THE Western Australian sheep flock is in decline, according to statistics provided by the Department of Primary Industries and Regional Development.
Since July 2019 it has dropped from 14.3 million head to between 12.9-13.4 million.
That's on the back of a massive 12 per cent increase in lamb and mutton exports from WA last year, equalling 84.1 million kilograms, worth a record $596.6 million to the local economy.
The flock reduction is also due to the 1.3m head of sheep and lambs that have been transferred to the Eastern States since July 2019.
More than a million sheep were trucked across the border between January 1 and June 30, 2020, including mated ewes.
One major reason is the impact of below-average rainfall across much of WA's livestock production areas.
This year a record number of areas have been declared water deficient by the State government - which has spent about $2m in carting water to assist livestock producers in the affected areas.
Pastoralists and Graziers Association of WA livestock committee chairman Chris Patmore said the flock has been declining "in a big way".
"Mainly seasonal conditions have caused that," Mr Patmore said.
"We didn't have a good spring last year and the break to the season was not too flash either.
"Producers have been taking the opportunity presented to them from Eastern States buyers due to a lack of water.
"It has been an easy decision to reduce numbers."
Meat & Livestock Australia (MLA) senior analyst Adam Cheetham said the WA sheep flock "has come under pressure, as has the east, due to prolonged drought conditions".
"WA producers, like those in the east, have been buoyed by an improvement in conditions more recently, however, the impact of high sheep turnoff will challenge supply for the remainder of the year," Mr Cheetham said.
"A high volume of interstate transfers, driven by east coast demand, is also having an impact on flock numbers in WA."
The national sheep flock has also been in decline due to the drought conditions over the past few years in the Eastern States.
In MLA's recent Sheep Industry Projections it said "estimates for June 2020 pin the national flock at 63.5m head, its lowest level in more than a century".
After years of increased meat processing of breeding ewes, a break in the drought and a flock recovery underway in the east, MLA believes the processing sector will be challenged by the lower supply.
This would keep prices high into the foreseeable future.
"Global market conditions have been particularly volatile in the past few months, as the spread of COVID-19 has fostered instability, created logistical hurdles for trade and slowed food service industries around the world," MLA said.
"This year, exports of lamb are forecast to fall slightly on 2019 volumes, to 282,000 tonnes shipping weight (swt), while mutton exports are expected to reach 129,000t swt, back 31pc on 2019," MLA said.
"Encouragingly, growing retail demand, a soft Australian dollar and the African swine fever-induced protein deficit continue to drive export prices for sheep meat, particularly as key markets such as China and the United States compete for shorter supplies.
"However, many key export markets now face economic recession as a result of the COVID-19 outbreak, which could lead to tighter disposable incomes and switching of consumption to lower-priced alternatives.
"Overall, sheep and lamb prices are expected to remain at historically high levels for the remainder of the year, given the expectation for fewer lambs and sheep available for slaughter, strong restocker demand for ewe lambs, limited competition from New Zealand, generally strong demand (despite some disruptions) and a low Australian dollar."
Last year Farm Weekly reported that mutton saleyard prices were likely to hold firm to the 600 cents a kilogram mark that was reached in July 2019, or increase, according to MLA predictions.
But the speculation was dependent on the international market's supply and demand - particularly the demand from China.
WA exports 95 per cent of its processed mutton.
Despite the prediction the mutton price dropped after a few months to between 400-450c/kg until February 2020, when it shot back up to 550c/kg.
On March 10, 2020, at the Muchea Livestock Centre mutton prices rose as high as 700c/kg and have been fluctuating around the 550-600c/kg mark since.
WA processors have been paying above 500c/kg for mutton.
Lamb prices have also seen record highs - with a saleyard price at Muchea reaching 890c/kg on March 17.
While the price has dropped off somewhat it has remained above the 700c/kg mark for the past five months.
WA processors have been offering around the 800c/kg mark for lambs, depending on type and class.
Mr Patmore said sheep meat prices were holding up "really well" but wool prices had really come back.
He said he had some wool in the system at the moment and was seeing "40pc less than this time last year" for it.
"It has taken the gloss off what sheep producers were seeing last year," Mr Patmore said.
WAFarmers Livestock Section president David Slade said while the industry was seeing high sheep meat prices producers were "getting a hiding from wool prices".
He said it was causing them to rethink their flock size as well as breeds.
"There has been a shift to meat sheep breeds and people are becoming more savvy on Merino carcase weights," Mr Slade said.
He said another reason why there was a decline in WA's sheep flock was because grain prices had been good and with a lack of water it was easier to put the paddocks into crops.
"It is expensive to cart water for livestock," Mr Slade said.
"The water deficient areas have not had enough rain to cause any runoff - they need 20 millimetres or more in one event for it to make a difference."
Live export
The live sheep export trade has continued to be challenging for the WA industry.
After surviving a political and activist assault in 2018-2019 and a host of greater regulations to the trade by the Independent Regulator - including an almost four month pause of trade during July-September to the Middle East - the number of sheep exported has dropped significantly.
MLA's Monthly Trade Summary for June shows that 581,911 sheep were exported live to various markets since January 1 - down 17pc on last year.
Aside from the uncertainty caused by the regulator, this is due to fewer players in the market as well as the key market of Kuwait establishing a presence in and seeking additional supply from South Africa to fill its requirements of fresh meat.
The live export industry continues to be a valuable one for WA producers and supply chain participants - making up 20pc of sheep turn-off in the State - with shipping wether prices as high as $160 per head at the saleyards.
Mr Cheetham said the live sheep exports from WA, year-to-May, "were back 22pc year-on-year".
"High processing numbers and interstate transfers have been contributing factors, however, the trade in recent years has seen an easing trend as key markets have increasingly sought boxed product," Mr Cheetham said.
"The impact of COVID-19 and the logistical challenges present at the port of Fremantle have also restricted the trade.
"Australian live sheep exports to both Jordan and Qatar were significant in December 2019, leaving stock on hand coming into 2020.
"This led to a very slow January and February for live sheep exports, however they did pick up substantially in March and had a solid April.
"May numbers were down, but have been impacted by the delayed departure of a sheep vessel due to the crew contracting COVID-19.
"Qatar exports have seen the biggest decline as they have also been facing some uncertainty around feedlot and slaughterhouse facilities, which has driven some uncertainty in live animal purchasing."
