Meat processors get selective at saleyards to save costs on skins processing

Australian sheep and lamb meat processors are being selective in their saleyard purchases to avoid additional costs associated with skin processing.

Meat and Livestock Australia market information analyst Jenny Lim said the decision could be attributed to the elevated prices of sheep meat last year and the “easing” skins market due to less demand from China.

“What we are seeing in the saleyards is that processors are only selecting lambs and ewes that have been freshly shorn, generally,” Ms Lim said.

“The removal of waste products from these facilities has also increased in price in the last few years and so by buying freshly shorn sheep and lambs, they may forgo the value on the skin but the actual processing time and waste produced could be reduced.”

When comparing the prices paid for newly shorn skins and those with three inches or more it is easy to see why processors are being selective.

According to MLA’s National Livestock Reporting System report dated June 1, Merino skins with vegetable matter free wool at 0.5-1 inch were priced at $3 for the 16.1kg-20kg weight range, $5 for 20.1kg-24kg to a maximum of $6 for 24kg plus.

It’s a different story for the longer wool lengths of three inches and above, at $17 for the lower weight range, and $20-$22 for the heavier skins.

Prices are about $2-$4 less for skins with a higher vegetable matter content.

Ms Lim said the Merino sheep skins with three inches and over of wool content more consistently attract highest prices, especially for 20kg and heavier.

She said NLRS captures a monthly price from which there has been “an easing in sheep skin prices across all types” (lamb, Merino and cross-bred).

In the past three years the market has dropped from an average of $17.42 across all Merino types in July 2021, to a slump of $10.65 in October last year.

The market picked up slightly in April to $13.44 but has dropped back the first week of July to an average of $12.18 for Merino types.

Ms Lim said most of Australia’s sheep and lamb skins are exported to China where we have also seen easing demand for other products such as cattle hides as well.

WA producers are not paid for their skins in the same way that their counterparts are in the Eastern States.

Corrigin sheep producer Steven Bolt said the lack of competition in the western market was a contributing factor to the “age old issue” that producers have raised with local processors in the past.

He said if WA producers are offered a price for skins at all it is minimal ($1-$3) at best.

“I don’t remember the last time I was offered a price for my skins,” Mr Bolt said.

He said being paid the $12 average that Eastern States producers were receiving would go a long way to covering freight costs associated with processing them and put a bit more confidence back into the industry.

WAMMCO said its system at Katanning involves skins being carefully removed and separated for salting and grading, before being individually examined and assessed by a trained team of graders, and then packed on site.

Skins can be graded to particular customer requirements, to be used in a wide range of finished products, including bedding, garment lining, show lining, car seat covers, floor rugs and paint rollers.