Implications for the Sheep CRC and the Australian sheep industry
The size of the Australian sheep flock has fallen from a 170 m in 1990 to below 77 m in 2008. With strong demand for lamb and high prices for mutton and sheep for the live export trade there are concerns that current levels of turnoff are not sustainable. There have also been important changes in the flock composition with an increase in the proportion of Merino ewes joined to terminal sires and a sharp decrease in numbers of Merino wethers relative to ewes. The combined effect of the declining flock size and the changing structure away from wool-producing Merinos has significantly reduced wool production.
Decreasing supply and continued strong demand has resulted in increased prices of sheep and lambs. The high prices for mature animals (ewes and wethers) provides a mixed message. On one hand it implies that it is good to keep ewes longer as it will be difficult to re-purchase at a later date. Alternatively, it provides an incentive to sell as the current prices provide a good opportunity for producers to get out of sheep. The age demographic of sheep producers means that this could be an important consideration for a number of producers nearing retirement age. Further information should be gathered on the characteristics of producers getting out of sheep to explore the hypothesis that older producers are selling sheep and moving into cattle.
In the case of wool, there has been a long period of low prices for producers initially driven by over supply and more recently the global economic crisis has led to reduced demand. Meanwhile, the rising Australian dollar has increased the price of wool to processers and consumers. For many sheep producers it appears that the lower wool price has been a further incentive to move out of Merino sheep. Most of the decrease in wool supply has been in the mid-micron wools (21-23 m) while the supply of fine and superfine wool has been relatively stable.
The changing flock size and structure are important to the Sheep CRC in terms of ensuring that our portfolio of research is appropriately focused and that our commitments made in the Commonwealth agreement are still achievable.
Three key documents provide detailed analysis of the changing flock:
Although there are some differences between projections by MLA and the DAFWA Wool Desk report it is clear that the size of the flock will only stabilize if there is a significant reduction in the number of mature animals (particularly ewes) being slaughtered, fewer ewes sold for live export and an increase in reproductive efficiency. Kimbal Curtis has developed a model for examining various scenarios for decreased slaughter rates and increasing reproductive efficiency. Several scenarios are outlined in the Wool Desk report. The model is available for further ‘what if’ scenario testing. To download the model click here.
Implications for CRC:
Recent Changes in the Australian Sheep Industry (the Disappearing Flock)
The Australian sheep industry has undergone, and continues to undergo, significant restructuring. At the core of this restructure is a re-weighting of the value derived from the sheep and lamb meat industries relative to the value derived from wool. In addition, there has been a sustained decline in the size of the sheep population over the last 20 years.
These changes in flock size and relative value from sheep meat and wool are dramatic. This report presents evidence of these changes and asks if they are sustainable.
Situation, outlook and opportunities for the supply and demand of apparel wool
The global and Australian wool industries have shrunk steadily in the past two decades due to competition from other fibres and other spending priorities for consumers on the one hand and from alternative farming enterprises on the other.
This discussion paper provides an overview of the trends in the supply and demand for wool over the past ten years, focusing on wool used in apparel and the situation for the Australian wool industry. The drivers of these trends are discussed to assist the Sheep CRC and others in deciding on programs that may address these drivers. Finally, the prospects for wool over the next 12 months and beyond are presented.
Chris Wilcox of Poimena Analysis has prepared this report with assistance from Kimbal Curtis of the Department of Agriculture & Food WA, drawing on data and information from a range of sources, including the International Wool Textile Organisation's Market Information report, papers presented at the Market Intelligence Committee of the IWTO's Annual Congress (of which Chris Wilcox is Chairman), the Australian Bureau of Statistics, the Australian Wool Testing Authority, AWEX, the Australian Wool Production Forecasting Committee and Australian Wool Innovation.
Flock Projection Model
This model was developed to support a discussion paper prepared on the decline of the Australian sheep flock. Results prior to 2008-09 for calibration/validation.
The model estimates lambs marked from opening number, percent ewes in the flock, percent ewes that are mataed and marking percent (all user inputs).
Once you download the Flock Projection Model, save it to your hard drive and then open the Flock Projection Model tick the box 'enable this content' and click ok.