MLA tips record lamb production and exports in 2023

Slaughter numbers, lamb production and exports will also reach record heights according to the latest Sheep Industry Projections update from Meat & Livestock Australia released today.

The report says medium-term confidence at the farm gate level, coupled with historically large numbers of breeding ewes and high marking rates, are factors driving national increases.

While all states are expected to experience flock growth, southern WA, Queensland and SA numbers are growing quickly as breeding ewe numbers rise.

Traditional sheep states, NSW and Victoria will continue to contribute to national flock growth, but it's expected increases in other states will be more prominent.

Carcase weights are also forecast to be elevated, thanks to long term, genetic investment which has delivered positive productivity gains in the national flock.

While weather forecasts suggest drier conditions for the second half of 2023, lamb carcase weights are forecast to remain high at 25.1 kilograms, which is 11 per cent, or 2.5kg/head, above the 10-year average.

An increased flock brings increased production and slaughter numbers is the message from MLA.

"Lamb slaughter is forecast to reach 22.6 million in 2023 as a result of large numbers of breeding ewes and strong marking rates," Senior Market Information Analyst at MLA, Ripley Atkinson said.

"This is a rise of 595,000 head or 2.7pc year-on-year.

"2022's slaughter performance showed that small stock processors had a greater ability to increase their throughput in line with higher supply, a trend MLA expects will continue in 2023.

"Looking further ahead to 2024, we forecast it to be a record year for lamb slaughter, reaching 23.2 million head. This would be a rise of 3pc, or 560,000 year-on-year and higher by 1.1 million head or 5pc on the 10-year average,"

For this year, production is forecast to reach 193,000 tonnes of sheepmeat, a 25pc increase year-on-year.

In 2024, mutton production is forecast to rise to 214,000 tonnes.

This figure would reflect an 11pc or 21,000 tonne increase on the 10-year average.

By 2025, mutton production is forecast to reach 237,000 tonnes, the highest volume since 2014.

On the flipside, for 2023 and beyond, a subdued outlook is anticipated for Australian live sheep exports due to industry uncertainty compounding the ongoing impacts of significant regulatory changes imposed on the industry since 2018.

With limited growth opportunities for exporters, consultation with various industry stakeholders estimate a static export volume of between 500,000 to 525,000 head expected for 2023.

Mr Atkinson said a silver lining in the decline in New Zealand's sheep numbers is the opportunities available for local sheep meat producers.

"New Zealand, like Australia, has good market access, quality assurance schemes and a strong reputation internationally meaning that they are an international competitor to Australian lamb and mutton," Mr Atkinson said.

"However, new opportunities may be made available to Australian producers and exporters as New Zealand flock size decreases, wool and lamb production become less profitable compared to dairy production, and land availability decreases.

"In recent years, successive Australian Governments have made considerable strides in gaining European market access, with talks ongoing for an Australia-European Union Free Trade Agreement and the AU-UK FTA signed in December 2021.

"As New Zealand sheepmeat exports have increasingly shifted away from Europe, and towards China, improved opportunities for Australian sheepmeat in European markets may continue."

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The main wool price indicator - the Eastern Market Indicator (EMI) - has improved 11pc since December 2022 when it sat at 1,224/kg.

The EMI currently sits at 1,358/kg - back to where it sat in July last year.

The December wool price was the lowest it had been since January 2021.

The wool price fall experienced at the end of 2022 was linked to China's strict COVID-19 lockdowns as the virus spread through the country, which also impacted port access.

MLA industry projections show that typically, high wool prices tend to shift the sheep flock demographics away from meat sheep to Merino types.

In turn, lower wool prices encourage producers to invest in meat breeds.

Higher wool prices are an important incentivisation for producers to grow more sheep - it is mutually beneficial for the wool price to be high for both wool growers themselves and the broader industry to produce more sheepmeat.

While wool prices have stabilised and declined in some categories and an acute shortage of shearers continues to plague wool growers, prime lamb producers are fetching premium prices for good quality stock.

This means that producers have been incentivised to breed more crossbred, dual-purpose and shedding sheep breeds.

Australia's Department of Home Affairs Migration Program planning indicates that in 2022-23, Australia will welcome 142,400 skilled workers, an increase of 79pc on the previous financial year.

This is an increase of 29pc in reference to pre-pandemic (2018-19) levels.

Encouragingly for the processing sector, regional skilled immigration is expected to reach 34,000 people - an increase of 204pc on last year.

It is hoped that the projected increase in immigration can help alleviate labour issues in the sector.

The availability of shearers has had a significant impact on the sheep industry over the last 12 months.

According to the 2021 Census, there were only 2,395 shearers in Australia,16pc below the number of shearers reported in the 2016 Census (2,841).

Looking ahead to 2024, the national flock's growth is projected to moderate and plateau, reaching 79.5 million head (a rise of 1pc, or 750,000 head year-on-year).

In 2025, the national flock is estimated to fall to 2023 levels, although it will remain above the 10-year average.

Overall, MLA projections show Australia's sheep industry to be in an exciting position of continued growth and development during 2023, supported by a rise in local production and global demand for high quality sheepmeat,