Australia’s domestic market might be the single biggest destination of Australian lamb – taking 45 per cent of production – but the potential for exports growth is massive, given how little of the product is traded globally.
Meat and Livestock Australia (MLA) manager industry co-innovation, Ben Thomas, said this was its big advantage over beef. And with our number one competitor, New Zealand, distracted with its investments in dairy, Australia’s opportunities in the global market have expanded.
Mr Thomas said there were no indications the New Zealand lamb flock was going to ramp up production any time soon, despite steadily growing demand for lamb from the US and China.
New Zealand’s reduced production was particularly timely for Australia with Britain’s exit of the European Union due in 18 months.
Australia has not had an opportunity like this to negotiate trade agreements with Britain since the 1970s, Mr Thomas said.
He said Britain accounted for 50pc of the EU quota. Australia’s quota limit into the EU was a paltry 19,000 tonnes (shipped weight).
New Zealand’s access dwarfed that with a 260,000t quota limit, of which it has at best only ever half filled, Mr Thomas said.
“This is where Brexit poses significant opportunity for beef and lamb. This is the first time we’ve been able to negotiate something significant since the ‘70s,” he said, adding that these markets were high value on a dollars per tonne basis.
This comes as the 2016-17 New Zealand lamb crop totalled just 21 million head, its smallest lambing since 1952 and down almost 10 million head on a decade ago.
However, to service these export opportunities, the Australian industry would have to divert product away from existing markets, simply because it couldn’t grow its production fast enough.
“This is why lamb prices at the farm gate have been able to increase, because the flock has remained at about 70 million head for about 10 years, but with less Merinos and more meat breeds,” Mr Thomas said.
“Because the flock remained stable, it hasn’t been able to keep pace with growth in global demand as New Zealand shifted focus to dairy.”
Beef and cropping were competing for space and limiting our ability to take advantage of the global appetite that existed for our lamb. MLA expects the national flock to plateau at 72 million to 73 million head.
Processing capacity has slowly increased to reach 22.5 million head last financial year, he said. Yet, it struggled to maintain this level.
Due to poorer lambings in the past six months, there would be fewer lambs come through the system this spring.
Mr Thomas will keep an eye on whether the spring increase would be enough to reverse processor closures. He said the stagnant flock size, which in turn limited our processing capacity, was limiting our ability to capture global opportunities.
Longer term, though, he said barring any hiccups with the dollar or export protocols, the outlook for steady growth in exports remained.
