The Benefits of Dry Ageing of Mutton to the Australian Sheep Meat Industry

There is a very large volume of low-value mutton produced in Australia and there have been suggestions that there are value adding opportunities that could improve the returns of sheep meat producers and value chain partners. Dry ageing is one technology being trialled to improve mutton eating quality and so attract premiums from consumer segments with high willingness to pay for guaranteed quality. The objective of this analysis is to estimate the industry-wide benefits of the adoption of dry ageing technology in the Australian mutton market, using assumptions that reflect the most likely ways the technology would be scaled up and most likely supplier and consumer responses in the relevant market segments. A new model of the Australian sheep meat market was used to undertake some scenario analyses about the costs of supplying dry aged mutton ready for delivery to butchers or the hotel, restaurant and institution sector, the size of the target market, and the willingness to pay by consumers for dry aged mutton. While there are already well-established businesses selling aged meat and there may be other small niche markets where the dry aging technology is profitable, the key result is that only under the most optimistic scenario examined would the implementation of dry ageing of mutton lead to positive industry-wide benefits. For our assumed most likely combination of costs and returns, the loss is around $34,000 per year. This loss is doubled in the pessimistic scenario, and in the optimistic scenario the loss turns into a very small positive return of some $3,600 per year. Sheep farmers gain in all scenarios, but these gains are outweighed in many scenarios by losses to value chain partners (processors, retailers and exporters) and consumers in domestic and export markets. Further experimental work which attempts to better quantify the annual operating cost of the proposed large dry ageing cabinets that ensure quality and the minimisation of moisture loss, and the actual willingness of consumers to pay for mutton of different qualities, in a store setting, may alter this conclusion in the future.