Small Western Australian abattoirs claim they are being squeezed out of business by eastern states meat processors dumping meat in WA.
Dardanup Butchering Company (DBC) is a relatively small processor supplying about 6-8 per cent of the WA market.
It deals mostly with high-end lamb and sheep, beef, pork and chicken.
In the 2016-2017 financial year the small meatworks was forced to reduce production by 7 per cent as it struggled with high prices for Australian meat.
Now, according to chief executive Mark Panizza, it is anticipating a further decrease of 10 per cent for the coming financial year.
"Some of the sweeter cuts — your cube rolls, your rumps, your strip loins and things — they can be $6-10 cheaper than what we can produce that same product in our state for," he said.
Mr Panizza said processors were also having to buy in more meat from the eastern states just to compete.
"We do buy in products, predominantly for the food service sector where it's very competitive price-wise," he said.
"We operate in markets that our eastern states competitors operate in so we have to match the prices that they tender, and the only way to do that is to use the same product that they use."
'Maybe we don't process at all'
Mr Panizza said if things did not turn around soon for DBC, it could get to the point where they did not process meat at all.
"The meat business in this country is all about high volumes and low margins. Currently we have much-diminished volumes and no margins," he said.
"We may well do what everyone else does and just look for spot buys to put into our system to average back the prices we have to pay.
"Or maybe we don't process at all and just buy product in."
Mr Panizza said those decisions were a while off, but the processor would like to go back to what it used to with livestock numbers and support local industry.
The recent influx of cheaper eastern states meat has been attributed to the lift in the Australian dollar.
Mr Panizza said this was putting pressure on eastern state export markets.
"The eastern states export two thirds of what they produce and only consume one third," he said.
"In Western Australia we're the reverse.
"So with the poor state of the export market, where does that other two thirds go? It tends to be dumped into Western Australia."
Compound of facts contributes to price competition
Meat and Livestock Australia marketing manager Ben Thomas agreed.
But he said seasonal conditions were also to blame.
"On the back of what has been some very hot and very dry conditions for winter, we're starting to see our producers lose confidence and that's both for the lamb and cattle side of things," he said.
"We're now all of a sudden starting to see the numbers come forward on the market in higher numbers than the last two or three years.
"So all of a sudden you've got a compounding effect of more cattle on the market, and a bit of resistance because of the stronger Aussie dollar."
He said retail beef prices had eased for the first time in a number of years, which had driven consumer demand upward.
Mr Thomas said in the lamb industry in particular, if the trend continued it could see the price producers got for lambs come off more than expected.
"Looking forward, there is a bit of concern that if these dry conditions do continue, and if there is a seasonally induced continuation of the rise in sheep and lambs on the market at the same time as the reduced processing capacity, that could cause a bit more of a correction in the market than otherwise would have been the case," he said
Not all processors affected
While the influx of meat from the east will affect all processors, the smaller processors are expected to be the hardest hit.
Coll MacRury, chief executive of WA's biggest lamb processor WAMMCO, said big investments in international markets meant WAMMCO could handle it.
"We have an association with the three big New Zealand companies that we co-brand with in the North American market," he said.
"These things take time, take a lot of money, take a lot of perseverance and a lot of hard work, but at the end of the day producers are seeing the results of that."
