Sheep muster in outback Queensland near Charleville.

Continuing the El Niño theme, in this article Mecardo looks at the El Niño/La Niña, rainfall, sheep offtake and consequently changes in the flock size. In early, April Mecardo looked at the relationship between rainfall and sheep offtake, the mechanism by which the flock size is adjusted, for Australian sheep regions. In this article, we split the sheep regions into Western Australia and Eastern Australia, as the article from two weeks ago (read here) showed the significantly weaker relationship between El Niño Southern Oscillation (ENSO) and rainfall in the western sheep regions.

The sale of sheep off the farm is the primary mechanism by which the flock size is adjusted.  Firstly, here is the definition of offtake used in this article. For the east, it is an Eastern Australian combination of sheep offtake (adult sheep sold off the farm during 12 months expressed as a percentage of the flock size), the change in the lamb offtake (for the same period) adjusted for any live exports and imports of sheep from Western Australia. The data is based on fiscal (season) years, with offtakes lagging by 4 months, giving a small predictive capacity. For the west, the definition is similar except an adjustment is made for sheep being exported to the east. The definition of the change in flock size is more straightforward – it is the year-on-year change in the eastern/western flocks as of the middle of the calendar year.

Figure 1 compares the eastern offtake with change in the eastern flock from 1999-2000 through to 2021-2022. The relationship is a strong one, with the flock size tending to shrink when the offtake is above 12%. The BOM defined La Niña (LA) and El Niño (EL) seasons are labelled. There have been La Niña years with high offtakes/shrinking flocks and El Niño years have ranged from mild shrinkages in the flock to years of substantial shrinkages.

Figure 2 repeats the exercise for Western Australia. The relationship between offtake and changes in flock size is weaker but the outstanding point for this article is the wide spread of La Niña and El Niño years across the graph. From a Western Australian flock size perspective La Niña/El Niño years do not tell us anything.

In Figure 3 the eastern offtake is compared to a weighted (according to wool production) rainfall rank across eastern sheep regions, for the same period. The weighted rainfall rank is different from the one used two weeks ago. In the earlier article, we compared the June to October average SOI to rainfall ranks for the April to November period of the same year. In this article the rolling 12-month rainfall rank for all months in the fiscal year (July to June) is averaged, so July is looking back as far as August the year before, August looking back as far as September the year before, and so on. This is done in an effort to mimic how farmers view the season at any point during the fiscal year. The correlation is saying that the rainfall rank accounts for about half of the sheep offtake in Eastern Australia. It is the major, but not only, driver of the sheep offtake.

The El Niño years are concentrated in the higher levels of sheep offtake, with the eastern sheep offtake varying from 16% to 19.7% for the five El Niño years of the past two decades. In terms of changes to the eastern flock, the range in El Niño years has been from -2% to -8.4%, based on a rainfall rank varying from 16% (awful) to 34% (tight) and averaging 32%.

La Niña years are even more widely dispersed in all the measures. The trend line in Figure 3 shows that when the rainfall rank falls below the 40th-45th percentiles levels the sheep offtake during the past two decades has lifted to levels where the flock shrinks. How much it shrinks depends a great deal on how low the rainfall rank for Eastern Australia falls.

What does it mean?

Simply by moving from a wet spring (2022) to a normal to dry spring (in 2023) livestock production in eastern Australia will be lower. Going on the record of the past two decades, an El Niño year in 2023 would flag a shrinkage in the Eastern Australian flock somewhere between 2% and 8%, depending on spring rainfall.

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Key Points

  • ENSO has little relationship to the sheep offtake in Western Australia.
  • In Eastern Australia (during the past two decades) rainfall accounts for about half of the sheep offtake level, which is the primary driver of changes in the flock size.
  • During the past two decades in El Niño years the eastern flock has shrunk on average by 5.6% (with a range in fall from 2% to 8.4%).

Click on figure to expand

Click on figure to expand

Click on figure to expand

Data sources: BOM, Long Paddock, MLA, ABS, Mecardo

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