WA flock decline signals broader structural issues for Australian sheep industry

• WA sheep and wool producer sentiment is driving a reduction in flock size as producers shift to broadacre cropping.

• If this decline continues, long-term structural issues may emerge for the sheep sector.

• Additionally, the largest breeding ewe flock in recent history is expected to drive higher mutton turnoff in spring 2024.

Meat & Livestock Australia’s Sheep Producer Intentions Survey (SPIS) is an excellent resource for gauging the sentiment of sheep and wool producers nationwide. It provides a wealth of data on flock demographics and trends, allowing for detailed analysis.

Positively, the latest report released in July showed an improvement in national sentiment for the sheep meat sector, rebounding from the lows of October 2023. However, when examining the data at a state level, the continued decline in confidence among WA sheep and wool producers is concerning for the national flock.

WA is a cornerstone state for the sheep industry, playing a critical role in both the sheep and wool sectors. As more WA producers permanently shift from sheep to broadacre cropping, this trend has the potential to create significant ripple effects for the entire Australian flock.

Why a smaller WA sheep flock matters for the rest of Australia

The SPIS survey clearly highlights the negative sentiment among WA sheep producers, and it's unlikely we’ll see a substantial turnaround when new numbers are released later this year. Nationally, sentiment for sheep meat producers is +4, whereas in WA, sheep meat producer sentiment stands at -64, and wool producer sentiment is -38, compared to -24 nationally.

WA is home to 19% of the national flock and ranks as the third most populous state for sheep in Australia. It has long been a key pillar of the national flock, with a historically larger share of Merino ewes in its breeding base.

The SPIS survey also points to significant operational shifts in WA over the next 12 months, with 67% of WA sheep producers planning to decrease their ewe flocks. By April next year, the breeding ewe flock in WA is forecast to decline by 27%, or 2.43 million head — these are forecasted numbers from producers themselves – not modelled figures.

This shift is supported by data from the Grain Industry Association of WA (GIWA), which reported a 140,000-hectare year-on-year increase in planted crop area in July. The writing is on the wall.

If WA continues to liquidate its flock in favor of permanent broadacre cropping, the national flock could face seismic repercussions. A permanently smaller flock would mean lower lamb and mutton turnoff, reduced sheep meat and wool production, and limited ability to meet export demand.

This also overlooks WA’s critical role in rebuilding eastern states' flocks during times of need, such as in 2020, when WA played a significant part in the flock cycle.

Spring flush of mutton

Spring marks a peak period for mutton (particularly ewe) turnoff as lambing and weaning lead to the removal of older or non-productive ewes to make way for younger breeding stock. Just last week, according to MLA’s NLRS slaughter report, mutton slaughter reached 212,000 head — the highest level since the first week of December 2019.

In the coming months, and into 2025 (weather permitting), we can expect large numbers of sheep to be processed. The breeding ewe flock is the largest it has been since 2007, so an increased turnoff is inevitable, leading to higher production volumes. As a result, we should see a rise in monthly mutton export volumes through the end of 2024.

In terms of pricing, this increase in supply could place downward pressure on mutton prices. However, it will likely be a two-tiered market: ewes with the potential to rejoin breeding flocks will be in demand in certain markets, while older, cast-for-age ewes will face tougher price competition due to the larger supply of mutton.

Ripley Atkinson's experience in the red meat industry and current role at StoneX developing price risk management tools for Australia’s sheep and cattle sectors ensures he delivers unique, whole of supply chain insights and analysis across key factors such as prices, supply, production and the drivers of the sheep and cattle cycles.

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