Livestock
The value of the livestock and livestock product industries is estimated to have increased 2.2% year-on-year to $7.9 billion.
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Production was higher for most commodities however prices continued to fall for key red meat categories which limited growth. Seasonal conditions were dry at the beginning of the year and warnings of a dry and hot summer triggered widespread selling of livestock. The increase in supply overwhelmed restocker demand and processing capacity which was still rebuilding following an extended period of herd and flock rebuilding. Prices for some categories of livestock fell to levels not experienced for decade. Fortunately, better seasonal conditions in the second half of the year resulted in a sharp rebound in prices.
Beef production is comfortably NSW’s largest livestock sector, followed by sheep meat. Red meat production makes up 54% of NSW livestock GVP.
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The poultry meat sector achieved the fastest annual growth, up 26% as both volumes and price increased.
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This strong growth meant the poultry meat industry became the third largest livestock sector in NSW, overtaking wool, where GVP fell 7% as the sector continued to struggle with weak global demand. The dairy industry maintained solid growth with GVP up 9%.
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Livestock Overview GVP summary
Production
Production rose for all livestock categories in 2023-24. With the beef herd at a 10-year high and the sheep flock at a 17 year high, red meat production surged with beef production up 21% and sheepmeat production up 17%. Poultry meat production was also up 8% with increasing domestic demand for cheaper protein and increased supply as new grower sheds came online in southern NSW. Demand for cheaper protein also supported egg producers though the industry experienced some production challenges, primarily due to outbreaks of Avian Influenza in the second half of the year. This limited growth and led to some periodic egg shortages. Dairy producers responded to the higher prices being offered by processors with production up 5%.
Price
Similar to last year, export focused sectors continued to experience significant price volatility during 2023-24. A weaker global economy and rising inflation in many key customer markets created some pressure on export prices which were only partially alleviated by a weaker Australian dollar. Domestic red meat supply was much higher than expected, especially in the first half of the year, and processor capacity was not sufficient to absorb the increase. There was also limited demand from restockers due reasonably poor seasonal conditions in some regions. The increase in supply pushed farmgate prices down.
However, as the year progressed, processing capacity increased and seasonal conditions improved which supported a significant recovery in prices by the end of the year. Nevertheless, average prices over the year were lower than 2022-23. Despite lower export prices, dairy farmgate prices were slightly higher as domestic processors continued to compete aggressively for supply following significant falls in national production in recent years. Domestic focused sectors, such as poultry meat and eggs faced higher input costs however, this trend also supported higher end prices which helped offset some of these costs.
Annual price change – NSW Livestock 2023-24
Outlook
The outlook for NSW livestock sectors is mixed. Whilst average prices for the red meat sector fell significantly during 2023-24, by the end of the year prices had more than recovered these losses. Domestic processing capacity has been increasing and, for sheepmeat, is at record highs. International demand for red meat is recovering and supply from key competitor countries is expected to decline over the next few years which should support increasing demand for Australian red meat. Seasonal conditions have also improved which should result in a much brighter year ahead for red meat producers.
Domestic focussed sectors such as eggs and poultry meat are expected to experience more stable conditions. Input cost increases are moderating however it may also be more difficult for producers to gain price rises as overall inflation in Australia moderates. Pork meat is in a similar position and may also face some difficulties in raising prices in a lower inflationary environment. Pork also faces import competition from processed pork and there is increased competition in international markets due to lower Chinese demand. However, Australian consumers remain under some pressure from higher interest rates and other cost of living increases. Whilst this makes consumers increasingly sensitive to price rises it should also support demand for poultry meat, eggs and pork which are more affordable sources of protein relative to red meat.
The outlook for the dairy industry is more challenging. Processors have been struggling with weak international demand, especially from China, higher import competition and high farmgate prices. There have been a high number of processor insolvencies and factory closures over the last 18 months. With supply in Victoria (the largest source of raw milk) recovering over the last 12 months, most processors have offered much lower opening prices to farmers for 2024-25. With input prices remaining high the price reductions will create some challenges for farmers. However, many producers in NSW supply the domestic drinking milk market where prices have been more stable. Some are also benefitting from multi-year contracts signed when prices were higher. Seasonal conditions are also generally supportive and prices for some key inputs are falling. These factors are expected to partially mitigate the impact of lower farmgate prices.
Wool also faces some uncertainty in the short term due to economic weakness in China. Price falls have stabilised recently however an increase in global demand is needed to lift farmgate prices.
