We often point out how Australia and New Zealand are the only major sheepmeat exporters in the world, and the ‘agri benchmark’ confirms why. Agri benchmark and Meat & Livestock Australia (MLA) have released a report ‘How are global and Australian sheepmeat producers performing?’ and it makes lamb production in Australia look pretty cheap.
Agri benchmark is a not for profit organization that compares farming enterprises across the globe in terms of profitability in order to help improve efficiency in global production.
The report, which can be found on MLA’s website, benchmarks the performance of 40 sheep farms across 16 countries. Six of the farms are spread across Australia, unfortunately, none are from New Zealand.
Compared to other countries, Australia’s sheep farms are large. All Australian farms had income above $US200,000, but only four other farms managed this before Government Subsidies. These farms were in Spain, Portugal, Namibia and Uruguay. The largest Australian farm had an income of $US1.65 million, with the nearest outside Australia being in Namibia and Uruguay at $US220,000.
Australia had economies of scale in its favour, and this helps competitiveness in terms of cost of production. Figure 1 shows the average cost of production across the sixteen countries, along with the total average.
Australia’s lamb cost of production of 290ȼ/kg lwt is amongst the lowest in the world. The data is from 2019, and is somewhat inflated by supplementary feed costs due to the drought in NSW. Figure 1 shows high costs of production in the Middle East, which are not surprisingly some of Australia’s major markets. Europe also has high costs of production, and farms which wouldn’t be profitable without government subsidies.
While costs are low, some farms in other countries do outperform Australia’s farms on some measures. Liveweight of lambs sold per ewe are around 50kgs for most European countries, with only one Australian farm achieving this.
Weaning percentages were also low for four of the six Australian farms, but that was due to Merino’s being the breeding ewe. The Coopworth and 1st Cross flocks achieved 140% and 120% respectively. The best farm was in the UK which weaned 160% of ewes joined.
What does it mean?
The good news for Australian lamb producers is the low cost of production here, and high costs in some major markets mean export prices should continue to find support. Being one of only two major lamb exporters leave Australia in the box seat to take advantage of improving demand for lamb, as rising prices aren’t going to see higher supply in some of our export market destinations.
China, a major market, has a low cost of production, but can’t keep growing at recent rates and keep up with demand growth.
Key Points
- Agri benchmark and MLA have released a report benchmarking global sheep farm profitability.
- Australia has the largest farms, and a low cost of production, making farms profitable.
- High production costs and prices in other countries should support export values.
Click on graph to expand
Data sources:
Agri benchmark, MLA, Mecardo
