Australia’s sheep population has reached an all-time high, with an estimated 79 million sheep spread nationwide.
While this may seem like a boon for the sheep industry, it has created significant challenges for farmers and consumers.
The oversupply of sheep has resulted in plummeting prices for farmers, causing concerns within the industry.
To manage the surplus, some farmers are taking extreme measures, including culling their sheep on the farm rather than selling them.
This drastic drop in prices comes as a surprise, considering that just two years ago, Australian sheep prices were at record highs.
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As the world’s largest exporter of sheep meat, Australia faces the challenge of managing this sudden oversupply.
About 70 per cent of the lamb produced in Australia is sold overseas.
According to Meat and Livestock Australia (MLA), the low farmgate prices are beginning to affect local retail prices.
Nationally, retail lamb prices have decreased by 9.5 per cent compared to the previous year.
MLA spokesman Steve Bignell explains that the price flow from sale yard prices to retail typically takes about eight months for cattle and sheep.
With lamb prices historically dropping in the spring, consumers can expect further decreases in retail prices.
Angus Harris, Co-CEO of Harris Farm Markets, also anticipates that lower farmgate prices for lamb and beef will soon translate into reduced retail prices for consumers.
He further cited that the delay in these price reductions reaching consumers is partly attributed to a shortage of meat processing workers, leading to higher labour costs in the supply chain.
But why are prices falling?
The past three years have witnessed higher-than-average rainfall in most of Australia’s farming regions, leading to abundant grass and forage for livestock.
These favourable conditions allowed farmers to increase their sheep herds, resulting in a remarkable 23 per cent growth in the national sheep flock since 2020.
The ability of sheep to breed rapidly contributes to the current oversupply issue, leading to the largest number of sheep, both for meat and wool production, in Australia since 2007.
Livestock agent Martin Simmons, based in Dubbo, New South Wales, noted that after the recent drought, farmers were eager to rebuild their flocks quickly.
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The lamb market experienced a boom due to the abundance of paddock feed and the global demand for meat.
By June 2021, some lamb prices reached record highs, hovering around $10 per kilogram. However, by September 2023, this boom had collapsed, and prices were back to a modest $3 to $4 per kilogram.
This price drop represented a 40 per cent year-on-year decrease in lamb prices, reaching their lowest point since 2014.
Old sheep sold as mutton witnessed an even more significant decline, nearly 80 per cent lower than in the past 15 years.
Moreover, producers grappled with high operational costs, including fertiliser expenses, interest rates, and transportation.
Farmers unable to afford transportation to market have been faced with difficult choices.
Meat and Livestock Australia estimates that about 33,000 sheep farmers operate in the country, but there is limited data regarding those who resort to culling their sheep on the farm.
Industry groups have reported instances where farmers, unable to cover the cost of transportation to sale yards or meat processing facilities, have had no option but to euthanise their sheep.