Increased costs of keeping livestock resulted in higher turn-off rates, creating excess supply and depressing prices.
Melbourne, Australia (PRWEB) March 25, 2015
Following years of losses, operators in the Sheep Farming industry in Australia have returned to growth for the majority of the past five years. The return of rain in 2009-10 marked the end of the persisting drought. Increased rainfall improved pasture feed, reducing the cost of keeping livestock and allowing farmers to expand production. According to IBISWorld industry analyst Brooke Tonkin, “Industry revenue has remained volatile, moving in line with fluctuations in commodity prices, rainfall and production.” Industry revenue is forecast to grow at an annualised 3.2% over the five years through 2014-15, to reach $3.2 billion.
Australia is home to almost 70 million sheep, with wool production historically forming the largest portion of industry revenue. However, year-on-year production of wool or livestock for meat depends on weather conditions. Rainfall influences the quality of pasture feed and therefore farmer reliance on stockfeed. Increased rainfall over the two years through 2010-11 caused a reduction in turn-off rates, with farmers looking to rebuild their flocks while pasture quality was improving. “Lamb prices jumped in response to limited supply,” says Tonkin. This coincided with a 29.8% increase in wool prices, caused by low supplies of high-quality wool. These price spikes helped the industry post strong revenue growth over the two years through 2010-11, despite reduced sales volumes. However, reduced rainfall over the two years through 2012-13 reversed this trend. Increased costs of keeping livestock resulted in higher turn-off rates, creating excess supply and depressing prices. A correction of prices over the two years through 2014-15 is anticipated to return revenue to growth. Industry revenue is forecast to rise 4.8% in 2014-15. The industry exhibits low levels of market share concentration.
External factors, particularly weather conditions, will determine the performance of the Sheep Farming industry over the next five years. Continuing high prices for lamb and wool will bode well for industry revenue. Export revenue is projected to grow over the five-year period, on the back of rising incomes and demand for lamb in overseas markets. However, the industry's positive demand factors will amount to little should El Nino weather patterns return over the next five years.
For more information, visit IBISWorld’s Sheep Farming industry in Australia report page.
This industry consists of farms that are primarily engaged in sheep farming. Sheep are farmed for their meat and wool.
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