Sheep prices crash as farmers sell their poorest stock for as little as $1

Farmers are selling their poorest stock for as little as a few dollars a head, as meat markets continue their freefall.

And in some cases, individual animals are failing to sell and are being put down at saleyards.

Sheep prices have been sliding for months, and this week fell to levels not seen in many years.

It has been a dramatic downturn in fortunes for sheep producers, who less than three years ago were celebrating record lamb and mutton prices.

Currently, adult sheep bound for abattoirs are selling for an average of $40 a head, but, in some cases, they are fetching less than $10 a head.

In Ballarat this week, a line of Dorper lambs from western New South Wales with skin affected by grass seed that creates problems at processing sold for as little as $1 a head. 

In the worst cases, farmers are making a substantial loss because the yard and transport fees are outstripping sale prices.

That’s not counting the cost of breeding and feeding those animals.

It’s created fears some farmers may be forced to shoot sheep and bury them in pits, in scenes reminiscent of the wool crisis in the early 1990s.

Analysts and livestock agents say there are many factors behind the price crash, including a global backlog of meat in cold stores, limited kill capacity at abattoirs, sheep being sold off in dry areas like northern NSW, uncertainty about drier conditions ahead and a hit to confidence because of the looming live export ban.

Prices slashed in two years

Tim Coyle farms at Walbundrie in the eastern Riverina.

Two years ago, he sold his cull ewes that were surplus to requirements for $174 a head.

But this year, the best of them fetched only $45 a head, while the draft of lighter animals didn’t sell.

“The prices have crashed in the past few weeks,” Mr Coyle said.

“[The ewes] that didn’t sell were not that light, but the buyers are very picky at the moment.

“We know it’s dry north of Dubbo and people are destocking, and the live export [phase-out] is having a big impact. There’s just big uncertainty.”

While he has been fortunate to enjoy good seasonal conditions and can afford to retain the ewes that didn’t sell, Mr Coyle says this isn’t the case for others.

“No-one wants to feed stock for two years and then have to sell them off,” he said.

“You’re better off taking the hit first up, and that’s probably what we’re seeing — more people are making the decision to destock earlier.”

Hopes ‘last resort’ will be avoided

Scott Young is a lamb producer and president of the Victorian Farmers Federation Livestock Group.

He hopes the situation won’t deteriorate to the point where farmers are shooting sheep on a large scale.

“It potentially [will happen], but that’s last resort, and obviously we don’t want that to happen,” he said.

“I’ve had producers say to me, unless the animals are worth $15 to $20, it actually costs them money to take them to market.

“But as producers, we never want to have our animals slaughtered and not be of any use.”

Tough times but ‘opportunity’ ahead

There’s a great deal of concern in the industry that the situation could get worse before it gets better, with big numbers of sheep and lambs to be sold across the country in spring.

Peter Cabot, president of the Australian Livestock and Property Agents Association, said the coming months would be tough.

“[There are] major numbers to run in September and October in the Riverina and in Victoria a little later,” he said.

Mr Cabot doesn’t expect that farmers will choose to shoot sheep, even if the alternative is selling them for a dollar or two.

“It probably does make more economical sense for them to be euthanised at home,” he said.

“But I think there are a lot of producers out there who can’t bring themselves to do that and would prefer to go through the saleyards — even though it would cost them money — rather than digging pits and shooting sheep,” he said.

Martin Simmons, branch manager at Elders Dubbo, says despite all the negativity and the worst prices he’s seen in 15 years, there is cause for optimism.

“The sheep and lamb market will turn around at some stage. The million-dollar question is when,” he said.

“I think there’s a genuine opportunity to step in and buy sheep and lambs, if anyone is game enough with a bit of feed around them.”

What’s to come?

Market analyst Matt Dalgleish, a director at Episode3.net, doesn’t think prices would fall much further.

“The correction in my mind has mostly come,” he said.

“Usually, you see a 15 per cent or so decline in lamb pricing as those big numbers come through in spring.

“But … a lot of that has already occurred, so we might only see a further five per cent fall.”

Mr Dalgleish said while there wasn’t a lot of transparency in the sector and it was difficult to comment on the profitability of different parts of the supply chain, it was clearly a good time for processors.

“If you go back two years, the margin for them was the opposite,” he said.

“So they need to have deep pockets, and, at the moment, they’re probably recouping losses or very tight margins of the past few years.”