Australian sheep flock’s 'new normal'

Despite record high slaughter rates for four consecutive years, the national flock size has been relatively stable for the past eight years, according to Australian Bureau of Agriculture and Resource Economics and Sciences senior economist Caroline Gunning-Trant.

During the ABARES Outlook conference, Dr Gunning-Trant said it was unusual to have high supply on the market while prices continue to go up.

“The opposite effect should have been happening,” she said.

“We really thought turn off would've eased to allow the flock to recover in earnest.”

Reasons why the flock hasn't taken as such a strong hit was attributed to improved lifetime ewe management, better genetics increasing marking rates and carcase weights, which has contributed to an overall more productive flock.

 “Given the cost to producers of restocking, getting the best quality lambs out of a ewe has been on the forefront of producers' operating strategies, and because of this we've been able to maintain the flock at about 70 million head,” Dr Gunning-Trant said.

That is where the flock is expected to remain by June 30, before gradually increasing to about 77 million head within five years.

“… Is this the new equilibrium flock size for Australia, given what we're seeing on the meat side and given that there aren't any strong signals on the wool side for any significant strengthening or weakening of demand there?” she said.

“… The pace of flock rebuilding will continue to be tempered not just by seasonal conditions, but on this ongoing level of high prices available now to producers.”

The demographics of nation’s sheep flock has been redefined dramatically in the past two decades, following the collapse of the reserve price scheme and more recently the burgeoning interest from the Middle East for Australia’s sheepmeat.

Dr Gunning-Trant believed the nation was still in a flock transition phase.

“The industry has moved away from one which produced wool and had much less emphasis on meat production to one which is now positioning itself to effectively deliver to two sources of demand from one animal,” she said.

“Business models are moving increasingly away from a wool or meat framework towards one that is really in the business of producing wool and meat and where the quality of both is equally important.

“That doesn't mean there aren't specialists for both wool and meat, but certainly there is a greater focus to the production of both products.”

This year, the eastern market indicator price of wool is forecast to be a about 13pc higher this year, landing at a conservative 1300 cents a kilogram clean.

While a lull in prices was experienced in 2012-13 since then the prices have continue to escalate, which Dr Gunning-Trant said was because of strong demand offsetting the extraordinary high turn-off in lamb slaughter which stemmed from drought conditions.​