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We love our lamb

We love our lamb Australian lamb marketing from paddock to plate.

Table of Contents Introduction: Turning lamb around 4 Chapter 1: Lamb, dominated by the wool industry 8 Chapter 2: Gearing up for change 14

Sheepmeat Council of Australia

Australian Meat and Livestock Corporation

Meat Research Corporation

Conference in Orange

Meeting in Albury

Chapter 3: Domestic lamb marketing 24

Commencement of promotion

Trim Lamb

New Trim Lamb

A new approach

Chapter 4: Developing export markets 34

USA and Fresh Australian Range Lamb (FARL)

Other overseas markets

Chapter 5: Coordinated research and development 42

Prime Lamb key program

Interim program to support LISP

Lamb Consistency key program

Other key programs

More recent programs

Chapter 6: Building LAMBPLAN 52

Meatsheep testing service

Moving to a national system

Progeny testing programs

LAMBPLANâ&#x20AC;&#x2122;s contribution

Chapter 7: Lamb Industry Strategic Plan 64

LISP process

Plan for change

Outcomes of LISP

Chapter 8: Supporting progress towards value-based marketing

Changes in selling systems

Growth of strategic alliances

Providing the supply chain with better information

Livestock market reports

AUS-MEAT’s role

Lamb identification and description

VIAscan, an automated carcase measurement system

Industry codes of practice

Meat Standards Australia

Chapter 9: Lessons learned 86

Acknowledgements 94

Appendix: Background statistics 95

Table 1: The national flock – Australian sheep and lamb numbers

Table 2: Summary of Australian wool production

Table 3: Australian meat consumption per head

Table 4: Lamb saleyard prices

Table 5: Australian/US dollar exchange rates – annual averages

Table 6: Australian exports of meat, by product

100

Table 7: Australian lamb meat exports (tsw) – fiscal year totals

102

Table 8: Retail meat prices

104

Table 9: Australian domestic lamb consumption and prices

106

Table 10: Periods of drought 1864 - 1983

107

Table 11: LamBplan implementation data

107

List of key people

108

Index

110

INTRODUCTION

Turning lamb around

or nearly 200 years, sheep farming in Australia was almost totally dominated by considerations of the market for wool. For the great majority of sheep farmers,

lamb was merely a by-product in the process of producing wool. However, the minority of sheep farmers who had elected to specialise in producing lambs for meat as a primary product, were far less content with this situation. Back in the 1980s, a small group of specialist lamb producers had a vision for improving it. Thanks to the backing of other producers, industry bodies and government departments, the position described above has changed and is now markedly different. The production of lamb for meat has become far better focussed on meeting the demands of the consumer market for lamb meat, that is to say satisfying the consumer. Lamb production is now more profitable than it was and in recent years retail prices for lamb have increased relative to the prices of other meats. Perhaps most remarkably, the actual physiques of lambs that are produced for meat have changed somewhat as larger and leaner animals are produced that are more in line with consumersâ&#x20AC;&#x2122; requirements. Many factors have played a part in bringing about this transformation.

WE LOVE OUR LAMB

Certainly the declining profitability of wool

was needed, and that results really started to be

production has been important; this has resulted in

apparent when these activities were coordinated.

a significant reduction in the size of the national flock

This is made clear by the following timeline of the

and a comparative improvement in the economics

key activities in different areas.

of meat production relative to wool. But in addition, over the period under review, the lamb industry

Prior to the late 1980s, activity was both limited

has developed a capacity for a significant level of

and there was limited RDE activity in parallel with

collective, cooperative action at a national level.

marketing initiatives. This began to change in that period and, during 1990 and following years,

The changes achieved have been remarkable.

there was parallel activity and gradually increasing

Industry awareness of widespread consumer

coordination of strategy.

dissatisfaction with the eating quality of lamb, in particular with the perception that lamb was too

No single activity or event alone transformed the

fatty, has led to the development and supply of

lamb industry; rather, simultaneous coordinated

larger, leaner lambs. Based on this modification of

activities directed to an ultimate consumer outcome.

the animal itself, new cuts of lamb have achieved considerable and lasting popularity. They have been

The second theme is that a significant challenge or

introduced to consumers following substantial market

“stretch goal” had wide-ranging impacts. In the

research and with the support of industry investment

Australian lamb industry, this was the decision to

in widespread advertising and promotion campaigns.

target the US market, which in turn was a significant

On the export side, total tonnages have nearly

element of the “$2bn by 2000” industry goal.

quadrupled over the period.

Targeting entry into the US market required new skills, new business relationships and ultimately new

This account concentrates mainly on those changes

product: all parts of the industry needed to change,

in the lamb industry that have been initiated by

and in doing so, developed new skills, confidence

and have had most effect on the lamb producers

and attitudes.

themselves. These changes have also affected the downstream activities of the processors and distributors of lamb. The large increase in lamb exports, greater consumer satisfaction with the product and the greatly increased value of the prime lamb industry are a testament to the success of the initiatives that have been taken over the years. Two key themes emerge from this story. Firstly, that activity in a number of different areas – industry policy, marketing, R&D and extension –

Lamb meat production has become much more focused on meeting the demands of consumers.

6 WE LOVE OUR LAMB

From back paddock to worldwide markets

Second half of 1980s

Marketing • Market research in US (1987) • Fresh Australian Range Lamb (FARL) campaign – US (1988)

External Events

First half of 1980s

• Falling real prices

RDE

• Increasing producer dissatisfaction

• Meat Research Corporation (MRC)’s RADIS study to

Marketing

prioritise returns to RDE

• “Rediscover Lamb” domestic

investment

campaign (1984)

External Events

1970s

• Declining domestic consumption • Small EU quota established

competitions

Strategy & Communication • SCA supports slaughter levy for marketing • Australian Meat and Livestock

Strategy & Communication • Sheepmeat Council of Australia (SCA) formed • Australian Meat and Livestock Corporation (AMLC) established

• AMLC Lamb GrowOut

Research and Development Corporation (AMLRDC) established • National Lamb Conference (1983) • Increased slaughter levy, with advisory committee

• DAN.073 Genetics R&D project/Meatsheep Testing Service (1985-1988) • LAMBPLAN launched (1989)

2000s

External Events • Exports to US grow by a further 100 per cent

Marketing

1990s

• Market Access & Development

External Events

key program

• Exports to US double 1990 to 2000 • US tariffs (1999)

RDE • Sheepmeats Eating Quality R&D

Marketing • Trim Lamb campaign – domestic (1992) • Fresh Australian Range Lamb campaign continues – US (1997)

and implementation • Maternal Central Progeny Test project (1997-2004) • Sheep CRC (two phases)

• Trim Lamb Re-launch – domestic (1997) • “We Love Our Lamb” – domestic (1999)

RDE • MRC Prime Lamb Key Program (1990-1994) • Lamb Consistency Key Program (1996-2001) • Central Progeny Test project (1991-1996)

Strategy & Communication • Closer coordination AMLC and MRC • Lamb Industry Strategic Plan (LISP) established • Meat & Livestock Australia (MLA) established

CHAPTER ONE

• For most of the past two hundred years wool has been a major contributor to the Australian economy • Lamb played a subordinate role as a by-product of wool • Specialist lamb producers were severely disadvantaged by the dominance of wool interests

Lamb, dominated by the wool industry

• There was no capacity for collective action to develop lamb as a product in its own right • Over a long period the Australian lamb industry lost market share both domestically and in export markets

10 WE LOVE OUR LAMB

bale of wool to England in 1807. In the 1820s the move towards wool was considerably strengthened with the importation of 5000 Merinos from Saxony, France and England. Through subsequent breeding, Merinos became better adapted to harsh Australian conditions, thanks to the development of the Peppin Merino and other variants. By 1861 there were 20.135 million sheep and lambs in Australia. The national flock was eventually to peak at some 180 million sheep in 1970 (see figure 1). Merinos, and therefore wool production, came to

dominate the sheep industry and by the early 1900s around 80 per cent of Australian wool was derived

he sheep meat industry can claim a place in

from this breed. By this time the national flock

Australian history dating back to the arrival

exceeded 70 million sheep. Meat production had

of the First Fleet. There is a record of sheep

become a subsidiary activity and meat, in the form

being loaded onto ships of the First Fleet

of surplus lambs and cast-for-age sheep, had become

in October 1787, during a month’s sojourn at the

largely a by-product of the wool industry. This meant

Cape of Good Hope. Just how many sheep survived

that little serious effort was made by most producers

the journey and reached Australia alive is not clear.

to focus meat production on the needs of the market,

Unfortunately, though, those sheep carried with them

and the interests of the wool industry were treated

sheep scab, which was subsequently to prove a curse.

as paramount. A report produced by the Bureau of Agricultural Economics in 1947 entitled The Economic

By 1800 there were 6124 sheep recorded in the

Outlook for the Fat Lamb Industry comments on the

colony. They were kept mainly for meat, rather than

subsidiary status of meat production compared with

wool production. Only 30 Merinos were reported

wool. It was noted that any attempts to improve

to be in the colony at that time. However, the

meat quality were viewed with suspicion because of

preponderance of meat sheep in the colony’s flock

possible “deleterious” effects on wool production.

soon changed and the industry commenced its very

The report pointed out the opportunity to remedy

first steps towards its subsequent specialisation in

this situation. However, it took several decades and

wool production with John Macarthur’s first purchase

a serious decline in the fortunes of wool for this

of a few Merinos in 1797. These sheep came from

advice to be acted upon in any determined and

a flock of Spanish sheep, which had been reared in

well-organised way.

the Cape of Good Hope. To most wool producers, meat remained truly Merinos thrived in New South Wales and other

relegated to the status of a by-product, its production

producers followed Macarthur’s example, but these

being incidental to producing wool. Wool was a

succeeded in producing only poor quality wool due

hugely important commodity. In 1950/51, an

to crossbreeding. Macarthur by contrast avoided this

exceptionally profitable year for wool, the value of

and according to one report, by 1803 had a flock of

wool production amounted to no less than 56 per

over 4000 almost pure bred Merinos. He sent his first

cent of the total value of production of all Australian

Lamb, dominated by the wool industry

The national flock 200

Numbers of sheep in millions

150

100

Millions 0 1930

1941

1952

1963

1974

1985

1996

2007

FIG 1: Source: refer Appendix Table 1

agriculture. Thereafter, prices fell significantly and the

in 1971. This was followed by the imposition of

industry moved into long term decline (see figure 2)

minimum reserve prices by the Australian Wool

as competition from other products, mainly manmade

Corporation in 1974. In 1988, the reserve price was

fibres, increased and the demand for wool for military

increased sharply in response to high demand. This

uniforms fell after the Korean War. Arguably the

caused a switch of farming resources into wool, and a

difficulties faced by specialist sheep meat producers

consequent level of wool production, which was too

were actually more complex and problematic than

high relative to demand. The resultant surplus was

the challenges of simply producing a by-product.

therefore stockpiled. This situation was unsustainable

Wool producers were able to increase or decrease

and the reserve price scheme was terminated in 1991.

the supply of lambs quite quickly on an opportunistic

By then the wool stockpile had grown to 4.7 million

basis in response to changes in demand for lamb.

bales and this surplus was realised over the next ten

Consequently any increases in lamb prices soon

years, the process being finalised in August 2001.

tended to be reversed by the effects of an increase in

The economics of Australian wool production were

the supply of lambs on the market as wool producers

by then permanently changed, paving the way for

ramped up the supply of lambs to take advantage of

a recognition of a relative increase in the potential

better market conditions.

value of the by-product, lamb.

The wool industry was slow to recognise the decline

Interestingly, the New Zealand sheep industry took

in demand for its product as long term rather than

a very different direction from its Australian cousin.

cyclical, and attempts were made to stabilise prices.

In 1882, some 90 per cent of New Zealand wool was

A wool deficiency payments scheme was introduced

still derived from Merinos, but by 1947 this had fallen

12 WE LOVE OUR LAMB

Greasy wool prices 8000 7000 6000

Actual price $/tonne

5000 4000 3000 2000 1000

$ per tonne

Price at constant 1953 $/tonne 1953

1959

1965

1971

1977

1983

1989

1995

2001

FIG 2: Source: refer Appendix Table 2

to around 2 per cent. This change commenced with

around 500,000 sheep. Most notably, Victorians

the introduction of the refrigerated shipping of meat

were early specialists in lamb production. In 1944,

in the 1880s, which precipitated a move towards

while Victoria accounted for only 15.6 per cent

dual purpose meat/wool breeds, such as the Romney,

of the national flock, it shipped 57 per cent of all

which were better suited than the Merino to the

lamb exports.

terrain and climate of large areas of New Zealand, the Australian lamb industryâ&#x20AC;&#x2122;s major competitor and

Specialist lamb producers were active from an early

the worldâ&#x20AC;&#x2122;s largest exporter of lamb. New Zealand

stage, but they lacked an organised approach. The

lamb, being derived largely from breeds producing

interests of wool still dominated the industry. Any

meat, was preferred by the UK market and therefore

grading of Australian lamb appears to have been

commanded higher prices than the predominantly

based on weight rather than quality. Live lamb

Merino-derived Australian lamb.

competitions were judged on appearance criteria, which were largely irrelevant to the quality of meat.

Notwithstanding the dominance of the Australian

Even carcase judging was based on factors, which

sheep industry by wool, efforts to develop meat

did not reflect the quality of the meat under scrutiny.

production through dual-purpose breeds continued. The first Border Leicester stud was established in

Though in the late 1930s, a series of quality

1881 and followed by many more studs specialising

competitions were organised by the Australian

in this breed. By 1960, there were some 1100 Border

Meat Board and held at Smithfield Market in London

Leicester stud flocks in Australia accounting for

to try and encourage the supply of uniform quality

Lamb, dominated by the wool industry

“fat lambs” for the UK market. However, these

in favour of maintaining this status quo. The New

competitions were suspended at the start of the

Zealand lamb industry was therefore able to achieve

Second World War.

a far greater quota for lamb imports into the EEC than the Australian industry. The small Australian EU

While demand for wool was the main economic

quota which persists to this day and is seen by the

driver of the industry, its by-product, sheep meat in

Australian lamb industry as highly restrictive is simply

general, i.e. both mutton and lamb, continued to play

a reflection of Australia’s market share, or rather lack

an important role in the colony’s and subsequently

of it, at the time of the UK’s entry into the EEC.

the nation’s diet. As late as 1972, sheep meat still accounted for 50 per cent of Australian red meat consumption, but this percentage has since declined. By 2004/5, lamb accounted for a little less than 25 per cent of red meat consumption per head. In 1880, a further important stage in the development of the meat industry arrived with the commencement of the refrigerated shipping trade and some 15 tonnes of sheep meat were exported to England. Total lamb exports reached 100,000 tonnes in 1941, but subsequently declined. By 1962, the tonnage had fallen to 24,000, of which 70 per cent was sent to the UK. However it is important to note that by this time Australian lamb comprised only 6–8 per cent of UK lamb imports. New Zealand lamb had gained a huge share of the UK market, almost eclipsing the Australian product. Consequently, when it came to setting quotas for imports into the EEC (as the European Union was then called) when UK was negotiating its entry in 1973, the New Zealanders had a strong argument

Specialised lamb producers were active early, but lacked an organised approach .

94 WE LOVE OUR LAMB

Acknowledgements

The author gratefully acknowledges the contributions of all the following to the preparation of this account of the changes in the lamb industry. The author is especially indebted to the following all of whom were: (a) major drivers of the changes in the lamb industry and (b) have contributed generously, both information and advice to the writing of this account: Arthur Gates

David Kingham

Gerald Martin

Ian Johnsson

Jim Martin

Bill Oâ&#x20AC;&#x2122;Halloran

Laurie Thatcher

Robert Banks

Ron Harris Contributions were made by all of the following who were interviewed either in person or by telephone: Alan Luff

Bernie Oâ&#x20AC;&#x2122;Sullivan

Brent McCleod

Bruce Standen

Chris Hindmarsh

Dale Cameron

Daniel Meehan

David Palmer

David Thomassen

Delene Evans

Dick Austen

Eckard Hubl

Gary Dick

Graeme Oxley

Hugh Beggs

Ian McCausland

Ian Ross

Jenny Bradley

John Penn

Kate Joseph

Neville Newton

Perc Blandford

Peter McInnes

Peter Trefort

Ralph Hood

Robin Shorthose

Scott Ashton-Jones

Stefan Spiker

Steve Martyn

Tim Kelf

Appendix: Background Statistics

Appendix

Table 1 : The national flock Australian sheep and lamb numbers â&#x20AC;&#x201C; year ending June Year

Millions

Year

Millions

Year

Millions

Year

1930

104.3

1931

110.4

Millions

1950

112.6

1970

179.8

1990

170.2

1951

115.3

1971

177.5

1991

163.2

1932

110.4

1952

117.4

1972

162.7

1992

148.2

1933

112.7

1953

122.8

1973

139.9

1993

138.1

1934

109.7

1954

126.7

1974

145.1

1994

132.6

1935

112.8

1955

130.6

1975

151.5

1995

120.9

1936

108.6

1956

138.8

1976

148.5

1996

121.1

1937

110.0

1957

149.5

1977

135.2

1997

120.2

1938

113.1

1958

149.0

1978

131.3

1998

117.5

1939

110.8

1959

152.4

1979

134.1

1999

115.4

1940

119.0

1960

154.9

1980

135.9

2000

118.6

1941

122.4

1961

152.4

1981

134.3

2001

110.9

1942

124.9

1962

157.4

1982

137.9

2002

106.2

1943

124.3

1963

158.3

1983

130.4

2003

99.2

1944

122.9

1964

164.7

1984

135.2

2004

101.3

1945

105.1

1965

170.3

1985

145.5

2005

101.1

1946

96.2

1966

157.3

1986

150.3

2006

91.0

1947

95.5

1967

163.9

1987

149.1

2007

85.7

1948

102.3

1968

166.6

1988

152.4

2008

79.2

1949

108.5

1969

174.3

1989

161.5

Source: MLA database

100 WE LOVE OUR LAMB

Table 6: Australian meat exports Annual exports of meat, by product Year

1969-70

1970-71

1971-72

1972-73

Beef and veal (kt)

327.90

333.94

404.63

574.57

Mutton (kt)

136.50

134.67

199.41

159.01

Lamb (kt)

1973-74

1974-75

1975-76

1976-77

1977-78

1978-79

474.75

423.33

549.00

645.91

757.68

813.70

67.36

85.86

140.68

181.38

147.65

109.64

Quantit y

41.40

44.37

37.06

29.08

19.94

23.80

31.97

39.89

39.48

41.30

Pig meat (kt)

5.4

4.1

20.4

1.5

5.6

3.5

1.6

2.3

Poultry meat (kt)

3.7

5.2

6.9

4.3

5.1

4.7

5.6

6.7

Live sheep (‘000)

Live cattle (‘000)

Value Beef and veal ($m)

Mutton ($m)

Lamb ($m)

Pig meat ($m)

4.4

1.9

3.6

17.5

8.6

2.3

8.4

5.4

3.1

Poultry meat ($m)

1.1

1.5

2.1

2.5

3.3

4.3

4.5

6.6

8.1 116.5

Live sheep ($m)

12.2

18.4

16.5

19.7

49.7

105.1

Live cattle ($m)

396.299

401.9

529.699

825.8

771.3

430.999

645.699

882.599

1156.5

1697.1

Beef and veal ($/kg)

Mutton ($/kg)

Lamb ($/kg)

Pig meat ($/kg)

0.81

0.95

0.88

0.86

0.96

1.53

1.50

1.54

1.94

2.17

Total ($m)

Unit value

Poultry meat ($/kg)

0.30

0.29

0.30

0.63

0.77

0.84

0.86

0.96

1.18

1.21

Live sheep ($/head)

Live cattle ($/head)

Year

1979-80

1980-81

1981-82

1982-83

1983-84

1984-85

1985-86

1986-87

1987-88

1988-89 537.82

Quantit y Beef and veal (kt)

580.76

498.27

544.73

578.80

439.25

415.99

468.01

554.15

615.85

Mutton (kt)

142.74

186.79

128.52

124.09

57.61

66.60

94.34

110.14

104.28

87.57

Lamb (kt)

48.05

41.79

31.11

33.81

31.71

32.37

49.35

52.91

49.01

37.67 6.53

Pig meat (kt)

2.9

Poultry meat (kt)

7.3

1.13

Live sheep (‘000)

6330.33

Live cattle (‘000)

87.04

Value Beef and veal ($m)

1753.37

Mutton ($m)

176.23

160.58

Lamb ($m)

111.24

96.61

Pig meat ($m)

5.9

28.15

Poultry meat ($m)

10.6

2.36

Live sheep ($m)

159

171

175

176

218

201

169

197

221

196.09

Live cattle ($m)

45.07

1760.7

1599

1477

1667

1487

1504

1730

2267

2527

2282.22

Beef and veal ($/kg)

3.24

Mutton ($/kg)

1.85

Lamb ($/kg)

2.27

2.56

Pig meat ($/kg)

2.03

2.33

2.00

3.50

2.67

3.25

2.50

3.20

3.09

4.31

Poultry meat ($/kg)

1.45

1.50

1.75

2.00

1.50

2.00

2.08

Total ($m)

Unit value

Live sheep ($/head)

30.98

Live cattle ($/head)

527.11

We love our lamb Australian lamb marketing from paddock to plate. Multiple improvements within the sheepmeat industry have had a positive effect on the operations of lamb producers, processors and distributors. Exports are up, consumer satisfaction is up and the value of the prime lamb industry has risen significantly. By focusing on meeting consumer demand, the Australian sheepmeat industry has helped create a world of opportunity.