DESPITE some hesitation in the South East livestock sector, lamb producers and agents seem mostly upbeat in their support for the proposed sale of Bordertown's Tatiara Meat Company to Swift Australia.
The deal, which is still subject to Australian Competition & Consumer Council approval, followed weeks of speculation about the future of Australia's largest exporter of chilled lamb under its present owners Vion Food Group, based in the Netherlands.
Hopes are that it will be 'business as usual' if the sale proceeds, and that JB Swift's economies of scale as the world's largest meat processor will assist producers to ride-out the high $A and diversify into other export and domestic markets.
The only major concerns are that the sale takes another competitor out of Australia's meat processing industry and that further rationalisation may lead to a monopoly of export lamb processors.
JB Swift's Australian arm owns 10 processing plants and has a total daily slaughter capacity of 8555 cattle and 24,500 smalls (sheep, pigs and calves), employing a workforce exceeding 7500 people.
Lamb prices sitting above $4 a kilogram for much of the year because of strong demand and a supply shortage are likely to have put considerable financial pressure on TMC, and industry leaders are now calling for producers to grow the nation's sheep flock to more sustainable levels.
But processors also need to send strong price signals along with more forward contracting and deliver more feedback along the supply chain.
SA Lamb Development Team chairman Glen Tilley said a strong and viable processing sector was needed to drive the market and progress the lamb industry.
"We are fortunate in SA to have two strong lamb processing businesses ? Swift would not be looking at a business which they did not see had the potential to grow," he said.
With high ewe-replacement costs and the large monetary outlay to buy-in lambs, there was a need for processors to issue more forward contracts to provide certainty to lamb producers.
"Processors are looking for security of supply, so it is in their interests to contract more," he said.
Producers could not afford to become complacent in these times of high lamb prices, and needed to focus on keeping their cost of production low.
It was really only in the past 12 months that specialist lamb producers had become profitable, with labour, freight, feed and shearing costs all going up.
"If you are producing lambs off grass and straight off their mothers then $3.80/kg is probably good money, but if you are shearing lambs with the extra management you might be looking for $4.20/kg," he said.
Bordertown stud sheep breeder Ian Pfeiffer said the first-class technology in TMC's slaughter and boning rooms would be a strong incentive for Swift to continue operating at Bordertown.
He said local lamb producers would gain an advantage, because Swift would focus on sourcing lambs across South Australia and western Victoria for its Bordertown plant and continue to buy interstate lambs for its other processing facilities.
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