Archive for July, 2019

Mutton market makes milestone

PRODUCERS are weighing up their “keep or kill” options with their older sheep to best capitalise on the burgeoning mutton and lamb markets.

This has resulted in a reduction of the number of restocker sheep numbers at sales across the country and increased competition from processors looking to secure mutton.

According to Meat and Livestock Australia’s (MLA) National Livestock Reporting Service (NLRS) the mutton indicator has hit its highest point since last July, reaching 357c a kilogram carcase weight (cwt) last week.

Statistics from MLA show the sheep slaughter for 2015 so far is back 25 per cent year-on-year for the January period, at 123,485 head per week, following what was the second consecutive year of over nine million head of sheep slaughtered.

MLA anticipated the relatively strong lamb prices of 2014 would continue into 2015, which would likely result in a dramatic year-on-year drop in sheep slaughter as the year progressed, as producers aim to maximise lamb production- albeit dependent on seasonal conditions.

Punters have tipped the mutton indicator will continue to rise as supply was anticipated to slow.

Meat market bolstering wool enterprisesIn the NSW market, Landmark Bombala livestock manager Justin Lewis said numbers at the Bombala district circuit sale were back about 6000 head last Wednesday, compared to the usual 17,000 to 18,000 surplus ewes and wethers that were usually offered at the sale.

“We had 11,430 sheep, which was well back on usual because the season has been so good,” Mr Lewis said.

He said a couple of the sales regular vendors had bought more land elsewhere in the last 12 months and had held onto to surplus sheep to stock those properties.

Mr Lewis said processors were at the sale but hardly got a look-in due to strong restocker demand.

“The processors could only buy about 500, seven-and-a-half year old ewes as the restockers didn’t want those,” he said.

Mr Lewis said ewe numbers in the Bombala district had remained static for at least four years now due to the run of good seasons and producers were trying to hold onto as many stock as possible.

Local restocker competition was also bolstered by the district receiving 35 millimetres of rain in the 10 days leading up to the sale, as did the reduced yarding contribute to very solid prices for both ewes and wethers.

Four-and-half year old Merino ewes topped $143, five-and-a-half year old ewes sold to $130 and six-and-a-half year old Merino ewes sold for $106.

Mr Lewis said older ewes and wethers sold by clients direct to the processor over the last month had returned a solid $80 average.

He said there was no doubt the meat side of the sheep job was holding up wool enterprises at present.

Strong restocker competitionWhilst the availability of older sheep was tightening, Thomas Foods International (TFI) livestock manager, Paul Leonard, Murray Bridge, South Australia, said TFI was currently processing its usual number of sheep at present – 5000 sheep a day at Murray Bridge and 3000 a day at Wollongarra, Queensland.

He said there was strong restocker competition in the yards.

“Restockers are even competing for seven-and-a-half year old sheep as the five-and-a-half year old and six-and-a-half year old sheep are not in the market as people are holding onto them,” he said.

However, Mr Leonard said he would much rather producers hold onto their older sheep and breed on with them than exit the sheep and lamb industry.

“Ultimately lamb is our main product as mutton is a by-product, so the more ewes producers are keeping the more lambs they are producing,” he said.

Mr Leonard said TFI were currently meeting the requirements of their international mutton markets.

“We aren’t going to run out of sheep, as sheep numbers recover so quickly, especially is these periods when people hold onto them numbers rebuild fast,” Mr Leonard said.

Mr Leonard anticipated mutton prices would remain consistently strong for the next three years- with the mutton price currently about 40pc higher than it was at this same time last year.

“Both mutton and lamb will be at a premium for the next two to three years,” he said.

“Demand from China and India for agricultural protein will also auger well for the mutton and lamb industry.”

Ewes in demandBarellan livestock agent, Mark Flagg, Flagg Livestock and Property, anticipated there could be a premium paid for scanned-in-lamb (SIL) first cross ewes at the annual Barellan first cross ewe today.

Mr Flagg said buying the SIL units was a good opportunity for restockers to replenish their ewe flocks and also make a speedy return on investment from the buoyant lamb market.

He expected local restockers would be competitive at the sale as there was a lot of lucerne feed about the district at the moment as they had received above average summer rainfall.

Mr Flagg, who also operates as a selling agent at the Griffith prime sale, expected the sale would be firmer than last year and ewe prices would make between $170 and $250. He expected Merino ewe numbers, suitable for the mutton trade, would dwindle.

“Traditionally ewe numbers ease as we move into winter and I expect this year we should see the mutton price kick on as we struggle to get the older Merino ewe number through,” he said.

GJ Hulm livestock agent, Isaac Hill, Wagga Wagga, said sheep numbers were holding consistent week-on-week at the Wagga prime market at the moment, but mutton numbers were a lot lower compared to other years at this time.

He said 95 per cent of the sheep at Wagga yards were bought by processors at the moment.

“There is a real even spread between the processors taking mutton, which is unusual, normally there is one processor in particular that is firing,” Mr Hill said.

“I think processors have adequate supply at the moment, but by the end of March they will have to compete a lot harder as supply tapers off,” he said.

Presently 7000 to 11,000 sheep were yarded weekly at Wagga.

Mr Hill said producers were happy with the money their surplus caste-for-age ewes were returning.

“The mutton market has been very good for 18 months to two years, while we have seen it dearer; it’s pretty solid with where it is just at the moment.”

Rain boosts stock conditionQuality wise, Mr Hill said the sheep couldn’t be in better condition as they had come off stubbles or summer grasses that had benefited from recent rain.

He said some producers had also opted to hold onto their older ewes for another year to get an extra lamb out of while lamb prices were solid.

Quade Moncrieff Livestock and Property director, Paul Quade, West Wyalong, said processors were forced to compete with strong restocker demand for older at the West Wyalong store sheep sale this week as there was plentiful supply of feed across the region.

“A lot of local producers received 100mm of rain in January – we usually get 20mm of rain in January – so many were looking to utilise the feed they have with some extra stock,” he said.

He said for that reason, good summer rain, a few vendors have opted to hold onto their stock.

Most of the 8000 sheep offered were in good condition as they had been on lucerne and quality summer grasses.

Mr Quade said some producers had already sold suitable older sheep at prime sales at Wagga, Forbes and Griffith, as well as direct to the processor in the last fortnight.

A client received $90 to $100 for six-and-a-half year old Merino ewes at Griffith and another client bagged $122 for three-year-old Merino wethers they sold to processor Fletcher’s International at Dubbo.

“I expected a strong market on sale day given how strong slaughter prices are,” Mr Quade said.

Butt Livestock and Property director, Phil Butt, Yass, said due to the strong mutton price there would be far less six-and-a-half year old and seven-and-a-half year old Merino ewes in the Yass circuit sale today.

“A lot of producers have been selling their older ewe over the last 12 months as the mutton slaughter price has been strong,” he said.

Mr Butt said the ewe shortage was not just limited to the mutton market.

“I think there will be a shortage of ewes in general on the market this year and this is already happening in the mutton market,” he said.

He producers in the Yass district weren’t holding onto surplus breeders and were operating their usual turnover programs.

Mr Butt expected prices for older ewes to be double that of last year’s sale at this time.

“For the past two years older ewes have been making about $65 at this sale, but I think to secure ewes people will have to be prepared a higher price – double last year’s prices,” he said.

Mr Butt said the Yass district has experienced a good 12 months seasonally and sheep would be 7-8kg heavier than this time last year.

He said 95pc of one-year-old ewes were at joinable weights, whereas they weren’t at that level last year.

There will be 7700 sheep offered at the sale, back on the 9000 head offered last year, mainly due to producers already selling Merino wethers direct to the processor or holding onto them.

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Can the Basin Plan deliver?

Neil Andrew and Bob Baldwin with SRI chair John Bradford.CONJECTURE is mounting in farming communities over whether the Murray-Darling Basin Plan can deliver its promised environmental water flows efficiently, without causing impacts from excessive flooding.

Stakeholders raised grievances about that vital aspect of the Basin Plan’s implementation with new Parliamentary Secretary to the Environment Minister Bob Baldwin in a series of introductory meetings held this week in key Basin States.

Mr Baldwin was joined on the four-day tour by Murray-Darling Basin Authority (MDBA) chair and former South Australian Liberal MP Neil Andrew, who started his new appointment on February 1.

On Monday, the delegation flew from Canberra over the Snowy Mountain water catchment scheme and Dartmouth Dam into Shepparton, Victoria, for engagements with irrigators and industry stakeholders, including on-farm talks.

The following day at Deniliquin, NSW, they toured various water delivery and irrigation projects where Mr Baldwin announced $100 million funding for private irrigation operators.

Participants in the Deniliquin leg included officials from the National Irrigators Council, NSW Irrigators Council, Department of Environment, MDBA, Murray Irrigation Limited, Commonwealth Environmental Water Holder (CEWH) and Southern Riverina Irrigators.

On Wednesday, the delegation met with farmers near Mildura in Victoria to check out more water efficiency projects before moving onto South Australia the following day to tour the Lower Lakes region.

Extra SDLs an issueThe Basin Plan was signed into law in late 2012 underpinned by a basic target of 2750 gigalitres in Sustainable Diversion Limits (SDLs) – although not signed by the NSW and Queensland governments until February 2014.

A last minute political manoeuvre by the former federal Labor government to appease their SA counterparts in 2012 amended the Water Act to inject an additional 450GL in SDLs, accompanied by a $1.75 billion federal government grant.

The added SDLs will be achieved by removing constraints in the river system through a $200 million allocation, with the remaining $1.55b going to water efficiency projects, most likely on-farm, to recover environmental water.

In his speech at the National Press Club in Canberra, after signing the Basin Plan into law, then Water Minister Tony Burke said the final 450GL – held water by the CEWH – would be gained by removing the constraints with no “downside” in terms of the Basin Plan’s social and economic outcomes.

But he said the 450GL would have “a massive, massive upside for the environmental outcomes”.

Mr Burke said the 2750GL met 11 of the 18 different river flow targets within the Murray – but removing the constraints to deliver that 450GL would see 17 out of 18 flow targets reached.

“Those constraints are things like river rules that prevent you from releasing dam water beyond certain levels, channels where if you try to put more water than the capacity of a channel allows, instead of the water going down the system it just goes out,” he said.

However, more than two years later, the Constraints Management Strategy (CMS) which underpins the 450GL delivery program remains a divisive issue angst amongst Basin stakeholders.

Flooding concern for farmersA key dilemma is how the $200m will be spent to ensure the Plan achieves its stated goals, without hurting or disrupting farm operations through excessive flooding that could also strand or kill livestock or deny feeding or damage private property, including crops.

It’s understood the ministerial council of State and federal water ministers doesn’t need to formally sign off on the CMS by mid-2016 – but the various governments must reach agreement one way or another, by that date, on the Authority’s final recommendations.

While there’s a general acceptance the $200m is insufficient, efforts are still being made to prioritise projects to achieve the best result for efficient delivery of SDLs.

MDBA officials are already engaged in ongoing consultations with community groups to finalise the CMS to deliver the 450GL without causing negative third party impacts.

Another potential hot spot for the MDBA to resolve with stakeholders is whether a flow of 80,000 megalitres a day in environmental watering requirements for the SA River Murray, can be achieved in the Basin Plan.

During the Deniliquin leg of the tour, MDBA river management executive director David Dreverman was quizzed by stakeholders about the Authority’s modelling on the additional water flows, but his responses failed to remove growing doubts.

Constrained by constraintsRicegrowers’ Association of Australia (RGA) president and chair of the National Farmers’ Federation water taskforce, Les Gordon accompanied Mr Baldwin’s delegation on Tuesday around Deniliquin.

Mr Gordon said the $200m allocated to the CMS was significantly short of the amount required, which government and MDBA officials were made aware of.

He said when considering the range of works needed to remove various constraints, including building bridges and other easements, in particular on private land throughout the system, the amount needed was “infinitely” more than $200m.

“A lot of water needs to come through a lot of little streams in this area and a lot of infrastructure and access is likely to be impacted,” he said.

Overall, Mr Gordon said the Basin Plan remained a “fairly divisive” issue amongst rural communities.

“A lot of people would still like to see it go away and a lot of people accept that it’s probably not going to go away,” he said.

Mr Gordon said those who accepted the Basin Plan was here to stay wanted it implemented in a cohesive way that protected their private assets and safeguarded the social and economic base of communities, like public infrastructure.

“These people are saying, ‘If you’re going to do this those assets need to be protected and we need to put some more robust processes in place to do that’,” he said.

“Every drop of water that goes out of productive agriculture into the environment will diminish returns to the broader community – there’s no doubt about that.

“But there’s a fairly widely held view now that you have a pool of water and it’s probably time to see if we can use it more effectively than we have in the past, and see how you do that before taking too much more away from farmers.”

A broad spectrum of issuesMr Baldwin said varying views and concerns did exist about the Basin Plan’s delivery, throughout the river system which, “always escalated in dry times”.

He said on Monday in Shepparton, stakeholders spoke about excessive water flows coming down the river and “perhaps flooding across the levy banks”.

“There is a broad spectrum of issues and they are different no matter if you’re in the north, or in the south or in the west,” he said.

“I’m listening to all those people; that’s why we’re embarking on a three-phase tour over a couple of months.

“This week we’re going down the Murray, the next trip will be down the Murrumbidgee and the next trip will be down the Darling.

“I intend to connect and engage with people out there on the ground; I’m that kind of guy. It’s a difficult area to work in because everyone feels that everyone else is against them.

“(But) if I had my way, I’d learn to do a rain dance and make it work and deliver rain on time.”

Liberal MP Sussan Ley, Farrer, said she believed the CMS had some inbuilt safeguards that would work, in terms delivering additional water levels, without creating adverse impacts on farm land and the community.

But she said stakeholders needed to be convinced the environmental watering plan would achieve its balanced objectives, with a win-win outcome for farmers and the environment “because the Basin Plan was premised on that working”.

Ms Ley said there would always be arguments over models for environmental water flows in the Basin Plan “and we accept that” but it was time to move on.

“There were models being talked about when I first represented this area in 2001,” she said.

“I think the time for modelling has past. I think the time for inquiries and reviews has past – that has been done to death.

“The implementation phase is where we’re up to now which is the most important.

“It’s where all of the theory and conversation hits the ground, so that just has to work.”

Forward commitmentMr Baldwin said, “everyone always claims they’re never listened to unless they get it their way”.

“There’s a Plan that’s been agreed to under the Inter-Governmental Agreement (IGA),” he said.

“That plan was formulated after a long period of consultation – it was swapped and changed on the way through – now is the time to deliver the Plan.”

But Mr Baldwin said, if irrigation groups or other stakeholders objected to key aspects of the Basin Plan, he was listening and they needed to point to specific examples of where it’s not working, “not just rhetoric”.

“Give me specifics we can act on, but generalisations don’t deliver outcomes,” he said.

“Show me where the error is and at least I can then review it.

“I might not agree with you but at least I can review it (but) ‘it’s not working’ just doesn’t cut the mustard.”

Mr Baldwin also dismissed concerns a change of government at the March NSW election and the outcome of the Queensland election could see a scenario where a federal Coalition government faced potentially four State Labor governments.

He said Liberal and Labor State governments they signed up to the IGA in a forward commitment.

“If they decide they want to chop and change, it’ll all fall over, we’ll pull our money back (and) money will be resumed by our treasury and finance, so it actually rests with State governments to actually work with us,” he said.

“We are the funder and the facilitator they are the enablers that will work on the ground – it’s up to State governments to deliver their side of the bargain.”

A bridge too farOn Tuesday, Mr Baldwin and Mr Andrew were taken to the Sandy Creek Bridge in the Wakool Shire, west of Deniliquin.

They were told the old wooden bridge – one of about 160 similar structures dotted on public and private property throughout the Shire – was considered a prime example of a constraint that must be considered for an upgrade in the CMS.

Currently, it has a 10 tonne weight limit, considered insufficient when the water level is raised or the river flooded to achieve environmental water flows, preventing local farmers or truck operators being able to access a lower-level easement nearby.

But if the bridge was upgraded and able to carry heavy farm machinery and other loads, local farmers could carry on business operations without undue or lengthy disruptions.

Roger Knight – a member of the Koondrook Perricoota Alliance local reference group – met with Mr Baldwin’s delegation and said it was “imperative” the bridge be replaced with a steel or concrete structure, whichever meets specified building requirements, to maintain regular landholder access, when such watering events are underway.

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Strong market lifts EMI to 1101c

Photo: CSIROTHE largest weekly price gain for wool in 17 months has lifted the Eastern Market Indicator (EMI) above 1100 cents a kilogram for the first time since February 2014.

After the Australian Wool Exchange (AWEX) opened the new year on 1059c, unchanged from 2014’s final week, the EMI climbed to 1070c last week. This week’s 31c rise brought the indicator up to 1101c/kg.

AWEX senior market analyst Lionel Plunkett said this week’s auctions saw solid interest for all wool types, but like last week most of the action was in the finer ranges.

“Best style and 40 Newtons per kilotex (Nkt) were initially the focus, rising 30 to 50c in the 18.5 and finer range on the opening day,” Mr Plunkett said.

“However, there was a reversal of fortunes on Thursday when support for the better types moderated as buyers turned their attention to the lower spec grades and those in the broader microns.”

Mr Plunkett said a jump in price levels of 30c was not uncommon and had a number of lots in the 20-micron and broader range trading over 1200c.

“Adding to the positive vibe was a strong finish to the day in Fremantle which closed out the week outperforming the East Coast in selected pockets.”

The west closed on 1130c/kg (up 41c), with 1127c at Sydney (up 29c) and 1084c in Melbourne (up 32c).

NOTE:The first version of this article mistakenly ran with headline “two-year high”.

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ACCC green lights JBS takeover

MEAT giant JBS has cleared one of the two main regulatory hurdles in its $1.45 billion takeover of big smallgoods company Primo (Australian Consolidated Food Holdings).

However, in a warning shot fired over JBS’ bows, the Australian Competition and Consumer Commission (ACCC) has flagged its wariness about a consolidating abattoir industry trend.

JBS Australia’s proposed acquisition of Primo will not constrain market competition, said the ACCC.

Primo is set to be sold to the meat processing and export giant in a strategic value-adding move set to aid JBS’ Asian market growth.

Livestock producers have been particularly worried about two more abattoirs joining the powerful JBS network and further reducing processing competition options.

Farmers, abattoirs, meat and small goods suppliers and customers responded to the bid announcement last November by making submissions to the ACCC and the Foreign Investment Review Board.

Although the Brazilian-based giant JBS – the world’s biggest animal protein processing company – has only been in Australia for seven years, it already owns 11 abattoirs (10 are operating) in five States, including Queensland’s big Dinmore and Rockhampton plants. Primo operates abattoirs at Port Wakefield in South Australia, processing pigs, and Scone in NSW’s Hunter Valley, which processes cattle.

The ACCC received submissions from “a range of interested parties”, who expressed concern that the proposed acquisition would result in less competition in the fat cattle market in northern NSW and Queensland.

Farmers and meat retailers are increasingly frustrated by consolidation of meat processing activities which are limiting the choice of independent meatworks bidding for livestock or offering service kill options to producers or butchers.

“The ACCC undertook a detailed assessment and determined that Primo is currently not a strong competitive constraint on JBS,” ACCC chairman Rod Sims said, noting JBS’s abattoirs in Queensland and Primo’s abattoir at Scone are more than 500 kilometres apart.

“Furthermore, the increase in market share as a result of the proposed acquisition would be relatively small and JBS would continue to be constrained in the market for the acquisition of fat cattle by a number of alternative abattoirs and supermarket chains, in the northern NSW and southern Queensland region.”

While the ACCC determined the proposed sale would be unlikely to raise “significant competition concerns”, the watchdog is wary of the potential impact of further consolidation of abattoirs.

“The ACCC will continue to monitor this industry and any future acquisitions will face additional scrutiny,” Mr Sims said.

Nationals Senator John Williams is seething at the decision, labelling the ACCC “out of touch with reality”.

“I find it confusing that on one hand the ACCC will not oppose this acquisition, yet in the next breath says it is wary of the potential impact of the further consolidation of abattoirs,” Senator Williams said.

“If that is true, why didn’t it act in this instance?”

The buy-up still requires Foreign Investment Review Board approval before it can go ahead.

The Primo Group, the largest processed ham bacon and smallgoods business in Australia and New Zealand, owns the Primo, Hans and Beehive brands and key processing operations in five locations.

Primo, established in NSW by the Lederer family in 1985, has been majority owned by Singaporean-based equity fund manager Affinity Equity Partners for the past three years.

Affinity bought 70.1 per cent of the business in late 2011 in a deal which then valued the company at $740 million.

The Lederer’s Primo business activities also include the Joes Meat market and Farm Fresh Meats butchery chain in NSW and suburban shopping centre interests, although JBS is considered unlikely to keep the retail operations in the long-term.

Affinity has described JBS – the world’s largest processor of fresh meats – as “the logical owner for Primo”.

Although JBS processes pigmeat at its Devonport plant in Tasmania for a third party, the Primo takeover is the first major move into the pork sector by the big red meat business.

It wants to take advantage of Primo Group’s growing export operations across Asia, including China.

JBS said the purchase was consistent with the global strategy of Brazilian parent company JBS S.A. to grow its presence in value-added products.

JBS Australia’s chief executive officer Brent Eastwood has made a point of noting the new owners “do not intend to make any meaningful changes to Primo Group’s operations for the foreseeable future”.

Primo Group chief executive officer, Paul Hitchcock insisted operations at Primo sites would remain “very much business as usual” for employees, suppliers and customers.

The Primo takeover follows the 2011 merger of Teys and Cargill’s six abattoirs in NSW, Queensland and SA and the earlier sale of Country Fresh Australia’s NSW and Queensland plants to SA’s Thomas Foods International, plus recent smaller meatworks closures in eastern Australia.

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