Mecardo Analysis - Lamb price and average wages
- By: "Farm Tender" News
- Ag Tech News
- Nov 01, 2018
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By Matt Dalgleish | Source: MLA, NLRS, Mecardo.
Many years ago, a smart farmer mentioned to me how a sheep cost half a week’s wages in the 1950s. He was thinking that meat prices (this is the early 1980s) were cheap in relation to his experience. This article takes a look at this proposition.
Many years ago, a smart farmer mentioned to me how a sheep cost half a week’s wages in the 1950s. He was thinking that meat prices (this is the early 1980s) were cheap in relation to his experience. This article takes a look at this proposition.
There were a couple of challenges putting the data together for this article, some of which need to be addressed further. The average carcass weight for lambs (and sheep) were first collected by the ABS in the early 1970s, so some assumptions have had to be made about earlier carcass weights. In addition, average wage data has been used but median wages would be a much better factor to use as it would not be skewed upwards as the average value is by higher incomes in the economy. Another challenge is that these articles become interesting and further ideas suggest themselves, in this case, the use of retail prices as well as saleyard prices.
In Figure 1 the saleyard value of a whole lamb (price by carcass weight) is given in annual terms from 1950 onwards and set as a proportion of the Australian average weekly wage (which is a male wage for the 1950s and thereafter a “persons” wage). It shows the value of a lamb (assumed to have a carcass weight of around 16 kg prior to 1970) accounted for 20-30% of the weekly wage in the 1950s. This falls short of the original comment but he was from South Australia so the sheep will have been probably larger, and there is a distribution of wages so the data is a possible match for the comment. I have no doubt about the comment, so it is the data on trial here.
Sheep numbers rose through to the late 1960s, before falling in the 1970s and recovering again until 1990 and then trending lower. The value of lamb in proportion to weekly wages falls through to the 1980s and then steadies, before starting to gradually recover in the 1990s and beyond. The value of lamb has risen from 4-5% in the 1980s to be close to 10% now, on par with the early 1970s.
Figure 2 takes a slightly different tack in that it holds the volume of lamb steady (at 1 kg) and looks at the ratio of price to wage. This is more in line with the perspective of a consumer and it shows the relative price of lamb has doubled since themed-1990s in relation to wages.
In Figure 3 the data runs for a shorter period, starting in 1972. It compares a kilogram of the retail price for lamb with average weekly wages. It is somewhat surprising as it shows the retail lamb price to be flatling in relation to the average wage, which is not how it seems in the butcher shop. It shows that lamb is a lot cheaper compared to the average wage than in the 1970s.
Key points:
* Lamb is about the one third of the value, in relation to wages, that it was in the 1950s.
* The saleyard lamb price as a proportion of the average wage has risen since the 1990s.
What does this mean?
Lamb (and its associated protein mutton) has become a lot cheaper in relation to average wages during the past seventy years. The saleyard price for a lamb in the 1950s accounted for 25-30% of the average weekly wage. If we were to repeat that in 2018, the saleyard price would be close to $400 for the animal. The falling trend in value seen from the 1950s through to the 1980s appears to have ended. The trend now shows a gradual increase in value in relation to average wages, reflecting a fall in lamb production when viewed on an international scale.
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