Lamb- Where does the premium go??

A leg of lamb for the family roast costs around $30 in a Nelson supermarket. The Nelson Mail looks at why it costs so much and who is getting the biggest bite in returns. So now there's a challenge to keep returns to farmers up so that they can continue, and keep the price down so that consumers will buy. Korere farmer Edwin Newport is a fourth generation sheep farmer. This week when he sends his seven-month-old lambs to the works he expects to get $5.10 a kilogram after processing. Silver Fern Farms in its 2007 annual report gives typical cost components of lamb from the farm gate to retailer. These include sea freight and import costs for export lamb, but removing those and adjusting the example for the domestic market gives a rough idea of the breakdown. Applying these to the $30.97 leg of lamb gives $11.46 to the farmer, $5.26 for processing, $4.96 for in-market costs such as cartage and $9.29 to the supermarket. It's not an actual makeup of the costs for that particular leg because there can be lots of variables, but it illustrates the issue. Farmers have simply not been getting enough to remain profitable. That's why last September Fed Farmers launched T150, a campaign setting a goal of $150 a lamb for the sheep-meat and wool industries to work towards over the next five years. Meat and fibre chairman Bruce Wills says on average over recent years farmers have received $55 for a full mid-season lamb carcass with a retail value of about $300. "That's where our concern came from - farmers getting just 20% of the retail value and that's appalling. Going back 20-odd years farmers were getting close to 35% of the retail value, Wills says. The change has come as the supermarkets, particularly in Europe, have gained more leverage power. Compounding the problem for sheep farming is the state of the wool industry. "Farmers only get 5% of wool's retail value; that's absolutely disgraceful. It was NZ's iconic industry which this country was built on."