Australian sheep flock forecast divides opinion among analysts

Meat and Livestock Australia predicts the national sheep flock will grow to a 16-year high of 78.75 million head this year, but the optimistic forecast has divided opinion among independent analysts.

The prediction, revealed in MLA’s latest quarterly sheep projections report last week, has been rubbished by outspoken livestock analyst Simon Quilty, who claimed the figure was about 5.5 million head too high.

However, Episode 3 analyst Matt Dalgleish told Countryman the forecast — which represents a 3.6 per cent or 2.75 million head year-on-year increase — appeared to be plausible.

“In terms of the growth in the flock MLA are projecting, it is consistent with the STR (sheep turnoff ratio) data I’ve looked at,” he said.

“I don’t have an issue with their projections from this perspective.”

Mr Dalgleish said the STR data for the final quarter of 2022, based on Australian Bureau of Statistics figures, came in at 9.4 per cent, bringing the annual average to 9.2 per cent.

“An STR above 14 per cent demonstrates a flock liquidation phase, while an STR under 14 per cent shows we are in rebuild,” he explained.

“The 2022 STR data shows there is still strong intent to rebuild the flock.

“A circa 9 per cent STR is consistent with flock growth of around 8 per cent per annum based on historic trends seen over the last 30 years.

“The last time the STR was this low, in 2021, the flock grew by nearly 11 per cent.”

According to the Australian Bureau of Statistics’ 2021-22 agricultural commodities report, the national sheep flock numbered 70 million head as of June 30 last year.

MLA’s estimate, on the other hand, was 76 million head.

The figures contained in the ABS report were based on a sample survey of about 25,000 agricultural businesses that were quizzed about the number of sheep and cattle on their holding for the year.

Data from the survey was then aggregated and weighted to account for the total number of agricultural businesses in Australia with an “estimated value of agricultural operations” of $40,000 or more.

MLA’s forecasts, however, are based on all sheep and cattle enterprises in Australia.

Countryman was unable to contact Mr Quilty for an interview, however, he told media last week he had accounted for the ABS’ methodology and compensated for smaller holdings in his analysis.

He said the ABS figures showed a national flock increase of 3.2 per cent in 2022, down from 7.1 per cent in 2021, which indicated the flock rebuild was slowing.

“They (MLA) have taken it upon themselves to now ignore ABS numbers, for the first time in 40 years,” Mr Quilty said.

“As far as I’m concerned, these ABS numbers make sense.”

Mr Quilty’s comments came just weeks after he slammed MLA’s latest cattle projections, released last month.

He said MLA’s prediction the national herd would grow to a nine-year high of 28.8 million head by the end of the year had been “grossly overstated” by about 3 million head.

MLA managing director Jason Strong appeared to hit back at Mr Quilty, though without naming names, when questioned about the forecast during a Senate Estimates hearing in Canberra on February 14.

“There’s been some incredibly irresponsible commentary around the herd numbers from a specific commentator who has a track record of trading on fear and anxiety,” Mr Strong said.

“There’s actually nothing to support those sort of comments, except someone’s desire to get themselves into the media, get a media grab, and create fear and anxiety amongst the industry.

“This is pretty disappointing, given how successful the industry has been in recent times, and the effort put into to establish a long-term, secure and profitable industry.”

According to MLA’s report, the forecast growth in the sheep flock was being driven by optimal breeding conditions nationwide, a genetically superior flock, improved lambing percentages and medium-term industry confidence at farm gate level.

“Growth is forecast across all States, with larger improvements in flock numbers expected from SA, WA, Queensland and Tasmania,” the report said.

“The key sheep producing States of NSW and Victoria are also forecast to lift numbers, although not as significantly as other States.”

MLA senior market information analyst Ripley Atkinson said the growing national flock would boost slaughter numbers and production.

“Lamb slaughter is forecast to reach 22.6 million in 2023 as a result of large numbers of breeding ewes and strong marking rates,” he said.

“This is a rise of 595,000 head, or 2.7 per cent year-on-year.

“Looking ahead to 2024, we forecast it to be a record year for lamb slaughter, reaching 23.2 million head.

“This would be a rise of 3 per cent, or 560,000 year-on-year, and higher by 1.1 million head or 5 per cent on the 10-year average.”

Carcase weights were also forecast to increase marginally this year, with lamb production tipped to smash last year’s record by about 20,000 tonnes, reaching an all-time high of 569,000 tonnes.