Producers will be charged to dispose of lamb and sheep skins

One of Australia’s biggest lamb processors will soon start charging a skin disposal fee in the latest blow for an already beleaguered industry.

Lamb producers may be hit with a $3 skin disposal fee in the latest blow to the beleaguered industry buckling under prices not seen for years.

And while the skin disposal fee is for over-the-hook sales, processors have indicated they will factor in this cost to saleyard values too.

From Monday, one of Australia’s biggest lamb processors, Thomas Foods International, is charging $3 for any skins “that need disposing”.

In a letter seen by The Weekly Times, TFI said it was announcing the disposal fee for sheep and lamb skins that carried no commercial value.

“Due to the continuing downturn in the international skin market and the ongoing rising costs of waste disposal, it has reached a point now that the business has no other option than to implement a $3 a head fee for skins that need disposing of at Tamworth, Bourke, Stawell and Lobethal,” the letter said.

“TFI has managed to absorb the disposal costs over the last 18 months but unfortunately cannot continue to do so.”

TFI declined to answer questions about the specifics of which skins would have no value, including whether it was breed related.

Victorian Farmers Federation livestock group president Scott Young said the proposed fee was “disappointing”.

Australian Meat Industry Council general manager of industry affairs Tim Ryan said a range of factors had depressed the skins market.

This included very soft global demand, slow economic growth in China and sanctions on Russia.

“The current downturn in the skins market is on top of a long-term rise in competition from synthetic materials,” Mr Ryan said.

“The last northern hemisphere winter was also warmer than average, slowing sales of sheepskin apparel.

“On top of all this, the recent increase in sheep and lamb kills means that the local market is awash with skins of low or no value.”

Mr Ryan said many processors had stockpiled skins but this could only done for a given period of time due to storage constraints and costs.

“Just like the grid reflects the marketable value of meat, this practice is a signal back to producers of what their skins are worth on the global market,” Mr Ryan said.

“Buyers in the saleyard will be implicitly incorporating the current skins market into their $/head purchases.”

Victorian Farmers Federation livestock group president Scott Young said it was “disappointing” that producers were wearing the costs of skin disposal.

“It is very disappointing that we have to pay to get rid of the skins especially when we are getting the lowest prices for our meat for years,” Mr Young said.

“In the past, we have had relatively strong prices for skins in the eastern states so this is just another blow for producers.”