Australia’s largest sheep flock in 16 years is leading to a massive loss of profitability for farmers across the country.
What do you do when you can’t even give your sheep away?
According to a CNBC report, that’s an issue Australian farmers are currently grappling with as above-average rainfall over the past three years has led to over 78 million sheep (78.75) in the country, the largest amount seen there since 2007. This, in turn, has sent mutton prices freefalling 70% over the past year to 1.87 Australian dollar per kg (US$1.23 per kg), based on data provided by the Meat and Livestock Australia Association (MLA).
“Farmers have [since] seen a massive fall in profitability… Many sheep may not have a market which could lead to farmers destroying animals,” said Steve McGuire, Vice President of agricultural advocacy group WAFarmers.
He added that farmers would much rather give the animals away than cull them, but there haven’t been many takers for the free sheep.
Just three years ago, the country had a historic 100-year low in its number of sheep, which sent demand and prices soaring to record levels. The country’s flock has expanded by 23% since then, leading to a greater strain on farmers to feed the animals, at the same time Australia is now experiencing record dry and parched weather conditions due to El Niño.
As a result, farmers are trying to reduce their flock, which may include sending livestock to slaughterhouses and meat processors. But the meat processing facilities are not able to cull the high volume of sheep fast enough due to labor skills shortages and a backlog from last year.
Another potential alternative being considered by farmers is not to mate their ewes to reduce costs. Yet there’s a concern that the sheep market may then become undersupplied quite quickly.
What it means for consumers
As the world’s largest leading producer and exporter of sheep meat, global prices so far don’t reflect the glut, though Woolworth’s, Australia’s largest supermarket chain, recently announced it would slash mutton prices by 20%.
A record amount of sheep meat was also exported in October. That included a major increase in sales to Israel, which was privy to a 139% increase in imports from January to October compared to last year, as 91,100 sheep were sent to the country.
Still, a recent National Farmers Federation survey showed that more than 60% of Australian farmers surveyed did not feel more positive about the future of farming compared to a year ago.
Coincidentally, in neighboring New Zealand, the ratio of sheep to people there has dropped below five to one for the first time since population records began in the late 1850s. The reason for the decrease there is believed to be because of farmers transitioning to pine forestry due to a demand for carbon credits.
