Inside the sheep industry’s battle to keep farmers

Sheep numbers are dropping across Australia as producers turn their backs on the once popular enterprise. We investigate why.

Australia is no longer riding on the sheep’s back, as producers turn away from the once-proud enterprise en masse.

The percentage of adult sheep being slaughtered as part of the national kill has hit its highest figure in more than 30 years, as the industry battles a trifecta of challenges: low wool prices, high costs and a tough season in some of the nation’s key production regions.

But there also appears to be a change in sentiment, with sheep out of favour.

Sheep are now out of favour with an increasing number of producers.

National Livestock Reporting Service figures show 11.8 million adult sheep were slaughtered in 2024, compared to 9.8 million in 2023 and a range of 5.8-6.6 million in each of the three preceding years.

It’s the highest kill rate since 1990-1991, following the end of the Reserve Price Scheme for wool at the start of 1991.

Mecardo market insights lead Olivia Agar said the adult sheep kill had risen rapidly from about 12 per cent, which is considered normal, to 16.4 per cent last year.

“These 2024 figures imply that the Australian flock is shrinking at 4.4 per cent, or thereabouts, on an annual basis,” Ms Agar said.

She said when similar kill rates had been seen in 1991, the industry had gone into a rapid decline in numbers for the next two decades.

The proposed end of the live sheep trade in Western Australia was playing a part in that state. But Ms Agar the situation was more complex in the eastern states, in part due to competition of enterprises for land use.

“There is still a fight for acres in WA with a relationship between hectares planted to crop versus sheep numbers, but in the east, this relationship has weakened over the last few decades,” Ms Agar said.

“It’s difficult to say whether the recent flock decline in the east is any swing out of sheep or just pressure from the tough season in the south.”

Australian Wool Production Forecasting Committee chairman Stephen Hill said the latest numbers released by his group in December showed wool production would slip below 300 million kilograms, down 12 per cent on the previous season, and sheep shorn would also be back to just 63.2 million.

Mr Hill said it was difficult to explain why the sentiment around sheep was so low.

“The five-year outlook shows returns from sheep and wool stacking up and the top sheep producers are making good money at the moment,” he said.

“And for those who do stay in, they are only going to be rewarded for the lower supply.”

More people are negative about running sheep.

Nutrien livestock development manager Ron Rutledge, who has been working as a stock agent for decades, said it was the most negative time he had seen for the sheep industry.

“The costs of production are the issue when compared with what you can earn, especially for wool sheep,” Mr Rutledge said.

“People are making business decisions, and if you carry debt and you have the chance to do something different like cattle or cropping, then people are doing that.”

Mr Rutledge said the next generation of farmers were also looking at sheep returns and finding them wanting.

“We have younger farmers who have seen their parents not make a lot and keep saying the market will come good, and it hasn’t, so they are making the move away from sheep themselves.”

WoolProducers Australia president and Gippsland sheep farmer Steve Harrison said he had been watching increasing numbers of people moving out of sheep.

“When you look at Auctionsplus, as I have been, you see two or three flock dispersals listed every week,” Mr Harrison said.

“I don’t think there is recognition of the big numbers of sheep that have been sold, or gone out of the system.”

Mr Harrison said while low wool prices had contributed to the exodus, it was important that people did their figures.

And there was also some country where running sheep was the best, and potentially only, option for the land.

Gunbar, NSW, sheep producer Paul Porter said the sheep industry decline was a direct result of the poor returns during the price slump in 2023.

“The damage was done in spring 2023. When you are selling 30kg (carcass weight) fat ewes and getting $35, and paying $9 to transport them and getting a $2 per head bill to dispose of the skins, that turns people off sheep,” Mr Porter said.

“Clearly the dry year in south-west Victoria and southeast South Australia has seen producers there selling off numbers.

“But there are total flocks being liquidated and people moving out of sheep altogether.”

Mr Porter said shearing costs and the process of shearing were also driving people away from running sheep.

“If you go to the saleyards, you see a lot of woolly sheep there, and even if a woolly lamb cops a $30 discount compared to a shorn lamb, producers seem willing to cop that,” Mr Porter said.