The success of the lamb industry over the past 30 years is a direct result of a coordinated supply chain approach.

In the 1980s lamb attracted low auction prices, with fluctuating quality, and was an inferior product to other protein sources. In the 1990s, the industry was worth about $1.1 billion and 85% was consumed domestically.

In 2017, Australia produces 8% of the world’s sheepmeat supply, exporting 56% of its lamb and 95% of its mutton to countries around the world. The sheepmeat industry is worth about $5.23 billion to the Australian economy each year.

The industry continues to strive through strategic planning and collaboration to be the leading supplier of lamb and sheepmeat to a world with growing demand for our premium product. The continued success of the sheepmeat industry is dependent on the structures and systems currently in place in the industry, and underpinned by marketing and research by MLA, AHA, and the NRS.

Industry structure

The sheepmeat industry’s success is built on consultative strategic planning, implemented through collaboration between organisations across the whole supply chain. This success has been underpinned by the significant investments made by MLA in marketing and research and development. The levy distribution is not limited to MLA; it includes AHA and the NRS, whose work has allowed the Australian brand to succeed in the world market.

The levy system

A sheep producer pays two levies:

1. A transaction levy at the point of sale of a lamb or sheep
2. A wool levy at the sale of wool

The transaction levy is capped so that it does not exceed:

• $0.20 for sheep. If the sale price is $10 or over, the levy still $0.20.
• $1.50 for lambs. If the sale price is $75 or over, the levy is still $1.50.

The Sheep and Lamb Transaction Levy is distributed to four streams. Animal Health Australia, Meat and Livestock Australia Marketing, Meat and Livestock Australia R&D and the National Residue Survey. SPA is responsible for oversight of the levy investment and for advising the Minister of Agriculture on the levy rate and distribution.

Lamb levy distribution

The lamb levy raises $40.9 million and is distributed in the following way:

Sheep levy distribution

The sheep levy raises $3 million and is distributed in the following way:

When the matching Federal Government contribution is included, SPA is responsible for oversight of approximately $57 million of levy investment. MLA invests about $37 million in levies on behalf of producers. This levy investment is directed through the Sheep Industry Strategic Plan (SISP).

Strategic planning

The 1995 Lamb Industry Strategic Plan (LISP) facilitated by the Meat Research Corporation (MRC) and the former Sheepmeat Council of Australia established high-level goals targeting an industry value of $2 billion per year by 2000. The subsequent industry revolution was market driven and underpinned by a program to identify, promote and create supply pathways for what consumers wanted, and an on-farm research and development (R&D) program focused on delivering it.

SCA collaborated with MLA and key industry stakeholders to execute R&D and marketing programs that facilitated cooperation and co-investment through the supply chain involving producers, processors, independent retailers and supermarkets. The federal and state governments’ critical financial contribution saw state government extension staff and research institutions play a pivotal role in building industry capability. This collaboration has underpinned reported industry benefits.

During 2009-10 SCA guided the development of the 2010-2015 Sheep Industry Strategic Plan to provide a blueprint for the sheepmeat industry for the next five years. The plan provided a link to the overarching framework, the Meat Industry Strategic Plan (MISP) developed by the RMAC and strategies which guide individual agencies, corporations and entities servicing the sheepmeat industry. This includes the National Sheepmeat Production Research, Development and Extension Strategy, MLA, Australian Meat Processor Corporation, NRS, AHA and other agencies responsible for implementing RD&E.

The SISP continues to be the roadmap to ensure all of the sheepmeat industry has a focus – it has a set of agreed, clearly articulated outcomes that produce results across the entire industry. It seeks to include all sectors to harness their energy and resources, achieve collaboration and cooperation to provide premium lamb to the world. In short, it is the foundation for the industry’s success.

SISP 2015-2020 (SISP2020), was launched in September 2015. The plan has been developed with a focus on 2030 – 15 years’ time – because many of the important industry decisions to be made during the plan’s timeframe will only start to yield a major influence some years after the life of the plan.

The plan is strongly aligned with, and sits within, the overarching framework provided for the red meat industry through the Meat Industry Strategic Plan 2015-20 (MISP 2020). MISP 2020 has used expert input from all parts of the red meat industry to provide economic modelling which has informed the priorities set out in this plan.

Benefits of the SISP2020

Major economic modelling was undertaken as part of the development of MISP 2020. While its focus was on the red meat industry as a whole, specific data for the sheepmeat industry was extracted and used in SISP’s development.

The modelling estimates that, if all of the activities in the MISP 2020 pertinent to the sheepmeat sector were to be undertaken at an annual investment of $58m, the plan would deliver increased net industry income of $728 million by 2020 and $3.49 billion by 2030 on the baseline projection.

Key outcomes expected from SISP 2020:

1. Systems in place that allow information flowing up and down the value chain to aid decision making and improve quality at all stages.
2. Reduced losses in the national flock including marking rates increased by 5 percentage points and ewe mortality rates decreased by 1 percentage point.
3. The successful definition and marketing of a yearling product: 1.39 million head underpinned by MSA without compromising the lamb category.
4. Improved access of Australian sheepmeat to key global markets: new market opportunities valued at $61 million by 2020 and $334 million by 2030.
5. The establishment of a collaborative sheep innovation centre to succeed the Sheep CRC in 2019.
6. Continuous improvement in product quality: quality increased by 2 MSA consumer points by 2020 whilst maintaining or improving lean meat yield.

The sheep industry’s key achievements include:

1. Increased consumer demand for sheepmeat worldwide through responding to consumer attitude and producing a more consistent, high quality, and leaner product; and integrated marketing approaches.
2. On-farm implementation of R&D outcomes through broad industry participation in extension activities delivered by MLA.
3. Significant genetic improvement of the national flock which increased productivity for sheepmeat producers. This work has mostly been conducted by the Sheep Cooperative Research Centre, established in 2007. The former Sheepmeat Council of Australia and MLA have been integral in the success to secure another $15.5 million for 2014-2019. One of the key factors in the success of the CRC and securing an extension has been industry’s engagement and collaboration across the supply chain.
4. Tools to improve sheep health. For example registration of the Gudair vaccine for Ovine Johnes Disease.

The rate of return on producers’ levy investment*

1. The total MLA internal rate of return is estimated at 16-26%
2. Total value added over 25 years $1.39-$2.39 billion at the farm gate

*Meat and Livestock Australia, 2008,  Building the Australian Prime Lamb Industry