Shrinking flock to impact markets

03 Feb, 2015 01:00 AM
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Looking forward, lamb production is expected to steadily increase during the next few years

LOWER sheep and lamb production is forecast to hit both the export and domestic markets in 2015 even though prices are not expected to wane.

At the same time the hunger for Australia's lamb overseas means the slice of the pie taken by domestic consumers will be reduced to just above 40 per cent by 2019. This is quite a shift from only a decade ago when exports of Australian lamb sat at about 40pc.

In releasing the Australian Sheep Industry Projections on Monday Meat and Livestock Australia's Ben Thomas, Sydney, said kilograms per capita of lamb consumption in Australia was likely to slip 11pc in 2015 to 7.9kg/capita.

Exports were also on the slide with lamb shipments easing nearly 15pc to 202,000 tonnes (shipped weight) and mutton back 27pc to 136,000t.

The actual fall in production was forecast by Mr Thomas to be 12pc for lamb (to 432,000t carcase weight) and 30pc for mutton (to 169,000t).

Mr Thomas said the total flock had been contracting during the past couple of years, primarily due to consistently high lamb and sheep slaughter throughout 2013 and 2014.

"This was when large parts of the key sheep producing regions were challenged by drought," he said.

As a result, by June 2015 the sheep flock was expected to have slipped 0.9pc (on year ago levels) to 71 million head.

But, he said results from the MLA and Australian Wool Innovation (AWI) wool and sheepmeat survey in October demonstrated that despite the challenging seasonal conditions, the producer intentions across all States was to maintain flocks in 2015.

"The October survey highlights a transition away from Merino to Merino joining, towards joining Merino ewes to other breed rams - particularly in NSW, Victoria and Western Australia," he said.

The 2013-14 period was also more profitable for prime lamb producers according to research by the Australian Bureau of Agricultural and Resource Economics and Sciences, commissioned by MLA.

Mr Thomas said after easing in 2012-13, average 2013-14 lamb farm cash incomes increased 24pc to $193,000 - a figure close to the record high levels of 2001-02 and 2010-11, in real terms.

"The improvement in farm cash income was driven by increased lamb, sheep and crop sale receipts," he said.

"Wool and beef cattle receipts remained similar to year-ago levels and cash costs remained mostly unchanged."

Breaking down the results by State for average slaughter lamb farm incomes, Western Australia was up 79pc to $366,000/farm; South Australia rose 33pc to $244,000/farm; NSW bounced 8pc to $144,000/farm; the Victorian farms were up 5pc to $138,000 and in Tasmania there was a slip of 3pc to $131,000/farm.

"Looking forward strong international demand is expected to continue, supporting prices and farm cash incomes in the medium term," Mr Thomas said.

It may be wishful thinking, but MLA's projections were based on the assumption that the drought will phase out this year.

Hence, through to 2019, the Australian sheep flock was expected to slowly increase, to almost 74 million head.

Mr Thomas said survey results also suggest, during the summer months of 2014-15, the number of lambs expected to be sold was 7pc higher than the same period the previous year.

"Looking forward from 2015, lamb production is expected to steadily increase during the next few years, to 506,000t (cwt) in 2019," he said.

"In line with production, the average national lamb carcase weight is forecast to rise gradually from 21.8kg/head (cwt) in 2015 to 22.2kg/head (cwt) in 2019."

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FarmOnline
Karen Bailey

Karen Bailey

is The Land's markets editor
Date: Newest first | Oldest first

READER COMMENTS

John NIven
3/02/2015 10:45:46 AM

What would you expect? Even in 1981 lamb consumption was 16.49 Kg per person. In 2011 lamb retailed $14.62 per kg chicken $5.49. Clearly the MLA collection of producers funds to pass onto retailers to maximise retailer profits at the expense of both consumers and producers is criminal. Go ALDI. And that's another thing, MLA doesn't have to divulge details of their advertising expenditure.
halfcocked
3/02/2015 9:08:08 PM

Its simple economics. 2 lambs per ha gross $210 versus 2.5 tonnes of cereal at $280 = $700.This is whats happenning in WA in the medium rainfall area. Crop is killing sheep! PS. We still have 4500 of them but I wonder why!
Cocky
4/02/2015 7:44:25 AM

If you think lamb competes in the same market as chicken, John Niven, you are delusional. In order for lamb production to be viable the common man will barely be able to afford it.
The Guru
4/02/2015 9:20:32 AM

Maybe if you improved your lamb production system the economics would not be as simple.
percy
5/02/2015 8:15:39 AM

The chickens are coming home to roost! Returns from wool sheep, the basis of our flock, have been poor for a long time; the next generation do not want the work involved with sheep and finally with a favourable season the figures are stacking up. Sheep buyers will now have to pay more for the product.

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