Premium niches possible in south-east Asia

23/08/2019

Column by Stephen Crisp

Policy Director, Sheep Producers Australia

During a recent industry trip through Singapore, Sheep Producers Australia representatives met purchasers and chefs at a major hotel who were proud to source lamb carcases from an Australian property as well as their ability to use the whole carcase in the menu.

This raised a few points for SPA relevant to Australian sheepmeat producers:

The ability to tell a provenance story is valuable to some buyers and their customers. Having the details of an Australian property is worth placing on menus, but this must be backed up with a supply chain that has the ability to trace the product back to its origin.

There is a premium available to both the sheep producer, and to the hotel, as they are seen as producing from a safe and reliable source, while potentially offering a ‘feel good’ factor for the consumer.

Some buyers are willing to look past the traditional ways of importing and distributing meat and adapt meals to enhance the sustainability message.

This poses some interesting questions for sheepmeat producers who wish to get closer to their customers and receive a premium for it.

Many producers do not have the time or contacts to engage with individual buyers in export markets. It can be challenging to develop a brand and gain a service kill with a processor in the same region. This is not the fault of meat processors because small lines introduce inefficiencies, such as different branded cartons with continual changeovers in production lines.

This does not mean the concept should be dismissed as ‘all too hard’ or something that only larger operations can participate in. To a certain extent, processors and producers are already partnering through current certification schemes and brands and are receiving a premium for meeting the specifications of that brand, such as being pasture-fed or for certain presentation of lamb cuts.

As traceability is developed through the supply chain, and automation is advanced in cold store operations, it will become easier to identify where the product in a particular carton – or a whole carcase – originated.

Conversely, as the supply of sheep and lamb is increasingly tightened, processors may look at service kill options in an effort to attract suppliers and to keep the works operating on longer shifts. They may also capture some of the niche market benefit which smaller brands are taking advantage of as higher prices pass through all levels of the process. This may compensate for the additional inefficiencies imposed at the plant.

This has already happened to some extent in the beef industry, with some of the largest players that once would not consider allowing outside brands into their operation, now providing a service kill, sometimes for whole shifts or days.

For the sheep industry, the concept is counter intuitive as we have benefitted from economies of scale with large sheep numbers and good chain speeds in our processing works. While Australia’s cost structures can make processing difficult, we should not limit our thinking in the way sheep producers and processors can partner into the future to get the best returns for our industry.