Wholesale beef and lamb prices plummet – so why are we still paying so much for meat at Coles and Woolworths?

Despite farmers now getting only a pittance for their cattle and sheep at sales yards, Aussie shoppers are unlikely to see a sharp fall in meat prices anytime soon, experts say.

Livestock market analyst Matt Dalgleish, who co-hosts the AgWatchers podcast, said prices for cattle and sheep have halved on average since they peaked in late 2020 and 2021 respectively.

However, these declines are not mirrored by the price of meat in supermarkets such as Coles and Woolworths, which in the case of beef is down just 1.2 per cent compared to a year ago, with lamb increasing by only a meager amount over the year. 0.9 percent fell. the same period, according to official statistics.

“We’ve seen some very mild price declines for meat, but it’s nowhere near the levels we’ve seen on the point of sale,” Dalgleish told the Daily Mail Australia on Thursday.

“I don’t expect prices to fall like that.”

While consumers are yet to see real relief at the checkout, farmers are taking to social media to complain about their plight.

“Lamb prices in the US have risen about 40% in the past 12 months, ours have halved,” Andrew Freshwater said Tuesday.

A lamb farmer’s cousin reported that his uncle “just sold lambs for $42 that were probably worth more than $150 this time last year.”

Commodity trader Simon McDougall spoke out at a cattle sale in northwest NSW in the town of Tamworth, citing for farmers that it had ‘entered carnage territory…’. Red ink everywhere’.

A spokesman for Meat & Livestock Australia told Daily Mail Australia on Thursday that prices for livestock are unlikely to have bottomed out.

“However, as we have seen over the last 12 weeks, it is clear that prices for lamb and beef in particular are falling and we expect prices to fall further in the future,” the spokesperson said.

The sharp fall in prices is attributed to an oversupply of animals.

Mr Dalgleish said the last few seasons of good rainfall have helped Australia replenish its animal numbers after a drought-stricken period.

“2019 was hit pretty hard (due to low rainfall) and the national sheep herd fell to just 60 million, but in the last three years we have built that back up to 80 million,” she said.

While long-term weather forecasters predicted another dry spell, Mr Dalgliesh said producers were desperately trying to unload livestock.

“They don’t want to hold too many animals that go into a potential drought phase,” he said.

‘So it has reverted to what the meat processors are happy to pay and the feedlots too, but with (high) grain prices the feedlots have limited amounts to spend.’

Another factor driving down prices is restrictions on Australia’s meat processing capacity, meaning farmers are struggling to find buyers.

“We’ve had very little issues with labor in the processing room, so the capacity for processors to handle high volumes is still a bit limited at the moment, so that’s why we’re getting these unfavorable price responses,” said Mr Dalgleish.

He also pointed out that producers only have a limited amount of time to get the best prices.

“If you’re delayed when your lambs are ready to go and those lambs cut their teeth and turn into pigs, you get a discount right away because it’s an older product,” he said.

Unfortunately for shoppers, Mr Dalgleish did not see meat prices falling any time soon, despite the struggles for farmers.

“It can take three to six months for the full impact of price movements at the sales yard to be felt throughout the supply chain,” he said.

The Meat & Livestock Australia spokesperson also said there is ‘generally a lag between production and prices at the box office’.

“Retailers often quote long-term prices for products like lamb chops, making them slow to adjust when prices change in general,” they said.

Mr Dalgleish said supply chain costs explain part of the huge discrepancy between what farmers got and what consumers paid.

Rising costs impacting the supply chain include labour, higher interest rates on business loans due to interest rate hikes, as well as energy and water.

“We still call red meat ‘manufactured,’ even if it’s a demanufacturing of an animal,” Dalgleish said.

“The more complex a product is, the more complex a supply chain is and the harder it is for those prices to adjust at the retail level because you have all those segments of the supply chain that are taking a little bit more of their margin.”

Even if processors and retailers make more money, Mr Dalgleish said they may only be recovering amounts lost during the period of skyrocketing animal prices.

“Meat processing tends to go through cycles,” he said.

“There are times when processors don’t make much money at all, which they did until recently, and so they have to have fairly deep pockets to continue on very small margins.

“Then we get times like now when they earn back that margin.”

He admitted it was difficult to know how much profit Australian processors or retailers are making because the meat supply chain is not transparent compared to the US where sales volumes and prices must be made public.

In a series of reports and updates from 2017 to 2019, the Australian Competition and Consumer Commission found a ‘lack of transparency’ in the meat processing market.

“The opacity makes it easier to capture the profit margin and not pass it on when there are price drops,” noted Mr Dalgleish.

While it may be of little comfort to cash-strapped meat lovers in Australia, Mr Dalgleish pointed out that while retail prices have fallen nowhere near the same amount as retail prices, they have also not risen quite as much in previous years.

“You saw retail prices per kilo that were the same as the $12 or $13 sales level during the peak period for some categories of young lambs,” he said.

Mr Dagleish said when he saw a major supermarket offering a leg of lamb for $13 to $14 a kilo it could only be a loss leader.

“I guess that was to bring in customers,” he said.

“They made absolutely no money from that.”