Profit Lift for WAMMCO - Media Release

WA’s biggest lamb processor, the WA Meat Marketing Cooperative, has recorded its second best annual profit of $2.7 million after paying qualifying producer members a pool bonus of $1 million.  This represents an improvement of $1.3 million on 2006/07 profit of $1.4 million.

The Member pool bonus was maintained at 5 percent of the value of livestock supplied by qualifying members for the fourth consecutive year, resulting in a distribution of an additional $1 million. Mutton was also included in the pool distribution for the first time this year with an average payment of $1.07 per head. The average bonus payment for qualifying lambs was $3.37 per head with a top figure of $5.30 per head.

The Cooperative has now distributed a total of $3.8 million to members over the past four years in the form of additional bonuses.

In their joint annual review, Chairman Dawson Bradford and Chief Executive Des Griffiths said the year had been challenging for members, customers and WAMMCO itself.

They said record prices paid for WA lamb by overseas customers, were diluted by the high $A, reducing returns to producers. Coupled with poor seasons in many areas of WA and steep increases in cost, especially for feed grains, producer margins were under pressure for a second consecutive year.

“Demand for product remained strong, despite record high prices, and with falling sheepmeat production worldwide, the outlook going forward remains positive.”

Pre-tax net profit was achieved on reduced turnover of $89 million (91.1 million in 2006/07), mainly due to the lower numbers of lamb processed in the first half. The fall in revenue was partially offset by an increase in sales revenue for extra ‘value added’ production.

WAMMCO paid an average price per head to lamb producers of $65.55, down marginally from $65.90 the previous year. However the average weight per head of lambs processed was slightly lighter at 21.04 kg, down from 21.3 kg the previous year.

A larger turnoff of sheep in the second half contributed significantly to the final profit result. This was despite the concerning and ongoing decline in the size of the WA sheep flock to the lowest level since the early 1920’s.

“We are acutely aware of the unsatisfactory returns many producers are receiving from livestock, compared to other enterprises. WAMMCO will continue to work hard with all sectors of the supply chain to ensure that producers receive the better returns they need.”

A further 582 lamb producers applied to join WAMMCO as members during the year, bringing its total membership to about 1900, and reflecting growing grower confidence in the Co-operative.

The report said labour shortages caused a six percent fall in throughput during peak season supply times at the Katanning plant.  This led to a loss to producers of an estimated $3 per lamb because further processing and value adding was unable to take place.
 
The new by-products plant completed at Katanning during the year has improved revenue from this division by $0.73 per head, representing an increase of 27 percent over the previous year. A new blood plant for by-products, and a new skin processing facility plus improvements to the stock receival area have been included in the 2007/2008 reinvestment schedule and are expected to further maximise returns to shareholders.