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Australian Ranchers Are Giving Away Sheep For Free As There Is Excess Of The Animals

Australian Ranchers Are Giving Away Sheep For Free As There Is Excess Of The Animals
Due to the surplus of mutton in Australia, prices have plummeted, and some farmers are choosing to give away or cull their sheep rather than raise them on the farm in order to save money.
According to data from Meat and Livestock Australia (MLA), mutton prices have dropped 70% in the last year to $1.23 per kg.
“Australia has had several very good seasons over the past few years, which means that the sheep flock has reached 78.75 million head – the largest since 2007,” said MLA’s global supply analyst Tim Jackson.
Three years of above-average rainfall in Australia's sheep regions—New South Wales and Victoria, in particular—were the driving force behind the massive sheep flock. Rainfall is necessary for grass to develop, which is good for cattle breeding and feeding.
“The more it rained and the longer the market stayed buoyant, the more it drove producers to retain sheep they’d otherwise turn off, and as a result numbers continued to grow,” chairman of Sheep Producers Australia, Andrew Spencer, told CNBC via email, referring to ranchers keeping more sheep on-farm instead of fattening them and sending the livestock to slaughterhouses and markets.
“Farmers have [since] seen a massive fall in profitability …  Many sheep may not have a market which could lead to farmers destroying animals,” Steve McGuire, vice president of agricultural advocacy group WAFarmers, told CNBC.
Although there haven't been many takers for the free sheep, he continued, farmers would much prefer give the animals away than cull them.
According to MLA statistics, Australia's sheep population is predicted to grow by 23% from the 100-year low in 2020.
The surplus of sheep led to a decline in livestock prices, which reversed the benefit farmers had received from record mutton prices three years prior.
For farmers, who now have to feed a large flock for a longer period of time despite the fact that the weather has turned bad this year, the discounted prices are a double-edged sword.
There might not be a market for many sheep, which could force farmers to destroy livestock.
September was the driest on record, according to the Australian Bureau of Meteorology, and the dry weather is not going to stop anytime soon. The bureau issued a warning in November that El Nino would persist and that there is a good chance of a strong positive Indian Ocean Dipole (IOD) occurrence, indicating that the upcoming few months will stay largely dry and hot.
The supply of feed will be reduced by the unfavourable weather.
Farmers are attempting to decrease their flock as a result, and this may involve delivering animals to butcher shops and meat processors.
“Conditions in 2023 have been dryer than the last three years … This has affected producer confidence, and increased supply of sheep and lambs to processors,” Jackson said.
However, the abattoirs, or facilities used for processing meat, are unable to quickly eliminate the large number of sheep.
“The increased turnoff of sheep has come at a time when processors are still not at full capacity due to labor skills shortages,” said co-founder of agricultural consulting firm Episode 3, Matt Dalgleish.
According to McGuire of WAFarmers, another factor contributing to the abattoir bottleneck is the backlog of unprocessed stock from the previous year's stock.
Australia is the world's largest producer and exporter of sheep meat, and the glut has driven down wholesale prices throughout the world.
What does this mean for grocery consumers who want to serve their next rack of lamb, though, given the cheaper prices?
McGuire pointed out that despite falling sheep prices, the retail discount has not yet been reflected to the same degree. Major Australian retail giant Woolworths Group declared it would reduce lamb product costs by 20%.
October saw record sheep meat exports from Australia, "so the meat is starting to move, it's just a big backlog to clear," according to McGuire. He anticipates that the price of mutton will continue to drop for customers in Australia and abroad.
Nevertheless, McGuire noted that some farmers are thinking about saving money by not breeding their sheep. This can cause the quantity of young lambs to decline, which could quickly change the situation in the sheep market from an overabundance to an undersupply.
More than 60% of Australian farmers surveyed in a recent National Farmers Federation survey expressed no greater optimism about the future of farming than they did a year earlier.

Christopher J. Mitchell

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