Holistic approach to lamb and mutton supply chain boosts profits, keep consumers happy
The current trading environment in which producers sell their stock is very much an old-fashioned system that may have worked well for them and for the entire supply chain in the past. However, the proliferation of abattoirs and wholesalers across the South African landscape has meant that the conventional way of shopping around between abattoirs to obtain the best price for stock on any particular day impacts the whole supply chain negatively.
Producers who don’t plan their production to be consistent are under pressure to accept the best possible price on the day that they’re ready to go to market – with abattoirs applying downward price pressure, which in turn affects producers’ profitability. Not only are they vulnerable to seasonal fluctuations in production, they have little control over the return on their investment, having to balance small price differentials with their costs of getting to market. At the next step in the value chain, wholesalers apply downward pressure on prices in order to make the biggest possible margins from retailers, with cutting facilities also playing their role in affecting the price of meat.
With stakeholders under pressure to make a profit, meat supply through the value chain has become inconsistent and consumers with limited budgets are faced with fluctuating prices, inconsistent quality, and erratic supply.
Regaining control of the supply chain
At GWK, we believe that there are two steps that producers need to take, in order to regain control of their role in the supply chain, and to regain control of the profitability and success of their enterprises.
The most important thing is for producers to understand their role in the value chain, and to find ways of managing its dynamics to their own advantage. This is closely tied to the second step, which is to adapt farming practices so that they are actively involved in the market, more consistently than two or three times each year.
A more consistent supply of produce means that producers are able to negotiate longer term prices with abattoirs, giving them certainty about the return on their investment in production. Abattoirs, in turn, will be assured of a more consistent supply of stock, and will be able to negotiate longer-term arrangements with the wholesalers that they sell to. In turn, wholesalers will be able to assure retailers of a consistent supply of produce, at a consistent price – boosting the profitability of a product class that has taken a knock in recent years.
Encouraging consumers to turn back to lamb and mutton
At GWK Meat, we have registered protocols that prescribe quality and origin, which means that when we take produce to market, buyers such as Checkers, Woolworths and Pick n Pay can pass that information on to consumers, confident that the meat they are selling is of the origin and quality that we say it is.
These protocols also mean that we can offer a consistent supply of lamb and mutton, which means that these retailers become trusted suppliers to consumers, who in turn vote with their money, and return to including lamb and mutton in their regular shopping.
GWK Meat offers its farmers access to market information about each role-player in the value chain, sharing agricultural and economic insights to stimulate more efficient production and marketing practices.
We’ve also invested in a cutting and packing facility in Cullinan near Pretoria, which adds another level of quality control and stability to the supply chain.
GWK shows the value of our more collaborative, longer-term view of improving the sector to the benefit of everyone who plays a role in the value chain, we hope that more producers will turn to our way of thinking and operating.
Doing so will encourage consumers to turn back to lamb and mutton as proteins of choice when they’re shopping, with positive impacts for everyone who plays a role in getting the meat from the farm and onto the plate.