Meat and Livestock Australia’s Managing Director David Palmer told delegates at the inaugural national lamb industry event LambEx 2010 held in Perth that recent forecasts and economic modelling provided a compelling platform for the prospects that lie ahead for the Australian lamb industry.

“Based on the international Food and Agricultural Organisation (FAO) demand forecasts which indicate growing global consumer requirements for lamb and country by country production estimates there will be a 300,000 tonne void in global supplies to meet demand over the next five years,” Mr Palmer said.

“When we overlaid this information with modelling by the Centre for International Economics (CIE) we found that Australia was the only country really in a position to capitalise on this opportunity,” he said.

CIE simulations demonstrated that the bulk of the consumption growth forecast (FAO – 1.6 million tonnes) would occur in China but that local Chinese sheepmeat production would largely fill the demand growth.

The remaining 300,000 tonnes in demand growth was a supply opportunity.

“In the past 14 years lamb production growth has not been anywhere near fast enough to meet domestic demand growth, so retail lamb prices have risen 112% (70% in real terms),” Mr Palmer said.

“Instead of the 30kt rise in lamb production we have seen in those 14 years we would have needed well in excess of 100,000 tonnes growth in production to meet the domestic demand growth we have seen,” he said.

Similarly, in the next six years the CIE models a 70kt to meet expected domestic demand growth (ie retail prices for lamb remaining at current levels and not becoming less affordable).

With these factors in mind, MLA developed a range of production scenarios to understand what industry would need to achieve to make the most of the opportunity.