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New 12-Month Lamb Pricing Model Announced

30 April 2008

New 12-Month Lamb Pricing Model Announced

As part of its commitment to develop effective partnerships with its supplier base and offshore customers PPCS has today announced a first for the meat industry with the introduction of a fixed price forward supply agreement from June 2008 to May 2009. These will also be eligible for any rebate distributions.

Keith Cooper, PPCS Chief Executive says the pricing structure was required by the industry to more closely align supply with market requirements, and focus on growing a product for the consumer from conception to plate.

“The forward supply agreements are also designed to give certainty to suppliers as to the final value of their product, in advance, so suppliers may make commercial decisions on farm, to capture the opportunities that certainty of value creates,” he says.

The supply model requires supplier partners to supply a small proportion of lambs in the off season in return for receiving a more robust value in the peak season. Fixed values vary from a high of 420 cents per kilogram (cpk) in winter 2008 to 400cpk for summer 2009.

The positive impact on those peak season suppliers who could deliver lambs during the winter would see peak season returns improve by around $12 per lamb over the past season. “Whilst we appreciate suppliers require even higher returns, it is a positive move. If our supplier partners make change as we make change we will achieve sustainable value for lamb producers,” says Mr Cooper.

He says that while the focus was on encouraging a supply of lambs to meet market requirements it would also induce supply chain gains from breeders to finishers and ensure the supply chain more equitably shares the final market value of the product.

“The future of the industry was dependent on ensuring the entire supply chain, breeder, finisher, processors, marketers, distributors and retailers all gain a sustainable margin, which could only be effected by the supply chain working as a true partnership, which was the basis of these forward supply agreements, linking the consumer to the supplier,” says Mr Cooper.

PPCS would be mailing the Forward Supply agreements to suppliers this week.

ENDS

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