Lamb producers with their sights set on carcase quality and weight targets can also pick up value by adjusting management strategies to produce premium skins.
Co-products such as skin, wool and hide are often an overlooked sector of the red meat industry, but they contribute to Australia’s reputation as a supplier of quality products into export markets.
According to the latest MLA markets report, lamb skins are averaging $9 per skin with the best in the market being quoted at $10 or a little better.
MLA says that prices increased in January after laboring about $7-$7.50 per skin since June 2017.
Last year, Australia exported more than $377 million worth of raw sheep and lamb skins, with 92 per cent going to China.
Australian Hide, Skin and Leather Exporters Association executive director, Dennis King says the skin trade can be influenced by social and political factors.
“The fashion industry is particularly susceptible to influence from activist groups and, in recent years, we’ve seen big global brands move away from using leather products in favour of synthetic alternatives,” he said.
“While this has had an effect on demand for hide, the market for lamb skins remains strong.”
He said the dumping of a seven per cent tariff on sheep skins by 1 January 2019 under the China–Australia Free Trade Agreement is not expected to have a significant impact.
“Australia and New Zealand are the main producers of sheep skins, so the volume of product cannot be sourced from other countries," Mr King said.
Thomas Foods International’s skin, hide and wool division manager, Simon Matters, says around 60pc of lambs processed by his company will make the cut for the premium skin market.
He said, with prices usually dropping by $2–3 between each of the three grades (premium, which can include up to 10% seconds, thirds and fourths or crossbreds), it is worthwhile for producers to ensure animals are presented in the best condition.
“The ideal lamb skin, he says, has at least half an inch (1.2cm) of fine, dense wool. This is crucial for the premium market, as these skins will be used for high quality garments and underlays.”
Mr Matters said producers he speaks to are interested in how they can achieve more value for their skins.
“Best practice management on-farm for fine wool tends to flow through to skin value as customers pay a premium for finer microns and unmarked hides,” he said.
“For example, grass seeds used to be a big issue, but generally producers are doing a good job at eliminating grass seeds and also there are fewer black points. Black wool cannot be dyed out, but producers are reducing this problem with genetic selection to produce more consistently lighter skins.”
A keyhole-crutch is also more likely to receive a premium, as crutching above the tail reduces the size and shape of the skin.
Skins are valued on the live animal to determine skin size and quality.
Buyers submit their prices in a daily tendering process at the abattoir. After they are purchased, skins are salted and sent to the buyers’ warehouse for grading, based on pelt type and wool quality.
Skins are then packed and shipped to tanneries in China, Russia and Turkey.