WIMMERA producers are continuing to reap the rewards of a strong livestock market, however regional butchers are struggling to pass the high prices onto consumers.
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The Meat and Livestock Australia's 2019 Sheep Industry Projections estimated the country's sheep flock would fall to 65.8 million head by the end of June.
This makes it the largest year-on-year decline since 2008.
Dry conditions have contributed to the downfall, with many producers now running significantly reduced flocks.
Meat and Livestock Australia's market intelligence manager Scott Tolmie said the combination of generally low lambing rates and a poor weather outlook for winter was expected to disrupt lamb supply in the coming months.
He said the dry conditions have led to sheep slaughter remaining elevated so far this year, however a slow-down was predicted for the second half of the year as producers look to maintain their core breeding flocks.
Mr Tolmie said overall the outlook remained positive for the industry.
"Despite the dry conditions, both lamb and mutton prices have reached record highs in the last 12 months," he said.
"This has been underpinned by strong demand for Australia's sheep meat exports, which continue to push new highs, bolstered by a declining Australian dollar and limited competition.
"The growth in demand, particularly from China and the United States, has translated into strong domestic farmgate prices,.
"The national mutton indicator breaking through 600c/kg cwt in May for the first time and lamb prices quickly closing in on the record highs of August 2018.
"The national saleyard trade lamb indicator opened the year at 657c/kg and has since advanced to 888c/kg, 40 per cent above year-ago levels."
Mr Tolmie said the forecast drop in sheep meat production in 2019 should keep lamb and mutton prices historically high throughout the year.
"Sheep meat exports have grown across most markets during the first four months of 2019 with Australian lamb exports to China increasing 22 per cent year-on-year," he said.
"Despite an elevated start to the year, exports are forecast to contract throughout the remainder of the year as supply tightens.
"Lamb exports are forecast to finish the year six per cent below 2018 levels, at 254,000 tonnes."
However, Horsham butcher Gary Taylor said the high price of meat was hurting everyone.
"The prices are high right across the board and people are struggling," he said.
Mr Taylor, of Your Regional Butcher in Horsham Plaza, said lamb chops now cost the same as steak.
He said he didn't see the prices improving any time soon.
"It will depend what happens with the rainfall in October and how much feed is around will determine the prices going into the new year," he said.
"If prices do drop off, they will most likely go back up again when sales resume in the new year."
Mr Taylor said overall there was a lack of meat supply worldwide, not just for lamb.
"There is a lack of protein, which includes lamb, beef, chicken and pork, so it becomes a supply and demand situation" he said.
"There is going to be a long hard run ahead for lambs.
"However, it is important people realise that the price is now on par with beef and there isn't anything we can do about it."
Horsham Regional Livestock Exchange chairman David Grimble said the recent lamb prices were "unprecedented".
He also said supply was not keeping up with demand.
"The drought conditions in New South Wales and Queensland are impacting our region," he said.
"People with stock are accommodating for the shortage of supply."
"Processors still have a commitment to meet demand and consumers still want that supply.
"This is the optimum time to market stock if people have it, so it's a really encouraging time for producers."
With grain prices also high, Mr Grimble said current lamb prices would help offset some of the costs of feeding stock.
"My only concern is that with lambs the price they are at the moment, the average person will be looking for cheaper cuts of meat," he said.
"We don't want to get to that point where people can't afford to buy lamb.
"However, the economic benefits of these prices will deliver for the whole region, including non-producer businesses, through enabling cash-flow."
Kalkee producer Tom Blair sold lambs for $320 a head on Wednesday and received $335 a head the week before.
Mr Blair said it was very pleasing to see good returns for his livestock.
He said he hadn't experienced prices like this before.
"We did extremely well last year in June and July with the same line of lambs, they sold for $260 and $262 and we topped the market then," he said.
"Things went in our favour too - after we shore them in December we put them on barley stubble then moved to chickpea stubble once the chickpeas had been stripped.
"Because we had no summer rain, it left the chickpeas dry and crisp and nice, which helped fatten them up.
"Then they were only on the feedlot for a month before we sold them."
Mr Blair said there were some extremely high prices around at the moment.
"There seems to be a shortage heavy export lambs," he said.
Mr Blair said because of the shortage, lambs sold in Horsham on Wednesday could be on supermarket shelves in the United States by the weekend.
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