There are too many sheep in Australia. It’s estimated there are about 79 million across the country.
The result is low prices for farmers and, if the experts are to be believed, lower prices for shoppers fond of a shank or leg roast.
Distressingly, the oversupply of sheep also creates animal welfare concerns, with industry groups hearing from farmers who feel they’ve no option other than to kill their sheep on farm rather than sell them.
The drop in prices comes less than two years after prices for Australian sheep were at record highs. So how did Australia — the world’s largest exporter of sheep meat — find itself here?
What do low farmgate prices mean for the price of a lamb chop?
About 70 per cent of the lamb produced in Australia is sold overseas, but according to Meat and Livestock Australia (MLA), the low prices at the farmgate are helping bring down prices at local supermarkets and butcher shops.
Nationally, retail lamb prices have dropped 9.5 per cent since last year.
And the cheaper it is in the shop, the more Australians tend to eat.
The most recent figures from MLA show lamb consumption is up about 14 per cent on last year — shanks alone are up 200 per cent, and leg roasts are also very popular.
“Price flow from sale yard prices through to the retail takes about eight months for both cattle and sheep,” MLA spokesman Steve Bignell says.
With lamb prices typically falling in the spring, he says to expect retail prices to fall further.
But why are prices falling?
For the past three years, most of Australia’s farms received higher than average rainfall, which means plenty of grass.
The good seasons allowed farmers to feed and breed more sheep, and since 2020, the national flock has grown a staggering 23 per cent.
The ability to breed quickly means there’s now the largest number of sheep, both for meat and wool, in Australia since 2007.
Dubbo-based livestock agent Martin Simmons said after the most recent drought, farmers in his region were keen to grow their business quickly.
“Everyone had fully destocked by the end of 2019 because we had just experienced a three-year drought around here,” Mr Simmons said.
“Everyone sort of went hammer and tong. They had plenty of feed about them, [and] they bought in a heap of numbers.”
What goes up must come down
Spurred on by the abundance of feed in paddocks and the global appetite for meat, by June 2021, the prices for some lambs were breaking records, edging $10/kilo.
But come September 2023, that boom had busted, and prices were looking more like $3 or $4 per kilo.
Lamb prices fell back 40 per cent year on year to the lowest price since 2014, and for old sheep sold as mutton, the fall was almost 80 per cent or the lowest in 15 years.
All while producers’ costs — think fertiliser, interest rates and trucking costs – remain high.
“It’s a culmination of a perfect storm, what’s going on at the moment,” said New South Wales sheep breeder Nigel Kerin.
“It’s crazy how it just turned up … with a commodity worth 30 per cent of what it was, it’s making it very tight to meet those financial commitments in business.”
What about farmers who can’t afford to send sheep to market?
According to Meat and Livestock Australia, there are about 33,000 sheep farmers in Australia.
It’s difficult to know how many are killing their animals on their farms. No-one keeps data about such things.
Industry groups say they are hearing from farmers who believe they have no other alternative but to shoot their sheep.
They can’t afford to transport them to a saleyard or meatworks because the returns outstrip the cost of freight.
And with conditions on farms deteriorating, they’re running out of feed.
One processor recently told the ABC that with good contracts to supply the supermarkets locked in and plenty of feed on his west Victorian farm, he’ would be in the “land of milk and honey” this spring.
Others, in dry regions, said they had already had to destroy sheep.
The weather
Australia is drying out.
Recently, the Bureau of Meteorology declared an El Niño weather pattern had arrived, bringing drier conditions again.
Dubbo-based lamb producer, processor and exporter Roger Fletcher says the forecast has spooked farmers, who fear a return to drought.
“I think the forecasters have probably done a very good job and unfortunately, they’re putting a hell of a lot of fear into people, and I’m not blaming them for being good at their job, but it’s making people very frightened.” Mr Fletcher said.
The processors’ wheels are clogged
While farmers are coming off a few good years, the meat processors have had a difficult run.
“I’ve never seen it in my lifetime – so many things, unfortunately, going wrong together,” Mr Fletcher said.
“You know, we have interest rates going up, electricity costs going up. All these things sort of coincide.”
While the COVID-19 pandemic was underway, disrupting the processors’ workforce, farmers kept sheep on farms for breeding — livestock prices were expensive, operating costs high, and now the logistics chain has jammed up.
“COVID caused a huge debacle within the shipping industry,” he said.
“Stuff got locked up. Ports couldn’t get off. Products were taking four months to get to their destination. The customers were begging for it because the produce was subsidised in those countries, and then when the subsidies went off, shipping improved.
“All of a sudden, there’s a huge amount of product that’s landed in these countries. And it’s just slowed everything down.”
Now, there’s an influx of animals to be slaughtered, and it is taking time for the processors to gear up.
With national unemployment, low staffing remains a challenge for processors who are attempting to sell meat into markets hindered by a global recession.
Mr Bignell said there were now some countries stockpiling meat, reducing the need to buy more Australian lamb.
“We do know processors are working as hard as they can, moving to Saturday shifts and double shifts where processors will process the animals, providing they have the supply and it makes economical sense,” he said.
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