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There have been significant changes in the size, composition and location of the Australian sheep flock since the early 1990s. Much of the change has been driven by farmers’ responses to the relative financial returns for farm outputs that have favoured broadacre crops over sheep and wool production.
This paper examines change in the sheep industry over recent decades and provides an important demonstration of market-driven change in the output mix of farms over time.
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Following the collapse of wool prices and removal of the Reserve Price Scheme in the early 1990s there have been significant changes in the size, composition and location of the Australian sheep flock. Much of the change has been driven by farmers’ responses to the relative financial returns for farm outputs that have favoured broadacre crops over sheep and wool production.
In addition to reductions in the size of the sheep flock, there has been a transition within the sheep producing sector away from a primary focus on wool production towards a more diversified mix of wool and lambs. This has been facilitated by changing flock compositions, with the use of breeds that are more suited to meat production than wool production as well as a declining proportion of wethers within the flock. These changes have differed across the regions, which have largely reflected differing substitution possibilities across landscape-types.
Despite reductions in the overall size of the Australian sheep flock, sheep remain a common enterprise on many broadacre farms and play an important role outside of farms that specialise in sheep. The many benefits of sheep enterprises include reductions in business risk through diversification, as well as on-farm agronomic advantages.
Despite declines in the number of sheep and the value of wool compared to lambs and other broadacre outputs, there have been significant improvements in the quality of product, changes in farm management practices and improvements in technologies. For example, there have been increases in partial productivity measures such as lamb marking rates and sheep turn-off rates.
Nevertheless, ABARES estimates of total factor productivity (TFP) show relatively small improvements in sheep industry productivity over the long-term. Part of the reason for these seemingly conflicting outcomes is the changing nature of the farms producing sheep, lambs and wool and their differing focus on various farm enterprises.
The causes and implications of productivity changes on sheep farms will be explored in further detail in an upcoming ABARES publication.