Shepherd, but it is good to understand, particularly when we're out there producing genetics for a future period of time and we really need to make sure that the markets align with what we're thinking the future will be.
00:02:36.210 --> 00:02:47.822 So it was great to hear from Angus and hear his perspective and, yeah, I'm sure people will enjoy particularly hearing about what 2026 looks like for us in the red meat sector.
00:02:47.822 --> 00:02:49.786 But we'll get on with the show and hear from Angus.
00:02:49.786 --> 00:02:53.753 Welcome back to Head Shepherd.
00:02:53.753 --> 00:02:58.088 This week we're thrilled to have Angus Gidley-Baird from Rabobank with us.
00:02:58.088 --> 00:02:58.669 Welcome, angus.
00:02:59.091 --> 00:02:59.531 G'day Mark.
00:02:59.531 --> 00:03:00.072 Good to be here.
00:03:00.633 --> 00:03:00.873 Excellent.
00:03:00.873 --> 00:03:13.412 I'm sure the senior analyst at Animal Protein is there, and so we're expecting to hear all things about what's happening in the world, and obviously everyone wants you to predict the future, and I'm no different, so we'll have that chat for our listeners.
00:03:13.412 --> 00:03:20.810 But yeah, before we get into the detail, it'd be just good to hear your backstory, the sort of career path to end up at Rabo and your current team.
00:03:21.400 --> 00:03:22.263 Yeah, yeah.
00:03:22.323 --> 00:03:26.598 So I mean my family's not off the land per se.
00:03:26.598 --> 00:03:28.306 We've always had a strong connection with it.
00:03:28.306 --> 00:03:33.508 That was, I think, where mum and dad sent us when the school holidays came around and they wanted to get rid of us.
00:03:33.508 --> 00:03:37.623 So there was a friend, a close family friend, that we spent a lot of time with.
00:03:37.623 --> 00:03:44.588 We ended up managing and running it for a number of years afterwards, mainly on the cattle side of things, but they ran some sheep as well.
00:03:46.009 --> 00:03:50.014 So that sort of gave me a little bit of a taste for ag and I was keen to.
00:03:50.014 --> 00:03:52.377 Yeah, I really enjoyed it and wanted to keep doing it.
00:03:52.377 --> 00:03:58.573 I did ag at school and then, yeah, when I got to uni time or making a decision on uni, I didn't really know what to do.
00:03:58.573 --> 00:04:12.843 So I chose ag economics and sort of then fell into a role with New South Wales Farmers Association, which is an advocacy group, a bit like, well, national farmers, state farming organizations, federated farmers in New Zealand, those sorts of things.
00:04:12.843 --> 00:04:31.004 So did that for about 10 years the obligatory sort of travel around Australia, travel over in Europe, and worked over in Europe for or in the UK for about 18 months, 12 months with the Department of Environment for Rural Affairs, which is their equivalent department of ag, and, yeah, came back here a bit more time with New South Wales farmers and then ended up at Rabo.
00:04:31.004 --> 00:04:33.509 So, yeah, I really enjoy it.
00:04:33.761 --> 00:04:54.165 I think it's great, you know, being able to look at what's going on in the markets, have that contact and be in touch with everyone in agriculture, but at the same time, the convenience and family that's based here in Sydney means that access to things that, yeah, you probably don't get anywhere else, but I really enjoy it.
00:04:54.165 --> 00:04:55.067 I think it's great.
00:04:55.067 --> 00:05:12.387 And the freedom that we've got within Rabo Research to sort of within our tramlines of the sectors that we cover, you know, to be able to look at what's going on in that market, understand how it's having an impact, try and distill through all the noise and come up with insights as to, you know, what it might mean for a producer or a processor.
00:05:12.387 --> 00:05:18.692 And you know, again, we're across the whole supply chain from, you know, the family farm to the corporate farm, to the.
00:05:18.692 --> 00:05:27.894 You know the agents, the processors, the retailers, the traders, multinational food service organisations, those sorts of things.
00:05:30.879 --> 00:05:32.636 So, you get a great perspective on what's going on across the whole supply chain.
00:05:32.636 --> 00:05:42.987 Yeah, it's awesome, and obviously Rabo are 100% embedded in agriculture, so it'd be great to be working in a bank that's committed to Ag in such a way.
00:05:44.060 --> 00:05:49.488 Yeah, and that's probably I mean, that's the real reason why Rabo Research exists within Rabobank.
00:05:49.488 --> 00:05:52.608 It's outside of the Netherlands which is its base.
00:05:52.608 --> 00:05:55.867 We're completely food and ag focused.
00:05:55.867 --> 00:06:05.940 So you know, with that exposure to that one sector, we don't have the ability to jump from sector to sector depending on, you know, profitability or economic situations or anything like that.
00:06:05.940 --> 00:06:32.605 So we're committed to food and ag and, as a result, they set up this Rabo research team as partly as a way of giving them the assurance that you know the cycles and the fluctuations we see in commodity markets on a regular basis, to give them the confidence that you know there's long-term future and prospects in those sectors and gives us an ability to invest or to commit to partnerships within the food and ag sector over a long-term horizon.
00:06:33.348 --> 00:06:35.807 Excellent, so our listeners are mostly not all.
00:06:35.807 --> 00:06:36.288 We've got a few.
00:06:36.288 --> 00:06:42.689 We've got 15% in Europe, but the rest are Europe and the US and all the Americas, but the rest are in Australia and New Zealand.
00:06:42.689 --> 00:06:49.571 They're obviously the two biggest exporters of lamb and mutton and love to compete on all things, including who invented Pavlova.
00:06:49.571 --> 00:06:57.608 They have both had some climatic struggles over the last little while and that's going to impact on total turnoff.
00:06:57.608 --> 00:07:01.987 If it hasn't already, it will later in the year, as this lamb crop should be reduced.
00:07:01.987 --> 00:07:04.004 I guess what are you seeing in these markets at the moment?
00:07:04.625 --> 00:07:07.992 Yeah, and I mean particularly from an Australian point of view.
00:07:07.992 --> 00:07:35.720 Obviously, the dry conditions that a lot of Australia saw through 2018-19, the rebuild that subsequently happened, favourable seasonal conditions for large parts of southern Australia, which is the main sheep-producing areas, have allowed a recovery in the flock and and although it's a little bit hard to get a conclusive number on how many sheep are out there, but I'd imagine we've got some pretty healthy sheep numbers out there at the moment and we've seen that we're starting.
00:07:35.720 --> 00:08:07.322 You know, in the last 18 months, the volumes of lambs and sheep coming to market, um the slaughter numbers that we're seeing at the moment, lamb slaughter is at record levels, sheep slaughter is at historically high volumes and, although we have seen some drier conditions yes, particularly southern parts of Australia you know Victoria, western Victoria, southeast, south Australia, western Australia, southeast sorry, southwest western Australia which do tend to be the higher, more densely populated sheep populations.
00:08:07.322 --> 00:08:20.985 So we have seen some people, obviously with feed conditions, possibly either feeding or maybe not being able to finish lambs, but I don't think at the moment we're necessarily in a situation where we're seeing huge liquidation of flocks and people selling right down on flocks.
00:08:20.985 --> 00:08:24.798 A lot of those areas I've just mentioned, have also received some rain in the last couple of, seeing huge liquidation of flocks and people selling right down on flocks.
00:08:24.798 --> 00:08:31.812 You know, a lot of those areas I've just mentioned have also received some rain in the last couple of weeks as well, through July, which has given them some hope.
00:08:31.812 --> 00:08:35.724 I mean, it's winter not much really grows in winter anyway, but it's.
00:08:35.724 --> 00:08:44.590 Yeah, the forecast as well from a you know, bureau point of view, is that it's looking towards, you know, neutral, potentially heading towards a lionina again.
00:08:44.590 --> 00:08:50.147 So people, I think, are still reasonably positive about it from a seasonal point of view.
00:08:50.147 --> 00:08:58.589 So, yeah, large volumes of lambs in the market as a result of the increased sheep flock and yeah, it's amazing what we're able to sell them to at the moment.
00:08:58.889 --> 00:09:08.011 New Zealand, on the other hand, I was just catching up with Jen, my colleague over in New Zealand, earlier this morning to get a bit of an update on where things are.
00:09:08.011 --> 00:09:17.149 But yeah, she noted that there was possibly a bit of a sting in the tail from the El Nino in late autumn, but in most areas now looking pretty good.
00:09:17.149 --> 00:09:33.756 And likewise, lamb slaughter over there has ticked past the 15 million head mark, as I understand, as of mid-June, has ticked past the $15 million head mark, as I understand, as of mid-June, and they're looking for a $17 million for the 2023-2024 season which, as I understand at the moment, according to June numbers, is up about 8% at the moment.
00:09:33.756 --> 00:09:41.413 So yeah, some large volumes, definitely large volumes coming over to Australia and some slightly higher volumes out of New Zealand at the moment too.
00:09:41.413 --> 00:09:46.571 So a lot of lamb around Does create a bit of a challenge trying to sell it into a global and domestic market, though.
00:09:47.360 --> 00:10:00.929 Yeah, I guess we'd be expecting the impacts of the seasonal conditions to impact, I guess, the later supply with scannings back a bit and I'm imagining condition scores are going to be low and some ewes, so lamb survival is going to be back.
00:10:00.929 --> 00:10:03.668 So it'll be interesting how that plays out by the end of the year.
00:10:03.668 --> 00:10:11.557 I guess already we'd be expecting the first suckers to be not too far away from the market in places like Wagga.
00:10:11.557 --> 00:10:13.725 I suppose that area is better than the south.
00:10:13.725 --> 00:10:17.932 So we might be late on the year when we get less supply than what we might expect.
00:10:18.700 --> 00:10:21.509 Yeah, and it's a difficult one to try and gauge.
00:10:22.110 --> 00:10:55.580 To me that's sort of the $60 dollar question, because it's not only from a a seasonal point of view, in terms of whether or not we're going to see those, uh, new season lambs come onto the market in the normal time frame at the normal weights, or whether they are a bit later and people struggling to finish or or get them to wait because of, yeah, drier conditions and and reduced feed availability, or the other one is just sort of understanding as well what the impact of, from an Australian point of view, what the impact of this elevated sheep slaughter over the last 12 to 18 months is going to do as well, is that it's always very difficult.
00:10:55.961 --> 00:11:18.101 You get total slaughter numbers for sheep, but you don't actually know whether they're male, female, you know what breed, so it's a bit of a guess as to whether or not you know the large numbers of adult sheep that are being slaughtered at the moment are going to have a material impact on, yeah, how many ewes were on the ground and therefore what our potential lamb numbers might be.
00:11:18.101 --> 00:11:25.847 So add that on top of the seasonal situation in terms of, yeah, lambing rates and and conception rates and things like that.
00:11:25.847 --> 00:11:28.004 Um, it'll be interesting to see.
00:11:28.004 --> 00:11:30.932 So, yeah, the next couple of months will be a good gauge.
00:11:30.932 --> 00:11:50.910 Anyway, it'll give us a fair indication I mean, it's stating the obvious, but it's a fair indication as to whether or not there's going to be a large adjustment in australian lamb production in this coming 12 months or whether it's going to be a more yeah, considered sort of smaller adjustment yeah, yeah, I guess we're talking to farmers both sides of the ditch pretty much daily.
00:11:50.931 --> 00:11:55.397 We've got a half hour, well, half our clients both sides of the ditch, which is which is interesting.
00:11:55.397 --> 00:12:04.087 And the differences in market prices always intrigue me and it's always, I guess, at a macro level they sort of follow the same trends but, but often they're well out of sync.
00:12:04.087 --> 00:12:13.250 And and it always intrigues me and I thought you might know the answer as to why New Zealand and Australia are both major exporters but sort of end up in different markets or different market situations.
00:12:14.059 --> 00:12:24.006 Yeah, it is an interesting one and just looking at the New Zealand prices, the AgriHQ South Island lamb price that seems to be tracking just over $6.50 at the moment.
00:12:24.006 --> 00:12:32.801 It has edged up through the last couple of months but still sitting well below sort of the the 10-year minimums um australian prices.
00:12:32.801 --> 00:12:36.870 On the other hand, our trade lamb prices are now up over eight dollars um.
00:12:36.870 --> 00:12:41.876 They've been going up quite strongly for the last couple of months and now above our five-year average.
00:12:41.876 --> 00:12:44.988 So new zealand prices are still well below the five-year average at the moment.
00:12:44.988 --> 00:12:47.115 So yeah, there is a very big difference.
00:12:47.115 --> 00:12:54.452 It's hard to say exactly what causes the price differential.
00:12:54.452 --> 00:13:03.046 You know, last year or 2022, land prices in New Zealand sort of probably held up a little bit better than Australian prices did.
00:13:03.046 --> 00:13:06.442 But at the same time you know they're different markets too, we've got to remember.
00:13:06.442 --> 00:13:10.283 You know Australia exports what is it about?
00:13:10.283 --> 00:13:12.107 65%?
00:13:12.528 --> 00:13:17.490 of our lamb production New Zealand is up around 85%, I think, as I understand.
00:13:17.490 --> 00:13:20.904 So we've got a much bigger domestic market that can absorb things.
00:13:20.904 --> 00:13:26.650 And I think at the moment and we're looking at quarterly data, so we're a bit behind.
00:13:26.650 --> 00:13:37.184 But our retail prices for lamb, based on our CPI information that comes out for quarter one, we're 16% below what they were the same time quarter one last year.
00:13:37.184 --> 00:13:39.671 So we've seen quite a big reduction in retail prices.
00:13:39.812 --> 00:13:54.142 Now you can't get a complete answer on how much is being consumed domestically, but a very sort of rudimentary back of the envelope calculation on volume produced, volume exported and the difference being how much is consumed.
00:13:54.142 --> 00:14:00.769 If you run those numbers it looks like there's potentially been a 10 plus percent increase in domestic consumption in Australia.
00:14:00.769 --> 00:14:06.245 So the reduction in retail prices might have actually encouraged some domestic consumption here.
00:14:06.245 --> 00:14:13.793 That might be helping to absorb some of these numbers, because when you start talking you've got to look at the competition landscape.
00:14:13.793 --> 00:14:24.910 So if the Australian domestic consumer is buying more, then it means that those exporters or the processors and exporters aren't having to push as much into an export market.
00:14:24.910 --> 00:14:27.225 And the US looks like.
00:14:27.225 --> 00:14:37.905 Well, we're seeing good volumes go to the US at the moment from an Australian point and that's one other point of difference is that Australia effectively has you could call it four large markets.
00:14:37.905 --> 00:14:41.179 We've got a domestic market that takes about 30% 35%.
00:14:41.179 --> 00:14:43.629 We've got the Middle East, china and the US.
00:14:43.629 --> 00:14:47.029 Last year all took about 13% of our overall production.
00:14:47.029 --> 00:15:01.039 So we've probably got a few more markets, large markets to take that product, as opposed to New Zealand, which is very export-focused and very China and Europe-focused in that mix as well.
00:15:02.261 --> 00:15:09.315 Australia and lamb I think we only send about 2% or 3% of our total lamb exports go to Europe.
00:15:09.315 --> 00:15:14.808 So it's a much smaller market and China is particularly soft at the moment.
00:15:14.808 --> 00:15:24.889 We're hearing from our economist earlier today about some of the figures that are coming out of China at the moment and that economy is quite weak.
00:15:24.889 --> 00:15:32.908 It's generally not a high price paying customer anyway, but it does take large amounts of volume.
00:15:32.908 --> 00:15:41.206 But the challenge here, with the large exposure new zealand has to that market, I think is probably just having a bigger impact on your markets whereas australia is able to.
00:15:41.206 --> 00:15:56.990 We seem to have, you know, reinvigorated the australian domestic consumer and they might be buying a bit more in the us market is buying quite a lot more at the moment as well, and prices to the to the US are holding up and slightly increasing, so that's probably just creating that slight difference in the two markets.
00:15:58.259 --> 00:15:59.383 Sam, can I get your claim?
00:15:59.383 --> 00:16:00.424 85% of that?
00:16:00.424 --> 00:16:06.263 No doubt it's a good chance.
00:16:06.263 --> 00:16:14.410 Sam's not listening, so I'm pretty safe We'll just cover off those markets while we're on it.
00:16:14.410 --> 00:16:19.840 Obviously, the quota changes to the UK and yeah, you've mentioned Chinese growth is still in decline.
00:16:19.840 --> 00:16:27.190 So is that UK quota change going to have any impact really, or is it not going to be as scary as what?
00:16:28.482 --> 00:16:30.489 Yeah, from an Australian point of view, it will.
00:16:35.940 --> 00:16:37.748 Depends if you're a Kiwi or an Australian, I think.
00:16:38.759 --> 00:16:46.611 Yeah, well, I mean New Zealand dominates that market, so we're probably feeling we've been hard done by for a number of years.
00:16:46.611 --> 00:16:48.245 Now we're finally clawing something back.
00:16:48.245 --> 00:16:51.261 But I mean New Zealand and this is another interesting thing too.
00:16:51.261 --> 00:16:57.806 I know that you know what you flagged from a question point of view is the type of lamb that's being grown and the weights that are being grown.
00:16:57.806 --> 00:17:03.568 And again, you know those differences in export markets might be having an influence on it.
00:17:03.568 --> 00:17:23.696 We call a more traditional lamb consumer, like most of the Europeans, a leg of lamb, those types of things roast lamb calls for, generally a sort of certain size.
00:17:23.696 --> 00:17:32.250 And yeah, that dominance of the European market is probably meaning that New Zealand lamb carcass weights haven't increased as much as, say, australia's ones, where we're sending a lot more to that US market.
00:17:32.250 --> 00:17:33.803 But back to the UK market.
00:17:33.803 --> 00:17:36.348 I mean, yes, increased access is great, it's always good.
00:17:37.412 --> 00:17:56.851 The challenge, I think, from an Australian point of view, in that UK and European market, although we don't have a free trade agreement with the European Union and that's probably going to be a number of years before that actually happens now the channels, the supply channels into that market, are already very well established and the consumers are already very well established.
00:17:56.851 --> 00:18:17.786 So unlike, say, a China market where you've got just a general increase in consumption absorbing more product, the market in Europe is very mature so you're not necessarily seeing any growth in overall volumes, although I understand UK production this year is down a bit and their imports are up so they've got to fill some of that gap.
00:18:17.786 --> 00:18:23.472 But generally we're talking about a consumer that's fairly well entrenched in terms of what their consumption habits are.
00:18:23.472 --> 00:18:27.991 So the only way Australian volume can get into that market is effectively displacing someone else.
00:18:27.991 --> 00:18:35.211 It's not an overall growth so there's an added competitiveness in that market for us to gain share.
00:18:36.101 --> 00:18:38.249 The UK or Europeans are also very parochial.
00:18:38.249 --> 00:18:48.165 They like their locally sourced product as well and, as I said, the Australian product with our US market volumes go into that US market.
00:18:48.165 --> 00:18:56.807 You know the availability of product here in Australia that might meet the specs that need to go into UK market might not be as big as what we actually think, but you definitely.
00:18:56.807 --> 00:19:02.988 Yeah, in speaking to processors and exporters here, they see it as an opportunity to increase and they are increasing sales into that market.
00:19:02.988 --> 00:19:07.207 Whether we ever get to the same sort of volumes that New Zealand does in that market.
00:19:07.207 --> 00:19:08.523 Yeah, it'll be a long way off.
00:19:08.523 --> 00:19:09.146 I would suggest.
00:19:13.740 --> 00:19:17.191 Yeah, I imagine there's a fair bit of protection going on on the marketing angle, the, I guess, both sides of the ditch.
00:19:17.191 --> 00:19:26.285 Yeah, and as you sort of mentioned that we are seeing a drift to heavier carcasses, like, I guess what would have been a here in new zealand 14, 15 kilo lamb is now probably more 18, 19, 20.
00:19:26.285 --> 00:19:34.092 In australia it's kind of gone from 18 to 20 to 22 to 24 and now, yeah, I know I think there's the grids are sort of ending under 25, it's probably getting less.
00:19:34.092 --> 00:19:39.608 Anyway, we're definitely seeing price premiums hitting or heading for bigger carcasses.
00:19:39.608 --> 00:19:43.171 That's obviously more efficient from a processing point of view, I'm assuming.
00:19:43.171 --> 00:19:45.969 Is that trend continuing and is the market going to?
00:19:45.969 --> 00:19:46.861 I guess?
00:19:46.861 --> 00:19:50.521 Is the market happy with that outcome or is that the process is sort of just trying to be more efficient?
00:19:51.083 --> 00:19:51.923 Yeah, I don't know.
00:19:51.923 --> 00:20:08.624 It's an interesting question, one I might challenge our retailers with when I get a chance to have a chat with them, because you can understand, from a processor point of view, the heavier I am going through.
00:20:08.624 --> 00:20:15.164 You know it's one body on a chain and if you're getting more off it then it's giving you a better yield and better utilization of your labor and better returns and all that so you can understand that.
00:20:15.164 --> 00:20:20.873 Yeah, our average slaughter weight for quarter one this year was up above 24 kilos.
00:20:20.873 --> 00:20:24.339 So five years ago it was 23 and 10 years ago it was 21.
00:20:24.339 --> 00:20:34.201 So it's, yeah, it's an ever increasing plane at the moment of increased weights and, as you said, the pricing grids are not penalizing people for those sorts of weights.
00:20:34.201 --> 00:20:40.266 I remember speaking to an Australian producer, probably five plus years ago, and I think anything over 24 kilos got a discount.
00:20:40.266 --> 00:20:44.722 Now I think you can get to 26 or 28 kilos before you start getting a discount.
00:20:44.722 --> 00:21:00.695 So the incentives there from a pricing point of view and if you can put the weight on and maybe there's a little bit of that too with you know we're doing a lot more and maybe there's a little bit of that too with you know we're doing a lot more, australia's doing a lot more sort of finishing and you see, you know feedlots and grain bins and paddocks and things like that.
00:21:00.695 --> 00:21:19.869 There's a lot more of that coming into play which, if you're not getting penalised from the extra weight, the opportunity there to put the weight on does probably start to add up.
00:21:19.869 --> 00:21:22.778 So, yeah, but I don't know, I don't know, I don't know whether this, this desire to chase weight, is necessarily, uh, the best thing for the market.
00:21:22.798 --> 00:21:29.800 I the the the fortune of being over in the us back in 2019 before everything went upside down and I went to a couple of feed yards in the us.
00:21:29.800 --> 00:21:34.662 There which, yeah, they're putting sheep on feed, which I thought was interesting.
00:21:34.662 --> 00:21:37.911 They were effectively trying to replicate the beef industry for sheep.
00:21:37.911 --> 00:21:44.486 They were taking sheep out of the mountain country, the lambs were being taken off their mothers as they headed into winter.
00:21:44.486 --> 00:21:54.010 They stuck them in a feed yard over winter and then they tried to hold those lambs until they got to Easter, which is their peak lamb consumption period, and it wasn't a feedlot like a beef feedlot.
00:21:54.010 --> 00:21:57.095 This is how much and how much weight gain they were looking for.
00:21:57.095 --> 00:22:01.145 It was almost like a holding pen to try and keep them at weight.
00:22:01.145 --> 00:22:03.290 And they were big.
00:22:03.290 --> 00:22:07.305 Those sheep over there were I think some of them were nudging 40 kilos.
00:22:07.305 --> 00:22:09.171 From a carcass weight point of view they're big.
00:22:09.171 --> 00:22:17.656 So I can understand Australia sending more product to the us and the us system over there's got a bigger animal and a bigger product.
00:22:17.656 --> 00:22:21.202 You know they're not as accustomed as we are to to lamb.
00:22:21.242 --> 00:22:21.864 How we eat it.
00:22:21.864 --> 00:22:34.997 Um, I was told a while ago that the ideal weight for a lamb leg is two kilos when it sits on the retail shelf and my rough calculations were well, that's about a 22, 24 kilo carcass.
00:22:34.997 --> 00:22:36.808 So I don't know whether or not.
00:22:36.808 --> 00:22:37.811 That's why I said it's.
00:22:37.811 --> 00:22:42.555 A question for the retailer is are we going to ask our consumer to eat a bigger product?
00:22:42.555 --> 00:22:44.192 Are we looking for a bigger eye muscle?
00:22:44.192 --> 00:22:46.643 Are we looking for a bigger lamb leg or are we just going to start trimming this stuff off?
00:22:46.643 --> 00:22:47.326 Looking for a bigger eye muscle?
00:22:47.326 --> 00:22:51.162 Are we looking for a bigger lamb leg or are we just going to start trimming this stuff off and are we going to turn it into, like the us does?
00:22:51.162 --> 00:22:52.286 Well, hamburger trade, you know?
00:22:52.666 --> 00:22:53.489 yeah but you sort of.
00:22:53.509 --> 00:23:10.593 Then ask yourself the question well, why are we chasing extra weight if we're not getting the same dollars for it at the end of the day, like if, if they're taking a lamb leg that suddenly becomes you know, two and a half plus kilos and they're trimming it off to get it down to a smaller weight, that trim's got to go into a lower-priced product.
00:23:10.593 --> 00:23:13.453 You sort of wonder well, should we be going in that direction?
00:23:13.453 --> 00:23:13.875 I don't know.
00:23:13.875 --> 00:23:18.856 But yeah, at the moment the price incentive is to keep producing more.
00:23:19.625 --> 00:23:26.936 Yeah, I guess that presents, yeah, on-farm challenges with if there's a discount to produce lighter carcasses and then.
00:23:26.936 --> 00:23:36.652 So therefore lamps hang around on farm longer which are eating tucker, that should be going down the ewe's throat for the next drop, and there's all sorts of flower benefits of heading for that bigger carcass.
00:23:36.652 --> 00:23:38.973 So you end up with bigger ewes to produce those bigger carcasses.
00:23:38.973 --> 00:23:48.118 Anyway, I think it's an interesting industry challenge anyway and I guess we've got to be careful where tail's not wagging the dog a bit.
00:23:48.244 --> 00:23:53.002 But yeah, and I was speaking to again speaking to jen, my colleague in new zealand.
00:23:53.002 --> 00:24:13.714 She was saying that well, it probably provided a bit of breathing space this year with lower land prices in new zealand and, you know, without you know seasonal pressure of no feed available, your ability to grow a heavier article and at least recover a better overall dollars per head possibly worked in your favor as opposed to being discounted for adding some extra kilos.
00:24:13.714 --> 00:24:15.788 So it sort of can work both ways.
00:24:15.788 --> 00:24:31.977 But I think, yeah, as you say, you've just got to be conscious of what that actual consumer wants, because I think, both from an Australian, new Zealand point of view, lamb is a very small part of the overall global protein and it is being positioned as a bit of a premium protein.
00:24:31.977 --> 00:24:40.470 So you you have to be, you know, acutely aware as to what that customer is actually looking for and make sure you supply that rather than trying to push volume into the market.
00:24:40.470 --> 00:24:44.992 It's only going to degrade whatever premiums you've got yeah, yeah, for sure we might.
00:24:45.233 --> 00:25:02.526 We might go there next, though we always hear the quote we don't need to feed the world, we just need to feed the world's affluent or or things along those lines, and and as an industry, we're invested pretty heavily in in imf, in beef and lamb, and it's frequently on the agenda when we're having discussions with people about their breeding objectives.
00:25:02.526 --> 00:25:03.488 I guess what?
00:25:03.488 --> 00:25:06.593 I guess, how do you see that premium end of the market playing out?
00:25:06.593 --> 00:25:11.119 Is that being driven, or is it driven by a different set of levers a bit?
00:25:11.119 --> 00:25:13.751 And is that growing stagnant?
00:25:13.751 --> 00:25:14.855 What's happening in premium?
00:25:15.365 --> 00:25:32.432 Yeah, I think this is really exciting, this space, particularly from a lamb point of view and I apologise to the New Zealand listeners if I don't know as much about the New Zealand industry, but the interesting thing for me is a lamb is a lamb and that's effectively what you're selling from a.
00:25:32.432 --> 00:25:34.651 That's the quality descriptor.
00:25:34.651 --> 00:25:36.869 Yeah, yeah, it's either lamb or it's not.
00:25:36.869 --> 00:25:50.117 Yeah, Whereas you look at some of the beef grading schemes that are around the world and there's obviously the manufacturing language around yearling and ages and number of teeth and all the rest of it.
00:25:50.117 --> 00:25:59.788 But I've also, as you noted, IMF and yield and all those sorts of things and different grading levels, the US has a grading scheme over there.
00:25:59.788 --> 00:26:03.874 We can say that's actually driven improvements in quality because of the pricing structure.
00:26:03.874 --> 00:26:04.575 They've got around it.
00:26:04.575 --> 00:26:15.573 I think it's really exciting from a lamb point of view because that age-old conversation around well, once it gets two worn bottom permanent teeth, it's suddenly not as good as the bloke next door.
00:26:15.625 --> 00:26:17.673 that doesn't have those two worn bottom teeth yeah.
00:26:19.025 --> 00:26:26.778 And if you can actually create an objective measure to say, well, this is that quality, I mean we shouldn't shy away from that.
00:26:26.845 --> 00:26:35.913 There will be lambs that have been sold as lamb and possibly getting exactly the same price as the the good quality one that might receive a discount because it's a bit more objective.
00:26:35.913 --> 00:26:50.756 But I think, particularly for lamb, when you're selling a product to a consumer out there not a customer consumer that's, you know, not necessarily it's not an australian or new zealand consumer that's been eating lamb all their life, but they're trying something for the first time.
00:26:50.756 --> 00:26:56.913 If, if you don't hit that quality mark, you know they might ever, not, not ever, go back to it again.
00:26:56.913 --> 00:27:21.692 So I think, I think it's exciting to be able to, yeah, that, that the industry sort of move in that direction, to create some of those objective measures that allow it to, um, yeah, create that quality scale so they can position the right product into that right market and ensure that you know the Walmart or wherever it is in the US that's buying lamb, that they get that same quality every day of the year because they can track it and measure it.
00:27:21.772 --> 00:27:23.367 As opposed to it well, it's lamb.
00:27:23.367 --> 00:27:30.057 It meets the definition for lamb because there's a variety within what is lamb isn't there Massive.
00:27:30.096 --> 00:27:36.073 yeah, and I do stir the keyways up a bit about the fact that IMF here is about half of what it is in Australia in lamb.
00:27:37.945 --> 00:27:39.528 And I think that's the other thing I mean.
00:27:39.528 --> 00:27:46.736 Again too, you know we talk IMF and they talk yield, but again, it's understanding what the consumer wants too.
00:27:46.736 --> 00:28:01.568 And it might not be like wagyu in the beef industry where everyone aims for like a six or a seven or an eight or whatever it is marble score, but we just know what the actual imf level is that produces the most desirable eating product.
00:28:01.568 --> 00:28:02.932 Because yeah, I was.
00:28:02.932 --> 00:28:09.574 I was a bit blown away when someone told me well, you can have two lambs on the plate and they're both called lamb and they're both sold as lamb.
00:28:09.574 --> 00:28:16.432 But one could be a brilliant eating experience and one's diabolical, but they're both paid the same and you pay the same for both.
00:28:16.432 --> 00:28:24.348 And you know, the only thing that characterises it in a quality sense is that it's lamb as opposed to mutton.
00:28:24.388 --> 00:28:25.690 Yeah, yeah, yeah.
00:28:25.690 --> 00:28:29.674 No, we're destined for a lot more sophistication, hopefully around that.
00:28:29.674 --> 00:28:55.173 And it is interesting that old IMF versus sort of sheer force Like you can get a good eating experience from something like obviously the New Zealand product tends to be young or younger and smaller and so wouldn't have as much IMF just by age, but is younger and therefore more tender versus the Australian product which tends to be a little bit older and and then for more imf developed and yeah.
