Mixed farmers expected to exit sheep industry after spring shearing due to compounding issues

Mixed farmers across WA are expected to exit the sheep industry in droves after spring shearing, as uncertainty around the live export trade combined with wool and sheep meat price reductions force a rethink of farm operations.

The Australian Wool Production Forecasting Committee published its full Australian Wool Production Forecast Report last week, revealing “a perfect storm” of issues facing WA sheep farmers.

Committee chair Stephen Hill said there was a “strong prevailing negative sentiment among sheep producers in WA” due to the live export trade issues, saleyard prices, shearing delays and a lack of kill space among local processors.

“It’s a bit of a perfect storm,” Mr Hill said.

“The live export issue is a real kick in the guts for the industry.”

He said sheep turnoff is currently double the processing capacity in WA with the phase out of live export heavily weighing on sheep producers’ minds.

“Young sheep that were not able to be processed due to limited processing capacity, and older ewes, were retained on-farm due to the falling mutton price,” Mr Hill said.

“An estimated 1.4 million sheep will be carried over into the new season — which is higher than usual.”

He said saleyard prices had come down quickly and farmers had been forced to keep their sheep — or sell off at a much lower rate.

He said live export numbers were up by 27 per cent between July to December 2022 (despite being 38 per cent below the five-year average).

Corrigin mixed farmer Steven Bolt said WA farmers were considering restructuring their operations due to the uncertainty caused by the Federal Government’s live export phase out plan.

“The live export issue has sapped the confidence out of the industry,” Mr Bolt said.

“It’s a combination of factors including labour and shearer shortages, the dry conditions and the uncertainty of live export.

“The level on anxiety is extremely high.”

Mr Bolt said the uncertainty and anxiety was causing mixed farmers to make decisions on the make-up and size of their flocks.

“There’s not a farmer out there at the moment that’s not considering the make up of their structure, whether that’s less sheep and more cropping or getting out of sheep altogether,” he said.

“They are weighing up their options at the moment and it all falls from the uncertainty out there.”

Mr Hill said the current negativity will impact sheep production in the new season and into 2025.

“Low sheep meat prices and wool returns are making wool production gross margins unfavourable for mixed farming enterprises,” he said.

“The committee expects many mixed farmers to move out of sheep following spring shearing.

“The value of mutton will be a key factor determining the speed of the move away from sheep — (a slow exit or dramatic sell-off).”

Mr Hill said the uncertainty would continue, especially with regards to the weather, which was expected to get drier in the coming months.

He said while there has been a good season in the northern and eastern wheatbelt following good rains, with cropping programs ongoing, and some emerging crops following a good break to the season, southern regions have had more average conditions.

“The big unknown is the weather,” Mr Hill said.

“BoM’s outlook for April to June 2023 is for below median rainfall for the majority of Australia and an El Nino watch is currently in place.

“Average rainfall deciles were evident throughout most wool-producing regions of WA, except for the South West corner with below-average rainfall deciles.”

WA is expected to shear 13 million head this year, a drop of 2.3 per cent, with an average cut of 4.65 kg greasy, up 2.2 per cent on last year.

Shorn wool production for 2022/23 is forecast to be 60.6 Mkg greasy, down one per cent on 2021/22.

AWPFC’s first forecast of shorn wool production for the 2023/24 season is 332 Mkg greasy, a 1.4 per cent increase on the 2022/23 forecast as a result of modest increases in the number of sheep shorn (up 1.7 per cent).

The average cut per head is expected to remain at 4.58 kg greasy which is at an historically high level (87th percentile).