Australia’s sheep industry has been navigating a delicate balance between flock rebuilding and liquidation throughout 2024, with the Sheep Turnoff Ratio (STR) serving as a key indicator of these trends. The STR, which measures the proportion of sheep being turned off relative to the total flock, is a critical metric in determining whether the national sheep population is growing or shrinking. Historically, an STR above 14% signals flock liquidation, while a figure below this threshold suggests growth.
At the beginning of 2024, the STR was already rising, increasing from 13.2% at the end of 2023 to 13.7% by the close of the first quarter. This modest but notable shift suggested that flock growth was slowing, though it was not yet clear whether liquidation was imminent. Meat & Livestock Australia (MLA) projected only a marginal increase in the national flock size, forecasting growth from 78.7 million head in 2023 to 79.1 million head in 2024. While this represented an increase, the rising STR indicated that the flock was hovering near a tipping point. Western Australia, in particular, showed signs of significant flock reduction, with its STR reaching a record 10.8% early in the year, highlighting regional disparities in the national trend and reflective of growing concern in the west over the ALP government’s plan to phase out live sheep exports in 2028.
By the end of the second quarter, the STR had risen to 13.9%, moving closer to the critical 14% mark. Although this suggested the national flock was nearing a phase of liquidation, the increase was not yet definitive. MLA had projected a 2.8% decline in the flock for 2024, but given the turnoff levels at the time, this estimate appeared somewhat high. However, anecdotal reports, particularly from Western Australia, pointed to significant reductions in local sheep numbers, which hinted that a broader flock contraction might still unfold.
As the year progressed, the anticipated shift became clearer. By the end of the third quarter, the STR had climbed to 14.4%, crossing the threshold into flock liquidation territory. This confirmed that the national flock was no longer expanding, reinforcing MLA’s initial forecasts that had suggested a notable decline by the end of the year. With the STR at this level, the size of the flock was unlikely to see any meaningful increase, and market conditions would determine whether this trend would continue into 2025.
In the final quarter of 2024, the STR increased even more sharply, rising from approximately 14.5% to 15.5%, firmly pushing the industry into flock liquidation. While this marked a significant shift on a quarterly basis, the annual average STR for 2024 settled at 14.2%, meaning that, on a yearly scale, the flock was only marginally in liquidation. The earlier MLA forecast of a slight increase in the national flock proved reasonable given that the STR remained close to the borderline between growth and decline. However, the late-year surge in the STR to nearly 16% suggests that 2025 could bring a more pronounced contraction in sheep numbers.
Current projections indicate that flock liquidation in 2025 could reach approximately 3%, based upon an average annual STR of around 16% this year, a significant shift from the relatively stable outlook from 2024. MLA’s sheep industry report from November 2024 suggested a turnoff rate of 2.7% for the 2025, a figure that now appears justified given the recent trends. The rising STR in the final quarter of 2024 indicates that liquidation pressures may intensify, influenced by factors such as producer confidence, weather conditions, and market demand.
The trajectory of the Australian sheep industry over the next few years highlights the delicate balance between rebuilding and liquidation. Early in the year, trends indicated relative stability, but as the STR consistently rose—particularly in the latter half of the year—the national flock began to contract.
The increased STR in the final quarter suggests that liquidation could accelerate into 2025, challenging previous forecasts of flock stability or growth. With market conditions, seasonal variability, and producer sentiment all playing crucial roles, the industry will closely watch whether the STR continues its upward trend or stabilises in the coming year.
Matt Dalgleish is a director of Episode3.net and co-host of the Agwatchers podcast.
