HUGE disparities in the price of red meat through the livestock exchange compared to the price consumers are paying at supermarkets has been reported by Meat & Livestock Australia (MLA).

MLA analysed the relationship between prices for livestock at the saleyards and prices of red meat at the shops, and said throughout the year, livestock prices for cattle and sheep declined significantly following historic highs in 2022.

While livestock prices decreased this year, MLA noted that the reduction in average retail price of red meat lags prices paid to producers by approximately eight months.

This was attributed to the amount of supply available, demand for Australian red meat in export markets, and rising input costs through the value chain.

   In the 12 weeks to August 13, 2023, retail prices for beef and lamb have declined significantly, following a trend that continued throughout 2023, demonstrating that the fall in livestock prices started to impact the price paid at the checkout.

The performance of Australian lamb and beef in the domestic market remains solid, with both proteins growing in sales volume and overall value.

When comparing the last quarter with the same period last year, value growth for beef is 1.8 per cent and for lamb is 4.2 per cent.

In the past, data on supply, pricing and consumer demand shows that it takes about eight months for livestock prices to translate to the retail shelf.

The last time in recent history that beef prices dropped considerably was in 2012, with the lag to shelf arriving eight months later, with those lower prices remaining for about nine months.

   For lamb, which has seen a drop in prices in the fourth quarter of the calendar year every year (Spring) since 2018, it experienced significant price drops in 2012-13 and 2016-2018. Correspondingly at this time, retail pricing took about nine months to fall.

MLA general manager of marketing and insights, Nathan Low, said lamb had seen a boom in purchases in recent months, as consumers noticed its falling price and jumped at the opportunity to purchase a high quality and nutritious protein.

According to Mr Low, there are a variety of factors that drive pricing in the retail market, as well as additional supply chain pressures occurring currently.

“Livestock prices are only one component of retail meat prices,” he said.

“Producing retail meat requires investment in energy costs, transport and freight costs, labour costs, packaging and disposal costs, retailer margins, processor margins, PPE and hygiene, all of which have increased in price over the last year, along with almost everything else.

“This is important to remember when considering when livestock prices increased as they did to historical highs last year.

“When saleyard prices were at those highs a year ago, retail prices increased but not at the same rate.”

“What we are seeing now is that same trend, just in the opposite direction.”

He said consumers needed a degree of certainty for their shopping basket and retailers smoothed the retail pricing impact over the longer term, rather than sharply increase or decrease the price of meat in accordance with livestock prices.

At the end of the day - producers are price takers not price makers!

That’s the farming gamble.