The sheep offtake has finally caught up with the general sentiment regarding the flock size. In this article, Mecardo looks at sheep and lamb offtakes in eastern and Western Australia.
In February Mecardo looked at sheep and lamb offtakes (read
more here), concluding that while the western flock was contracting the
eastern sheep offtake was still at neutral levels. Varying the proportion of
adult sheep in a flock sold to abattoirs tends to be the main voluntary
mechanism for farmers to adjust the size of their flocks, in eastern Australia
at least.
As of November, the eastern sheep offtake has climbed above
neutral levels, so that the eastern flock will have shrunk by around 1% during
the past 12 months via this mechanism. There is also the mechanism of lamb
sales to abattoirs, which in the east has been tracking along around 36%, which
since 2016 has been a normal level.
Schematics show how these offtakes have varied during the
past 45 years. Figure 1 shows the eastern Australian sheep offtake (rolling 12-month
total of adult sheep sold to abattoirs expressed as a proportion of the flock
size at the beginning of the 12-month period) from 1980 onwards. The eastern
sheep flock is also shown with the shaded areas denoted periods when the sheep
offtake is above 13% which tends to correlate with periods of flock shrinkage.
The sheep offtake has reached 13.8% which is now at flock contraction levels.
Figure 2 repeats the exercise for the eastern lamb offtake.
The weakness of calculating offtakes is that it requires an
estimate of the flock size for Eastern and Western Australia. At this stage,
the latest official estimates of the Western Australian flock are from 2022
which is a problem at a time when this flock appears to be changing
significantly. For the purpose of this analysis estimations have been used. Clearly,
this is a gap in the data collected and published by the responsible bodies.
Figures 3 and 4 show the Western Australian sheep and lamb
offtakes respectively. The western sheep offtake at 25% is contractionary, while
the western lamb offtake at 27% is unprecedentedly high – therefore also
contractionary.
From a national perspective, the sheep offtake is running at
15%, which implies a current contraction in the flock size (from this
mechanism) of 3%. If we assume 1% is occurring in the east, that means the
western flock is accounting for the balance. The western flock accounted for
16% of the national flock in 2022. For a change in the western flock to account
for a 2% drop in the national flock, the WA flock would need to shrink by
12.5%. The reality is that the western flock as of mid-2024 will be smaller, so
the shrinkage in the western flock from adult sheep sales is likely to be
greater than 12.5%.
Then there is the effect of lamb sales. It is unclear what
the neutral level of the lamb offtake is for the western flock. Safe to assume
it is not 27%. If we assume that 20% is sustainable (a guess) then lamb sales
will be contributing to a 7% shrinkage in the flock size. All up it seems
reasonable to expect the western flock at this stage to be shrinking at a rate
of 20%.
Guessing upon estimates is all very well however a good
survey is required to tell us what is going on, especially in Western
Australia. A good example of this work is the following work by Western
Australian Department of Agricultural and Food carried out 15 years ago (read
more here).
What does it mean?
Given the seasonal conditions in Victoria (extending into the eastern Riverina) and southern South Australia the current 1% shrinkage flagged by the sheep offtake is better than to be expected, although we do have to get through to the new southern pasture season yet.
Factors that are material to the flock size and not measured on an industry basis (weaning and death rates) will also create impacts in southeastern Australia, given dry conditions. In Western Australia, the flock looks to be downsizing in a substantial way, which will have implications for wool and meat production as well as the entire service sector for livestock. The lack of good data on the flock size and makeup increases the uncertainty about what is going on west of the Nullarbor.
Key Points
- The eastern Australian flock looks to be shrinking by around 1% at present from adult sheep sales.
- In contrast the Western Australian flock is shrinking by 12.5% or more from sheep sales with additional shrinkage from record lamb sales as a proportion of the (estimated) flock.
Click on figure to expand
Click on figure to expand
Click on figure to expand
Click on figure to expand
Data sources:ABS, ABARES, MLA, DAFF, ICS, Mecardo
