FINALLY, it has happened - one of the major meat retailers has decided that lamb prices are overdue to fall and the average Australian consumer can reap some benefits from the decidedly softer lamb market evident for most of this year.
There it was, large as life in the Sunday Mail: 'Lamb prices at Woolies are in for the chop'.
Hallelujah - thought maybe the Woolworths management have been reading my articles - not likely - but sometimes I like to imagine that what I write does have some effect.
I have been advocating the importance of the domestic market for months, and any increased consumption on home ground can only help the plight of lamb producers, particularly when things are starting to look a bit tough.
Although the article was basically filled with good news, there were a few inferences that grated.
It is true that Woolies will slash prices for roasts, chops and mince by 20 per cent to 30pc.
Great news for our average city dweller but I wonder how impressed the same city-dwelling shopper would be if they knew that the saleyard price for lamb had dropped by between 22pc and 26pc in the first six months of this year.
There is one paragraph that particularly tickles my sense of humour:
"Bosses at the supermarket giant promise to absorb the cost of the discounts - to the tune of $13 million in the coming year."
I may be cynical but I'm fairly sure that the $13m will come out of producers' pockets, not by any pressuring device that Woolies can devise but by the mere fact that market forces in general have conspired to push prices down.
This is very clever marketing by Woolies - they get all of the plaudits for looking after the public by lowering prices without having to sacrifice anything but dollar turnover.
I doubt whether their profit margins have altered significantly, and there is little doubt that with the spring lamb season looming large there will be a fair increase in kilogram-turnover for the canny management of Woolies.
The question remains 'Where does this leave the Coles chain? Down, down, prices are down is a catchy tune and slogan, but they can either quietly match the Woolies initiative or take them on and shave margins to gain market share.
Either way, the producer wins.
While our domestic suppliers strive to increase the sales of lamb to the public, processors still need to satisfy the requirements of a flourishing export market.
The power of the supermarket duopoly cannot be underestimated. If they go head-to-head with lamb discounts there is no doubt that people will swing back to eating
Source: farmonline.com.au
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