Meat prices in Australia are surging on the back of increased demand from China, where the outbreak of African swine fever (ASF) continues to create a global shortage of protein.

Coll MacRury, the group chief executive of meat processor WAMMCO, said since about July he had seen unprecedented demand for sheep meat, in particular secondary middle and off cuts.

Coll MacRury says China's demand for sheep meat continues to rise. ( Supplied: WAMMCO )

"It's certainly at an all time high, we've never seen prices to this extent," he said.

"We've seen price increases of $1 to $1.50 a kilo on mutton six ways, some of the flap prices on lamb we've seen $2 and $3-a-kilo increases — they're decent increases that are really supporting the farming fraternity, and it's being passed back to the farmers."

Surge in demand not expected

Official figures say 39 per cent of hogs in China have been destroyed due to ASF, but industry analysts believe that figure could be as high as 70 per cent by year's end.

Mr MacRury said he had anticipated a price increase due to ASF, but not to this extent.

"The severity of the number of pigs they've had to slaughter over there because of swine fever, we probably didn't envisage (price rises) as great as it is," he said.

"We're not a beef processor, but I know a number of beef processors have seen significant increases in prices in China as well.

"I think it's generally a lift for all primary proteins going into that market at the moment."

Good news for sheep industry

Mr MacRury said WAMMCO was not slaughtering more stock but was seeing increased value for those it was processing.

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"We're seeing other countries, if they want to try and acquire the cuts that the Chinese are taking, they've had to lift their levels, but honestly they're struggling to pay the levels that the Chinese are paying for that product," he said.

"The big thing is that the New Zealand and Australian sheep flocks are not increasing at all, so it means you're robbing Peter to pay Paul, so other markets are missing out ... China is soaking up any spare capacity."

Farmers would hopefully see a lasting benefit from the increased Chinese demand, he said.

"They're saying it could take years to rebuild to anywhere near where they were; I've heard figures of seven, eight, nine years.

"It's obviously pretty tough for the pork industry domestically in China, but it's good news for processors in Australia and New Zealand and other countries that supply — it's good news for farmers that have stuck with the industry."