Aussie sheep farms sixth most prosperous in the world: study

Four in five sheep farms globally make a profit. But Australia only ranks sixth on the leaderboard. Here, we reveal opportunities for improvement.

How Australian farms rate on long-term profit.

Sheep farms are profitable business for almost 80 per cent of the farms surveyed in a major global study of the state of the industry.

This finding is thanks to the strong demand for lamb and sheepmeat – particularly from China – and tight supplies, especially on Australian, New Zealand and Chinese farms, pushing prices north.

But sheep farmers in the UK and Germany are not faring well due to low productivity, big labour and depreciation bills and reduced government payments.

This is according to a new report looking at the global state of sheepmeat production, published by Meat and Livestock Australia.

In Australia, five out of six typical sheep farms made good money in 2019, despite being hit by poor seasons, notably in NSW.

The report showed the global export ovine price had risen more than any other meat in the past 30 years as supply battled to keep pace with demand.

MLA analyst Stephen Bignell said one of the most interesting aspects of the report was Australia recorded as the sixth most-profitable country to run sheep.

Mixed farming, particular, rated well here, he said, although it was recognised that on those farms grain income and diversification drove profitability.

The study looked at 40 farms in 16 countries and of them five of the six typical Australian sheep farms were profitable in 2019, though most were impacted by poor seasons.

The three farms not in severe drought were among the most profitable, while the two NSW farms in severe drought had low profits or modest losses.

The study also found Australian sheep farms were large and diversified in comparison to most countries and despite seasonal challenges, most achieved short and medium-term profitability.

However it found there were opportunities to improve productivity, such as weaning rates, but generally Australian sheep farmers were using management skills to achieve internationally competitive labour productivity, growth rates, weaning weights and sale weights to

achieve their short-term, medium-term and often long-term profitability.

Another strength was the economies of scale with large farm sizes and resultant low operating costs per hectare. Maintaining low cost of production and diversified enterprises on Australian farms remained vitally important to preserve the viability of the sheep enterprise, particularly considering climate variability.

Mr Bignell added rising Australian land values would be a challenge for farmers and would be a “real factor” in their ability to pay off land.

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