h The Future of Australian Sheep Exports

The Future of Australian Sheep Exports

The Future of Australian Sheep Exports

Article #42

In September, ANZ released their agricultural report on the Australian Sheep Industry, comparing it to the trends of the golden age of Australian Sheep exports and the predicted diminishing of the industry in the next 3 decades. Back in the early 1900s, the Australian economy rode "On the Sheeps back". While today we still retain a considerable hold on the market (taking place as the worlds leading wool producer and only second to china in the production of lamb and mutton), it appears that the demand of the production will take a much more complicated route in the coming future.

For a considerable time now the demand of sheep meat has grown much faster than the demand for wool (as it continues growing in value). Agricultural practices have clearly helped encourage keeping wastefulness limited, with a reduction in flock by 100 million in the last forty years, while meat production has risen 6.6 kgs in the last 2 decades - as the genetics of the flock targets more meat per head.

The demand for sheep meat will continue to grow with the economic growth of developing nations - which could potentially result in a 21% increase in global supply, however other meat demand will grow exponentially higher, with the supply of beef looking to grow 33% in the same time. The growth in this period for sheep meat is looking to be strongest in Asia, where lamb is only second to poultry, however demand is expected to fall in Europe and drop in growth in America. Interestingly, however the value of sheep meat is looking to grow 30%, as opposed to other meats such as chicken which will only grow 9.8% in value.

The problem with the future of sheep exports will be in regard to wool (previously a strong source of export in Australia), will grow minimally, exponentially unmatched to the meat. On the plus side however the value of wool is looking to increase which should help keep the profitability of sheep farming considerable for the next two decades.

According to the report, Sheep farmers ultimately have a 1.2% better rate of return on equity compared to beef farmer. However, the most profitable agricultural direction for farmers will actually be a mixed operation specialising in rotations between Wool, Beef, Lamb and Wheat.

Source: ILCS Consulting