Livestock
The value of the livestock and livestock product industries was estimated to have increased 2.4% year-on-year to $8.2 billion.
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Whilst production increased due to sizeable increases in the state’s flock and herd, prices for beef and sheepmeat fell substantially, especially in the second half of the year. Seasonal conditions were favourable in the early part of the year with above average rainfall, however, as the season progressed conditions deteriorated and supply increased. Processors struggled to increase capacity given some continued supply chain challenges and significant issues in attracting labour. Producers also struggled with rapidly rising
costs which were particularly acute for intensive livestock industries (dairy, poultry, pork, eggs). Beef remains comfortably the largest livestock sector in NSW achieving GVP of $3.4 billion, up 1% year-on-year.
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The dairy industry achieved the strongest growth in GVP, up 17.5%.
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Milk production continued to fall however prices are now rising strongly as processors compete for supply in a rapidly shrinking market. The egg industry also achieved strong growth in GVP, up 12.7% as prices increased following production cost increases and some product shortages. The NSW Honey and beeswax industry recorded the largest decline in GVP, impacted by biosecurity control activities related to varroa mite, and lower prices.
Production
Production was higher for almost all livestock commodities as the herd and flock rebuild slowed which meant producers had more livestock available for sale. The onset of drier conditions in the second half of the year also encouraged producers to begin reducing stock numbers in some areas, especially in the north of the state. Production increased for most intensive livestock industries (eggs, poultry, pork) as they overcame some supply chain challenges from the previous year. The dairy industry was the only NSW commodity where production declined, despite reasonable seasonal conditions for most of the year. Dairy production was once again hampered by extreme weather and flooding in key production regions and there continues to be a high level of farm exits.
Price
A notable divergence during the year was the difference in pricing trends for domestic focused industries relative to export industries. As NSW continued to recover from the 2017-2020 drought, the herd and flock rebuild pushed livestock prices to record highs. However, as the rebuild slowed in 2022-23 and with drier conditions emerging, supply increased and livestock prices fell sharply. At the same time, production costs increased as inflation re-emerged. Intensive industries were most exposed to higher costs and supply chain challenges. Intensive industries (eggs, poultry, pork) tend to be more domestic focused and, with production risks rising, retailers, processors and wholesalers were forced to accept some price rises to maintain supply.
As a result, domestic focused industries achieved reasonable price growth in contrast to export focused sectors where prices fell sharply. A notable exception for exporters was the dairy industry. Whilst export share of production is lower than for red meats, exports are still significant and high levels of dairy imports also increase dairy’s exposure to international prices. However, unlike red meats where supply has been increasing, consecutive years of lower milk supply led to increased competition from processors and much higher farmgate prices in 2022-23. Nevertheless, over the long term, export focused red meat industries continue to achieve better price growth relative to domestic focused sectors.
Index: Estimated average NSW livestock farmgate prices 52
- Red Meat (ex. pork)
- Poultry
- Wool
- Dairy
- Eggs
- Pork
Outlook
There are some short-term challenges for most livestock sectors given a deterioration in seasonal conditions and some demand uncertainty as the global economy adjusts to higher interest rates. For red meat producers there have been further falls in livestock prices at the start of 2023-24. Warnings from the Bureau of Meteorology that spring and summer will be dry and hot has resulted in many producers choosing to sell livestock rather than retain and feed. The increase in supply is exceeding available processing leading to significant falls in farmgate prices. Without widespread rain it is unlikely that supply will ease. Processors are working to increase processing capacity however, many face challenges in accessing the labour required. There are also reports of slower demand from export customers due to uncertain global economic conditions. Despite these short-term challenges, the medium-term outlook remains promising. Although there has been some easing in demand, export prices remain historically high, supported by a weaker Australian dollar. Red meat exports are now more competitive and Australian red meat retains a strong reputation in global markets. The US is likely to enter a herd rebuilding phase in the near future and this will reduce competition in key beef markets and improve lamb’s competitive position in the US market. Once supply is better aligned with processing capacity, farmgate prices are expected to improve again, supported by growing exports.
The dairy industry is expected to benefit from higher prices in 2023-24 and, depending on seasonal conditions, a possible recovery in production. However, dairy farmer production costs are also continuing to rise, and the dairy processing sector is under significant pressure as high domestic farmgate prices make it difficult to compete in international markets. High domestic prices are also encouraging an increase in dairy imports. The other intensive livestock sectors (poultry, eggs and pork) will also face higher production costs and will need to achieve price increases to maintain profitability. Wool also faces some uncertainty in the short term due to economic weakness in China and an increase in greasy wool supply however global wool inventory levels are low which should support medium term demand. Beyond these short-term challenges however, NSW livestock and livestock product producers remain internationally competitive and are well placed to benefit from growing global demand.
