Sheepmeat is heating up
ABARES cost of production estimates suggest significant economies of size in the Australian sheepmeat industry offer producers a strong incentive to increase production and profitability.
The ABARES report, commissioned by MLA, presents cost of production estimates for sheep producers for the three years ending 2015-16, based on data ABARES collects on broadacre farms through its Australian Agricultural and Grazing Industries Survey.
Producers can use this report to compare the cost of production of their sheep flock with the industry average, and identify opportunities for improvements within their business.
From 2013-14 to 2015-16, wool, lamb and sheep prices increased.
However on-farm per kilogram cost of sheep production also lifted over the same period (in real terms).
For the three years, the national average total cost of sheep production was 311c/kg live weight (lwt) for all sheep producers and 298c/kg lwt for slaughter lamb producers.
For slaughter lamb producers, spending was higher across most cost components in 2015-16, compared to the previous year.
Poor seasonal conditions across much of the south-east saw expenditure on fodder rise 28% year-on-year.
The cost of sheep purchases was up 25% in 2015-16, as a result of higher lamb and sheep prices.
However the survey results show the average cost of production declined as lamb production increased.
For the three years to 2015-16, the total cost of production (including the value of unpaid labour) for the smallest slaughter lamb enterprises surveyed (200-500 lambs sold) averaged 366c/kg, whereas the cost of production for slaughter lamb producers selling more than 2000 lambs averaged 257c/kg.
FIGURES: An ABARES report has looked at the future of sheepmeat production and profitability.