Forward supply contracts for the WA sheep meat sector

Page last updated: Thursday, 27 July 2023 - 4:13pm

Please note: This content may be out of date and is currently under review.

Recommendations

Implementation activities for this project

  • Deliberate and clear ongoing industry engagement, including:
    • to support specific ‘physical supply chain’ projects with sheep production groups/ major producers to develop aggregated supply to engage with downstream processing, live export, retailer companies to implement forward supply agreements (longer than three months) for out of season sheep during the months November to July
    • to engage and assist willing processors/exporters to assist them to develop and implement forward contracts based on the best practice learnings and template that addresses the major challenges identified herein
    • to support and facilitate existing and new grower alliance groups
    • to support and facilitate industry innovation day(s).
  • Support the development and implementation of trial ‘AuctionsPlus’ forward contract sales for slaughter lamb delivery out to six months with forward contract template information and best practice learnings obtained through this study.
  • Support the development of new technology and market information and trading platforms for the sheep industry.
  • Facilitate and support the development and promotion of alternative longer-term sheep breeder finance products by banks and financial providers.
  • Consider completing a study into sheep processing benefit utilisation, productivity and quality standards based on the theoretical increased use and adoption of forward contracts including different market volume and timing scenarios.

WA sheep industry leadership bodies 

  •  Advocate and promote:
    • for Australia/WA to obtain a dedicated United Kingdom (UK) lamb quota following the exit of the UK from the European Union (EU)
    • value chain alignment, producer to consumer
    • the adoption of physical forward contract agreements longer than three months
    • to the banking and financial services sector for the creation of livestock breeder finance products
    • nationally for the training and education of OTC Riemann derivative products
    • the development of additional specific live export market information prices per category (Meat and Livestock Australia (MLA) and LiveCorp)
    • the development of trading platforms in the WA sheep industry (e.g. similar to grain industry Clear Grain).
  • Develop an alliance with an independent dispute resolution and arbitration service for forward contracts.
  • Develop an alliance with an Australian agricultural industry body that has successfully developed a framework for implementing and maintaining a comprehensive contracting system in an Australian agricultural commodity.
  • Increase industry governance standards and perception through appointment of an independent Chair.

Regulation

Department of Primary Industries and Regional Development (DPIRD) and WA Government to consider:

  • Advocating for legislation for greater supply chain information through legislation or voluntary industry similar to the USDA Livestock Mandatory Price Reporting Act.
  • Engaging with Grain Trade Australia or other industry body to work with and support the WA sheep industry to develop a robust dispute resolution system and contracting framework.
  • Advocating for the delivery of a minimum industry standard Code of Conduct with regard to agents and other key stakeholders.