Supermarket Woolworths says its decision to cut the price of some lamb products by more than a quarter is all about boosting sales.
The announcement of a 30 per cent cut to supermarket lamb prices has caused waves within the industry.
Woolworths general manager of fresh foods, Pat McEntee, says international demand for Australian lamb means the open market is robust and competitive.
"We always pay a fair price for our livestock and operate in a competitive livestock market," he said.
"Woolies are actually absorbing about $13 million in reducing our costs and, of course, with the strong demand for Australian lambs overseas, it keeps a robust and competitive marketplace."
Graziers are saying they too are confident international demand will dictate lamb prices.
Northern NSW sheep and lamb producer James Jackson says, with tight margins, farmers are reliant on steady prices.
"You're immediately concerned for you producers that it'll translate into a decrease in farm gate prices," he said.
"However, it must be understood that there are a lot of markets buying it, and although Woolworths control around 7 per cent of the kill in Australia and are a very important client, there are other avenues for selling the lamb."
But the full effect of the cuts will be felt by domestic independent butchers.
Director of Clancyjames butcher shops in Brisbane, David Bobbermen, says the grip of the supermarkets is tightening.
"It will definitely have an effect on independent butcher shops on Australia," he said.
"The amount of predatory pricing that supermarkets are putting on small independent retailers, it's a big danger for this country.
"It has an enormous effect on this country if the independent butcher dies on the vine. It's pretty frightening actually."
Some butchers say they'll have to lower their own prices to compete with Woolworths.
Butcher Bob Sloan, from Horsham in western Victoria, says some of his lamb is already cheaper than what's sold in supermarkets.
"We can only cut back and we're probably all of the same opinion (that) we just have to match them a little bit and beat them on things we can beat them on and give good quality and service."
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