Sheep industry still holding the ag fort

In the grip of drought, NSW sheep industry is a shining light

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Export lamb prices have hit record highs, part of the strong performance of the sheep and wool industry at large in the most trying of droughts. Photo by Rachael Webb.

Export lamb prices have hit record highs, part of the strong performance of the sheep and wool industry at large in the most trying of droughts. Photo by Rachael Webb.

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New data shows big rise in sheep enterprise profits

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With export lamb prices hitting record highs, it's probably no surprise to find data showing sheep enterprises are moving forward leaps and bounds in NSW.

Data from the NSW Department of Primary Industries, provided to The Land, shows wool enterprises increased by $9.50, on average, with the 18 micron self-replacing Merino enterprise delivering the highest gross margin of $63/Dry Sheep Equivalent (DSE), breaking the $600 per hectare barrier at 10 DSE/ha.

It also shows that analysis of 10 typical sheep enterprises revealed an average rise of $5.50 per dry sheep equivalent (DSE) to around $50/DSE or $500 per hectare at a stocking rate of 10 DSE.

(A DSE is used as a method of standardising an animal unit and is the amount of feed required by a two year old, 50kg Merino wether to maintain its weight - MLA.)

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NSW Agriculture Minister Adam Marshall said the new figures show sheep enterprises are getting stronger, despite dry conditions.

"Sheep enterprise performance has steadily improved in the last 10 years and analysis of the 2018 gross margins was very positive for wool-based enterprises and positive for most sheepmeat enterprises," Mr Marshall said.

"While drought has been very challenging for sheep producers during the past 18 months, the strong underlying profitability of sheep enterprises has cushioned the impact, even when supplementary feeding was taken into account.

Related: Big money paid for heavy export lambs

"The impacts of this drought are being felt across the state, so to see the underlying profitability of these enterprises reaffirmed is good news for sheepmeat and wool producers."

The addition of an eight-month period of drought feeding, including feeding to finish lambs for sale, showed the majority of sheep enterprises weathered the initial onslaught of the drought.

Enterprises which performed well in good times were in a better position to weather difficult times and will be more likely to recover sooner, when conditions improve.

Analysis of 10 typical sheep enterprises revealed an average rise of $5.50 per dry sheep equivalent (DSE) to around $50/DSE or $500 per hectare at a stocking rate of 10 DSE/ha.

"Wool enterprises increased by $9.50, on average, with the 18 micron self-replacing Merino enterprise delivering the highest gross margin of $63/DSE, breaking the $600 per hectare barrier at 10 DSE/ha," Mr Marshall said.

"This result is primarily due to wool income gains, with the enterprise also receiving a 21 per cent increase in the dollar value of four-month-old wether lambs sold to fill demand from wether enterprises.

"The 20 micron wether enterprise saw the largest gain, with gross margin up $13.07 to $49/DSE, or $130/ha at a stocking rate of 10 DSE/ha.

"Despite paying more for wether lamb replacements, wether enterprises performed exceptionally well, with the 18 micron wethers achieving $59/DSE."

The latest data from the Meat and Livestock Corporation shows that several sheep and lamb pricing indicators broke records during the final week of May.

"Weekly slaughter data tracking below year-ago levels. The outlook for lamb supply remains poor, with seasonal conditions yet to improve," its weekly report said.

"The Eastern States Trade Lamb Indicator (ESTLI) rose to 868/kg carcase weight (cwt) on Tuesday, up 8% week-on-week and just 2% below the all-time high of 884/kg cwt (August 2018)."

Export lamb prices hit a record $345 at Griffith last Friday.

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