2009, Volume 17, Paper 3
ISSN: 1883-5675

The Influence of Weight and Fat on Lamb Prices, Revisited

Charlie Hufton
Garry Griffith
John Mullen
Terence Farrell

Abstract

Previous research has found inconsistencies in the valuation of weight and fat characteristics of lamb carcasses between the saleyard and wholesale markets. In this paper, recent New South Wales saleyard, over-the-hook and wholesale price data on different classes of lamb are analysed using hedonic methods to determine the relative influence of weight and fat on prices received. In relation to fat score, lambs that are assessed as fat score 2 are discounted relative to lambs assessed as fat score 3, by around 26 c/kg in the live lamb market and by around 8 c/kg in the carcass market. There are no significant premiums or discounts for lambs assessed as fat score 4 in the markets where that could be tested. Premiums and discounts for fat scores are now consistent across the two market levels, and this implies some improvement in the efficiency of price discovery in the lamb market since Mullen’s study a decade ago. However, in relation to carcass weight, premiums and discounts are quite inconsistent across the market levels. There is a consistent premium for 18-20 kg lambs in all markets of between 11 and 40 c/kg, but then there is also a 29 c/kg premium for very light lambs in the wholesale market and a 38 c/kg premium for the heaviest lambs in the over-the-hook market. It appears that consumers’ stated preferences for larger lambs are not being reflected in price incentives generated in the live lamb and lamb carcass markets. Seasonal effects in all markets also proved to be significant, but the patterns are again quite different in each of the markets. 

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