Sheepmeat

GVP $1,462 million est. Up 16% year-on-year.
Steady and historically high prices continue to drive growth.
The volume of mutton exports remained relatively steady, offset by a gain in the volume of lamb exports.

Average NSW saleyard prices drifted slightly higher than those achieved over the previous 12-months with producers continuing to enjoy generally strong returns. Excellent offshore demand was an effective counter to the higher supply.

Production

The 2021-22 year marked the second season of the flock rebuild and, with seasonal conditions supporting average to above-average pasture production, the NSW flock continued to grow. NSW flock numbers had reached 24.7 million head by the start of the 2021-22 year, the highest level in 3 years.¹⁹⁵ This growth was driven by favourable marking rates and strong producer intentions to continue to grow the flock. Results from the June 2021, October 2021 and February 2022 MLA/AWI Sheepmeat & Wool Surveys²⁸ indicated that the flock rebuild was very much at the forefront of NSW producer decision-making processes, with large portion of sheep producers’ intent on buying in and retaining more ewes lambs and older ewes.

Reflecting this uptick in supply, there was a 17% year-on-year increase in east coast sheep yardings, driven largely by NSW saleyards.²¹¹ Sheep slaughter increased by 33% to just over 2.1 million head and average sheep carcase weights fell slightly, softening by 2.3% year-on-year however, still well above the 10-year average weight.²¹¹ An annual total of 59,908 tonnes cwt of mutton was produced, up by 28% on the previous year.²¹¹

Lamb supply increased off the back of elevated marking rates for both the spring and autumn lambing seasons. This resulted in more lambs available to retain and for sale. The October 2021 and February 2022 MLA/AWI Sheepmeat & Wool Survey indicated that marking rates were well up across all breeds.²⁸ Despite this increase in supply, NSW lamb slaughter remained relatively steady year-on-year, increasing by only 1% to 5.2 million head,²¹¹ reflective of the flock rebuilding intentions. Average lamb carcase weights eased slightly, following the trend set by sheep, down 2.7% year-on-year to average 25.4 kilograms per head.²¹¹ This decrease in average carcase weight offset the slight increase in slaughter and production of lamb fell 1.6% to 134,568 tonnes cwt.²¹¹

AuctionsPlus commercial sheep and lamb listings data indicates that an estimated 2.2 million head were offered in NSW via the online platform during 2021-22. The top listing categories in NSW included Central West NSW (32% of listings), Riverina (26% of listings) and South-West Slopes & Plains (10% of listings).³⁰ Across the ewe categories for 2021-22, Merino Ewes (including SM, SIL ewes and ewes with lambs at foot) were the most populated category comprising 51% of total NSW ewe listings. First Cross Ewes were the second most populated category, comprising 22% of total NSW ewe listings.³⁰

Sheepmeat production and slaughter²¹¹

Lamb Slaughter
Sheep Slaughter
Lamb Production (RHS)
Mutton Production (RHS)

Download data (.XLSX)

Price

Saleyard sheep and lamb prices held firm at historically strong levels. With the NSW Mutton Indicator the exception, all state saleyard sheep and lamb indicators averaged higher than 2020-21 average prices.²¹¹ Mutton prices continued to defy the higher supply and were underpinned by improved seasonal conditions, low flock numbers and good demand. Whilst the average NSW Mutton Indicator (NSWMI) for 2021-22 fell 4% year-on-year to 617c/kg cwt, this average remained 11% above the five-year average.²¹¹ The NSWMI reached a winter peak of 720 cents in early July 2021, fell 27% through the usual seasonal step-down to a low of 527 cents in April 2022, and generally traded between the 650 to 550 cents range for much of the year.²¹¹ The ongoing strength of demand was demonstrated during the seasonal decline over the 2021-22 summer. The NSWMI averaged 605c/kg cwt over December, January, and February, compared to the 10-year average price of 404c/kg cwt for the same time period. That was a 50% premium.⁴⁰

The Eastern States Trade Lamb Indicator (ESTLI) found its winter peak of 960c/kg in August 2021 and began its seasonal drift downwards as the annual spring flush commenced to finish the year at 792c/kg cwt.²¹¹ AuctionsPlus quarterly lamb category prices highlight the overall positive price trends for 2021-22. The strength of the First cross ewe lamb and Merino ewe lamb markets continued throughout 2021-22 highlighting the ongoing strong demand for breeding stock.

New season lamb yardings were slightly higher and later than usual.⁴¹ This surge in supply placed heightened pressure on prices during the usual price volatility that is typical of the spring period. Some processing bottlenecks were also created as the increased supply met with lambs supplied on favourable forward contracts that were available in late 2021.⁴¹ Supply eased off slightly during early 2022 as COVID-19- impacted processor operational capacities and producers held back stock to avoid the resulting price volatility.²¹⁴

Excellent grazing and feed availability in key producing areas incentivised producers to hold onto lambs for longer and to increase carcase weights. Market prices for heavy lambs remained historically high which led to large volumes of heavy weight spec lambs delivered to saleyards. The Heavy Lamb Indicator reached a new high of 993c/kg in August 2021, rising 66% in just 12 months.²¹¹

AuctionsPlus quarterly average lamb prices⁴¹

Crossbred Lambs
Merino Ewe Lambs
Merino Wether Lambs
First X Ewe Lambs
Shedding Breed Lambs
Composite/Other Breed Lambs

Download data (.XLSX)

Trade and Macroeconomic Conditions

The increase in sheepmeat production flowed to export markets where it was met by strong demand following post-COVID-19 economic recovery in key markets. Global sheepmeat consumption is forecast to grow an average of 1.4% per annum out to 2024. This growth, largely led by Asia, is being driven by increasing disposable incomes and fluctuating consumer preferences towards a wider variety of protein sources.⁴³

Both the value and volume of NSW sheepmeat exports increased, with mutton exports remaining relatively steady and offset by a gain in both the volume and value of lamb exports. The total volume of NSW sheepmeat exports increased 5% to 128 thousand tonnes whilst the value increased by an impressive 29% year-on-year to $1.35 billion.³⁵ This reflected a substantial 23% increase in the unit value of sheepmeat exports with each unit of sheepmeat valued at $10.57/kg compared to $8.59/kg in 2020-21.³⁵ China remained the largest market by both value and volume and a market share of 38% by value³⁵ however, it was the only major market that did not show volume growth in 2021-22, with year-on-year exports declining by 4%, likely due to the impacts of ongoing COVID-19 restrictions on foodservice and logistical issues.⁴⁴ The US remained second largest market with a market share of 26%, with South Korea, Japan, and Canada rounding out the top 5 destinations by value.

Exports to the UK were the standout growth market for sheepmeat, increasing in value by 118% year-on-year.³⁵ Over the last two decades, sheepmeat exports to the UK have halved and the proportion of exports to the UK as a percentage of total NSW sheepmeat exports moved from around 11% of exports to 2% in recent years. The Australia-UK Free Trade Agreement, signed in December 2021, enabled immediate access to a duty-free quota of 25,000 tonnes, rising to 75,000 tonnes in 10-years. Whilst Australian sheepmeat is not expected to immediately flow into the UK in large volumes, this agreement does facilitate increased market diversity, particularly for high-value, premium cut products.

NSW Lamb export volumes were reasonably steady year-on-year, up by 5% to 75 thousand tonnes and valued at $896 million.³⁵ Demand from the US strengthened, with lamb exports to the US reaching to over 19 thousand tonnes in 2021-22, the highest annual figure on record and 13% higher than the volume exported in 2020. Poor weather and COVID-induced processing difficulties resulted in a decline in the US flock and thus an increased reliance on imports.⁴²

NSW lamb and mutton exports - key partners 2021-22³⁵

Mutton
Lamb

Download data (.XLSX)

Fresh or chilled lamb is the preferred form of consumption in the US, largely supported by online retail and growth in more ethnically diverse cuisines. In 2021-22, NSW lamb exports also experienced strong growth to a diverse group of smaller markets.¹⁸⁴ The combined value of exports to the Switzerland, Malaysia, Papua New Guinea, Qatar, and Taiwan increased by $11 million or 52% year-on-year.³⁵

Similar to lamb exports, mutton export volumes were relatively stable, rising by a modest 3% year-on-year to 51 thousand tonnes.³⁵ Mutton export values rose by a substantial 24% year-on-year to reach $447 million.³⁵

Outlook

The seasonal outlook will provide opportunities for increased production in 2022-23, with average to high rainfall and soil moisture helping to maintain ground cover and high pasture availability. Given this seasonal forecast, it is likely that the restocking process will continue. MLA expect the pace of this rebuild may start to increase with recent national flock size projections forecast a return to 78.8 million head in 2023, the largest national flock since 2008. Pressures remain for both domestic and export markets due to the ongoing impact of COVID-19 and rising price inflation although the mid-term industry market outlook looks favourable. Prices have begun to ease slightly and will continue to decline as supply reaches its usual spring/early summer seasonal peak. The forecast rise in lamb supply will likely see year-on-year prices ease however, they will remain historically elevated well into 2023, supported by continuing domestic demand from restockers and feeders, and strong export demand.

Stronger Primary Industries Strategy

Protecting animal welfare in drought through Stock Welfare Panels

Stock Welfare Panels are a structured process that seek to improve animal welfare outcomes in situations where stock animals have not been provided proper and sufficient food, drink, or shelter, or necessary veterinary treatment. Stock Welfare Panels are particularly important tools in times of drought, when climatic conditions may compromise the ability of farmers to meet the needs of their animals.

The Panels are chaired by a Department of Primary Industries (DPI) representative and includes as members a representative of Local Land Services (LLS) who has expertise in animal welfare or stock management (typically a veterinary practitioner), an animal welfare inspector authorised under the Prevention of Cruelty to Animals Act 1979, and a veterinary practitioner (if the DPI or LLS member isn’t a veterinary practitioner). In most cases, the Panel also includes a representative from the NSW Farmers’ Association.

Strategic Outcome

Food Safety and Animal Welfare

The Panel works with the stock owner to help resolve issues in a timely manner, by providing advice and directions to help support decision-making by stock owners to address animal welfare situations and prevent the situation from deteriorating.

The primary aim of the Stock Welfare Panel is always to address the welfare situation, however if these interventions fail, the last resort of the Stock Welfare Process is to seize and dispose of the affected stock. Seizure and disposal is not a decision taken lightly and is only taken if all other alternatives to address the welfare issues have been exhausted.

Where animals have to be seized, those that are fit for transport are sent for sale and the proceeds are returned to the farmer (less the costs incurred in seizing and selling the animals). Animals that are not fit to load may have to be humanely euthanased.

The Stock Welfare Panel process was established in 2012, and since 2018 Stock Welfare Panels have facilitated better welfare outcomes for more than 33,000 stock animals. The Stock Welfare Panel process is well regarded in farming communities and is seen as a flexible tool to address long term welfare issues through bringing together people with local knowledge and industry expertise to work collaboratively with the stock owner, with the purpose being to achieve good welfare outcomes for the animals and for the people involved.