What are sheep producers’ intentions for the next year?

The latest Sheep Producer Intentions Survey issued by Meat & Livestock Australia (MLA) and Australian Wool Innovation (AWI) was conducted in May, with results released last week. The survey aims to:

• gain an understanding of the sentiment and intentions of sheep producers across Australia, with questions mainly revolving around breeding ewes and wethers as well as breed breakdowns
• give insights into the on-farm and off-farm drivers behind producers' decision making.

Producer sentiment

Live export and weather concerns were top of mind for a lot of Australian sheep producers when the survey was conducted in the first two weeks of May.

Although producer sentiment eased in all states, overall sentiment towards the sheepmeat industry remained positive. Western Australia was the only state to report a negative sentiment due to live export concerns increasing. However, sentiment in SA fell quite significantly, also due to some producers’ concerns around live export.

Breeds

Merinos remains the dominant breed in breeding ewe numbers at 64%. WA, Queensland and SA had the highest proportion of Merinos at 85%, 72% and 66% respectively. Victoria reported a spread of numbers across Merino (47%), First Cross (25%) and Prime Lamb (21%).

Queensland had quite a high proportion of shedding breeding ewes, making up 23% of their state totals. Conditions in the north are more suited to these breeds and so the prevalence of shedding sheep in their breeders is to be expected.

Intentions for flocks

Producer intentions for the next 12 months have changed since the last full wave of the survey was conducted in October 2022. With a drier weather outlook for most of Australia, inflationary pressures and labour issues, the amount of producers expecting to increase their sheep numbers has eased.

Overall, there was a mixed response from producers regarding their breeding ewe flock:

• 30% indicated they would increase their breeding ewe flock size
• 38% indicated they would remain unchanged
• 32% indicating they would decrease their breeding ewe flock size.

This split is fairly even across farm sizes and indicates that some producers are waiting to see how the season goes.

Of the producers expecting to decrease, 69% of them are going to cull older ewes that may have been held over from the rebuild period. Mutton numbers and slaughter have been elevated this year, so this result is to be expected as producers sell on older sheep for processing. With the easing in mutton prices, some processors are prioritising mutton slaughter over lamb slaughter. This prioritisation is being supported by the supply coming through the system.

WA has the highest percentage of producers expected to decrease their breeding numbers at 46%.

Drivers affecting producer decisions

Weather is still the number one driver of producers’ on-farm and off-farm decision making. It accounted for 50% of on-farm and 31% of off-farm decision making. The second most mentioned driver for on-farm decision making was feed availability, which could be attributed to weather and seasonal conditions as well.

Input costs/inflationary pressures were the second biggest factor for off-farm decision making, with the cost of production, fertiliser, feed and chemicals impacting business spending.

Interestingly, labour shortages and access only accounted for 12% and 11% of off-farm and on-farm decision making respectively. Prices only accounted for 10% of on-farm decision making, even though softer prices are currently being experienced in the market.

This survey indicates that we can expect more older ewes to reach the market in the next 12 months, which is in line with MLA’s forecast of higher mutton slaughter in the next three years. There also seems to be a slight shift towards more crossbred breeds in some states, as pressures around labour and access to shearers hasn’t eased.