ROGER Fletcher reckons he can reel off many reasons why lamb and sheep prices are half of what they were two years ago.
"Where do you want to start?" said the head of Australia's largest lamb and sheep processor, Fletcher International Exports.
The collapse in European and North American economies, problems in the live export trade, inaccurate flock forecasting, the high Australian dollar, the increasing supply of cheaper chicken and pork, the high contract prices offered last year by several of his competitors, an oversupply of large lambs, and good seasons all appear on the Fletcher list of the guilty.
Simply put, he said, there have been a combination of supply and demand factors - none of which have favoured Australian producers.
All, he said, help explain why the lamb carcass rates of $6/kg-plus of February and March of last year have evaporated, replaced by current rates of $2.80-$3.30kg.
"They will get better," Mr Fletcher said "but we might have to wait until later next year".
The Fletcher plants at Dubbo and Narrikup, near Albany in Western Australia, have a two-shift daily capacity of 17,000. They are capable of processing four million head, or 15-16 per cent of nation's 26 million slaughterings.
At the moment the Dubbo plant is flat out on two shifts. Narrikup has one shift.
"It's too hard competing with the mines for labour in the west," Mr Fletcher said.
Most of the lambs and sheep for Dubbo are picked up from NSW. But Mr Fletcher said he will buy as far south as Hamilton as the season progresses.
When it was commissioned in 1988, the Dubbo plant was geared solely for exports. In recent years, it has also supplied domestic supermarkets.
Mr Fletcher said the problems began in late 2010 when two of the larger processors - "I prefer not to name them" - fearing a supply shortfall, began offering forward price contracts of $6-plus into the new year.
"I have never offered forward contracts and never will," he said.
"We buy over the hooks, in the paddock and in the markets.
"Those contract prices pushed lamb prices beyond what the average consumer was prepared to pay.
"We lost a lot of consumers and we are struggling to get them back."
He said Australia had no option but to increase its exports into what was becoming an increasingly difficult global market.
Three years ago, when Australia processed a record 20.5 million lambs, 54 per cent went to the local market.
Mr Fletcher said domestic sales were down this year, with exports up. That ratio is now 50:50. He said this happened as the financial troubles began to bite in the US and Europe - the two big markets for Australian and New Zealand lamb.
"In the US, chilled lamb was going into frozen storage, and the New Zealanders had trouble placing their lamb into the UK and Europe.
"We are both out there fighting for the same markets," he said.
Mr Fletcher said he no longer supplies the US, preferring to sell into the Middle East and Asia.
He is chuffed that he has just been able to get his first two containers in India, but is annoyed that he has to pay a 30 per cent tariff.
That brings Mr Fletcher to his next big gripe - market access or, put another way, the cost of tariffs and duties. On this, he has the Federal Government and Meat and Livestock Australia in his sights.
"When they (the Government) were negotiating uranium to India, we should have been in there getting rid of the tariffs," he said.
He cites a similar issue with access into China. There, tariffs, depending on the type of meat cut, range from 12-23 per cent.
But what he finds most galling is that New Zealand has been able to negotiate a free-trade agreement with China that, in a few years, will mean it is free of tariffs. In the meantime Australia, sits on its hands and our producers continue to pay duties.
Mr Fletcher said China is the bright hope for mutton and lamb exports.
"They (China) have been winding back their flocks as they put more and more land back to agriculture (cropping)," he said.
"In the last five years their per-capita mutton consumption has increased from 2.4 to 3.5kg," he said, noting that, in China, mutton and lamb are the same product.
On a slightly brighter note, Mr Fletcher said lamb-skin prices, which crashed under the weight of an over-supply in the Ugg Boot market, are beginning to pick up, particularly going into the Asian winter.
He said a lot of problems stem from Australia's inability to forecast the lamb supply.
"MLA got it all wrong earlier this year," he said.
"There are a lot more lambs out there than what we were told."
Mr Fletcher claims producers retained a lot more ewes than forecasts suggested they would.
The push to make more money with larger lambs is another major factor.
"The domestic market can't use those lambs, so they have to be exported," he said.
The Middle East and its live sheep trade is another of Mr Fletcher's favourite topics.
"People think I am opposed to the trade, but I'm not," he said.
"The only reason why the trade existed is because it was heavily subsidised by their governments."
In light of the recent shipping problems, including the culling of a shipment in Pakistan, Mr Fletcher is tipping a looming end to the live export trade.
It is likely to be replaced by exports of mutton and lamb. "Why do you think the two big exporters (Wellard and Jordan's Livestock Shipping Services) have bought abattoirs in Western Australia?" he said.
But converting the live sheep trade to shipments of mutton and lamb won't be easy with the competition from cheaper meats such as chicken.
Mr Fletcher said chicken landed in Egypt was US$1250/tonne earlier this year, against a lamb price of US$6000.
