Lamb price volatility and soaring costs drive capital cuts on farm

Sellers at Ballarat lamb market say a price downturn, high costs and a dry season mean tough financial decisions must be made.

Many lamb producers are struggling to find healthy profit margins this autumn, as prices fluctuate and costs spiral.

The Weekly Times spoke to three sellers at last Tuesday’s Ballarat lamb market about how they managed tougher times.

For some, diversity of enterprises on-farm and reducing capital expenditure were the keys. Others took a long-term view, and said ups and downs were the nature of farming.

Joe Medlyn from Stuart Mill selling 300. Picture: Zoe Phillips

Stuart Mill’s Joe Medlyn saw 300 of his Poll Dorset-cross lambs make what he described as “returns that could have been better”.

The 30-35kg November-December shorn lambs topped at $170 and averaged $160 a head, Joe said. “I think prices could have been better really,” he said. “Prices were back $8-$10 and they should have made a bit more.”

Joe said his main enterprise was sheep but he also does some cropping and diversity was important, especially during downturns. “Our harvest yields were good, and you do need the crops to help renovate pastures,” he said. “Our agronomist did say this week everyone should have a few sheep in their rotation, I do think diversity helps.”

Joe said he was managing the tougher conditions by “not spending as much and budgeting”. But he wouldn’t cut back on fertilisers, instead he’d limit capital improvements. The central Victorian farmer said despite the drop in profits he was not considering an enterprise change. “We just have to go with the flow and hope the job (market) comes good.”

Elizabeth Donovan from Illabarook selling 170. Picture: Zoe Phillips

Elizabeth Donovan, Illabrook, sold 170 lambs at Ballarat to a top of $148. “You always hope for more, but that was probably all right for what the market was,” she said.

With conditions drying out and the Autumn break not yet in sight, Elizabeth said her family had no choice but to sell lambs to make way for lambing ewes. “You can’t hang onto them forever, they will deteriorate if we don’t sell,” she said.

Elizabeth and her family also do some cropping and said while crops showed promise early, rain damage limited their potential. “Farming is never easy”, she said, “but we manage”. “But we aren’t just starting off....it’s difficult for those who are starting off now. Costs are astronomical and we never get paid for all our labour.

Michael and sons Angus and Jack Treweek from Bald Hills selling 102. Picture: Zoe Phillips

Michael Treweek, Bald Hills, and sons Angus and Jack sold 102, 31-32kg Poll Dorset-cross lambs for $189 at Ballarat, a price that Michael said he was “happy with”. Having sold two-thirds of his lambs to date, he hoped to finish the remainder with silage on-hand. “And, I’m banking on getting more rain, as it has dried off big time.” While lamb returns were “getting a bit tight”, all sectors were “tightening up, and it’s a hell of a lot better than where it was in September (last year).”