The latest release of Meat and Livestock Australia’s Industry Projections has a pertinent section on the structural shift in the national flock. Survey results continue to show a shift away from Merino sheep towards meat and shedding breeds. Here we take a look at how price is driving this shift.
In the MLA
Industry Projections, they used the May Sheep Producer Intentions Survey (SPIS)
numbers to highlight the shift in the flock. The survey has gone through a
number of changes of providers in recent years, with numbers jumping around a
bit, but it is worth a look anyway.
Figure 1
shows the SPIS figures for breeding ewe numbers over the past twelve years. The
highlight of the survey data is the rapid growth in breeding ewes ‘other’ than
Merinos in the past four years. According to the SPIS data, Merinos now make up
61% of the breeding flock, down from 75% in 2020.
The number
of ‘other’ breeding ewes has grown 81% since 2020. Over the same period, the
number of Merino breeding ewes for joining to Merino Rams has declined by 8%.
The
favourable seasons in 2021 and 2022 led to flock growth, and it appears the
flock growth has been solely in the meat sheep department, with Merino steady
at best, and likely still in decline.
Figure 2
shows one of the major drivers behind the shifting flock structure. In Figure 2 we can see the weekly 19-micron
wool price guide (MPG), the Eastern States Trade Lamb Indicator (ESTLI), and
the spread between the two.
While the
19 MPG hasn’t been as low as it was through much of the 2000s, the ESTLI has
been much stronger over the last four years. There was only a brief period when
lamb prices were in the doldrums this time last year when wool returned to the
200% premium to lamb. For much of the rest of the last four years, the 19 MPG
has been hovering around double the lamb price. The increased cost of shearing has
further tipped the scales in favour of meat sheep, driving the growth of
shedding breeds.
It isn’t
just breed that dictates the performance of a farm business involved in Sheep
production. To discuss other factors to consider, John Francis from Agrista
joined Mecardo on this week’s episode of the podcast (listen here). His recent report for AWI: ‘Why
stay in Wool Sheep’ investigates how specialist
wool enterprises have delivered similar or superior profits when compared to
alternative enterprises over a five-year period.
What does it mean?
Covid and the subsequent decline in wool prices came at a bad time for the Merino breed. The only time we’ve seen growth in the Merino portion of the flock was in 2018-19 when the 19 MPG was at a 200-250% premium to the ESTLI. While it hovers around 100% any flock growth will be in favour of ‘other’ breeds.
Key Points
- MLA data suggests Merino ewes make up just 61% of the breeding flock this year.
- The last four years have seen rapid growth in meat and shedding breeds.
- Price spreads between wool and lamb partly explain this shifting flock structure.
Click on figure to expand
Click on figure to expand
Data sources: USDA, AWEX, AWI, Agrista, Mecardo
