The value of the industry increased by an estimated 33% to $1,458 million with sheepmeat producers benefiting from the combined effects of low supply, strong export demand and sustained high prices.
DPI Cowra Agricultural Research and Advisory Station has been recognised as the Centre for Red Meat and Sheep Development, with a long and impressive research record in the improvement of the Australian sheepmeat industry.
Recent activities have focussed on developing improvements in genetics, meat quality, nutrition, reproduction, lamb survival and market development. Plant Breeders throughout Australia have used this site for over 100 years to undertake the detailed assessment of new selections and ultimately their inclusion in on-site national variety trials.
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Prolonged drought, heavy destocking, and high slaughter rates over the past few seasons resulted in a depleted NSW sheep flock, decreasing to just over 22 million head at the end of 2019, the lowest in a century and a fall of 14% since January 2017, prior to the drought 24. Despite the decline in flock numbers, total sheepmeat production in 2019-20 was up 3% year-on-year to 193,364 tonnes carcase weight 115 and up 19% on the 10-year average.
Sheep slaughter was down 9% year-on-year to 2,489,851 head 115, a positive result for flock recovery, but also an indicator of depleted supply with flock numbers unable to sustain the high slaughter rates of recent seasons past. Sheep average carcase weights showed substantial improvement, up 13% on the 2018-19 season 115, offsetting the effect of the lower slaughter numbers and also reflecting the return to improved seasonal conditions. Overall, total mutton production was up 3% year-on-year to 69,896 tonnes carcase weight 115.
Lamb slaughter fell 3% year-on-year to 4,771,401 head 115. The tough seasonal challenges faced during 2018-19, low feed and water availability and above-average temperatures saw both joining and lamb marking rates fall 15% and 18% respectively, limiting the available lamb supply into 2019-20 24. Similar to sheep, the fall in lamb slaughter was offset by a 6% increase in lamb carcase weights 115, with strong price incentives encouraging producers to feed lambs to higher weights through supplementary and lot feeding. Total lamb meat production was up 3% year-on-year to 123,468 tonnes carcase weight 115.
Over the past 10-years NSW average sheep and lamb carcase weights have increased 25% helping to boost production despite relatively low flock numbers 115. This trend can largely be attributed to the transition from Merinos to meat-producing breeds and, in recent years. a large number of producers supplementary feeding lambs.
Global markets largely continued to reflect strong demand despite the economic uncertainty surrounding the COVID-19 outbreak. Supply limitations out of Australia’s closest competitor New Zealand, a slowing of supplies from other market competitors, and the soft Australian Dollar helped support NSW export volumes in 2019-20 to a record 121 thousand tonnes of sheepmeat, up 6% year-on-year 94. Growing export prices also saw total NSW sheepmeat exports reach a record value of over $1 billion for the first time 94.
China remained the largest and most valuable export market for NSW sheepmeat, significantly increasing in value by 37% and 15% by volume year-on-year 94. African Swine Fever continued to limit pork production in China and the protein gap in the Chinese supply chain was one of the main drivers of demand over the past 12-months 16. The United States was the second largest market, which increased in value by 11% and increased in volume by 7% over the past year 94.
Exports to China in 2019-20 were largely comprised of lower-value, bone-in, frozen cuts, where the majority of export growth has occurred in recent years 114. Exports to China of higher-value fresh and frozen cuts are growing however still only comprise approximately 0.3% of the market by volume 94. In contrast, the USA takes a much higher proportion of bone-in and boneless chilled cuts which accounted for 57% of exports by volume in 2019-20 94.
Limited domestic supply, continued strong international demand and limited international competition saw sheep prices remain at historically high levels. Despite the global economic instability created by the spread of COVID-19 a comparison of year-on-year prices saw all stock categories experience significant growth.
Mutton prices were the standout in 2019-20 with the NSW saleyard mutton indicator up 29% year-on-year to average 604 cents per kilogram carcase weight 115, 60% above the 10-year average and reaching a high of 747 cents per kilogram carcase weight in June 2020during the seasonal winter supply contraction 115.
Lamb prices were also very well supported with indicators lifting across all lamb categories, boosted by the decline in available supply. The NSW Trade Lamb Indicator rose 14% year-on-year to average 842 cents per kilogram carcase weight and set a record of 1,001 cents per kilogram carcase weight in May 2020, up by a noteworthy 371 cents per kilogram on year-ago levels 115. Widespread rain events in 2020 fueled fierce competition between processors and restockers and drove the restocker indicator 53% above the 10-year average 115.
The improvement in seasonal conditions will provide much needed relief for the drought-weary industry. Sheep supplies into saleyards have started to diminish and the prospect of further rain will likely reduce this even further although robust prices will pose an attractive counter to strong restocking intentions. Strong competition between processors and restockers will place significant upward pressure on prices. Critically, the improvement in seasonal conditions in early-to-mid 2020 largely occurred outside one of the main NSW joining periods which will have an effect on lamb supply into 2020-21.
Internationally, the impacts of COVID-19 are expected to continue, even intensify, with eleven of Australia’s top fifteen most valuable red meat export markets expected to enter recession in 2020, creating a range of factors that are expected to impact red meat sales 147. That said, the long-term outlook remains positive. Australia remains in a strong, globally competitive position with global supply unable to sufficiently meet demand.