In­sights from the Young Beef Pro­duc­ers Fo­rum at Roma

Warwick Daily News - South West Queensland Rural Weekly - - Front Page - CAS­SAN­DRA GLOVER Cas­san­[email protected]­ral­weekly.com.au

THERE is plenty of room for growth in Aus­tralia’s sheep and wool in­dus­tries, with in­creased de­mand driv­ing prices and cre­at­ing a pos­i­tive out­look.

For the first time in the event’s his­tory, the Young Beef Pro­duc­ers Fo­rum in­cluded pre­sen­ta­tions about sheep.

Robert Her­rmann from Me­cardo pro­vided statis­tics on the sheep in­dus­try, show­ing the op­por­tu­ni­ties and chal­lenges of sheep and wool pro­duc­tion.

Mr Her­rmann said by 2030 there will be 3.2 bil­lion mid­dle-class peo­ple in Asia com­pared to 32 mil­lion in the United States.

“(Asia) is not only go­ing to have in­creased pop­u­la­tion, but in­creased wealth,” Mr Her­rmann said. “And in­creased wealth brings in­creased dis­pos­able in­come.

“In the past you see de­vel­op­ing coun­tries go through these stages, and one of the things that hap­pens is the con­sump­tion of pro­teins and fats and car­bo­hy­drates dra­mat­i­cally in­creases.”

Mr Her­rmann said re­ports from the Or­gan­i­sa­tion for Eco­nomic Co-op­er­a­tion and De­vel­op­ment pre­dict the de­mand for sheep­meat is go­ing to con­tinue to grow.

Mr Her­rmann said the world’s sheep flock was in­creas­ing.

“The big­gest sheep flock in the world is ac­tu­ally in China, by a mile, and it’s grow­ing,” he said.

“The other sheep flock that’s grow­ing is in Nige­ria. But those two flocks aren’t likely to be ex­port­ing any­thing.

“The ones that count are Aus­tralia and New Zealand, the ones with the ex­port ca­pac­ity. They’re go­ing to have an im­pact on the avail­abil­ity of sheep­meat into the world.”

Most of the world’s sheep­meat is ex­ported out of Aus­tralia and New Zealand, ac­cord­ing to Mr Her­rmann.

He said pre­vi­ously New Zealand has car­ried more than half of sheep ex­ports.

“New Zealand doesn’t have the ca­pac­ity to main­tain that, their sheep flock is low. They’ve fallen out of love with sheep and fallen in love with dairy cat­tle,” Mr Her­rmann said.

“Peo­ple say ‘the dairy in­dus­try has its ups and downs’. In New Zealand, the sheep ar­eas have been con­verted to dairies and once that con­ver­sion hap­pens it doesn’t re­vert.

“You can’t in­vest $2 mil­lion in a dairy farm and put in the type of in­fra­struc­ture you need and then de­cide you’re go­ing to pull out later on.”

Mr Her­rmann said Queens­land wasn’t pulling its weight in sheep pro­duc­tion, with num­bers de­creas­ing sig­nif­i­cantly due to drought, wild dogs and a move to crop­ping.

“At the mo­ment you have less sheep in Queens­land than in Tas­ma­nia. This is the first time we’ve seen this, ac­cord­ing to MLA’s sur­vey data in 2017,” Mr Her­rmann said.

“The sheep flock is pre­dom­i­nantly spread through Western Aus­tralia, South Aus­tralia, New South Wales and Vic­to­ria.

“They’re the ar­eas also where you’re get­ting tremen­dous com­pe­ti­tion for crop­ping. Crop­ping is ac­tu­ally tak­ing up a lot of the hectares that had pre­vi­ously been used for sheep.”

Aus­tralia’s sheep pop­u­la­tion has de­creased by more than 100 mil­lion since 1990.

“In 1990 we had 170 mil­lion sheep and we had 13 mil­lion hectares of crop in Aus­tralia,” Mr Her­rmann said.

“Fast for­ward to to­day and we’ve got about 67 mil­lion sheep and 18-20 mil­lion hectares of crop.

“Crop­ping has been a big im­pact on wool pro­duc­tion. In the US they would say it’s a fight for acres, and the fight for acres has been won well and truly by crop­ping.”

Mr Her­rmann said now was the time for peo­ple to con­sider sheep pro­duc­tion as ex­port de­mand grew from coun­tries like China.

At present, 57 per cent of lamb is ex­ported from Aus­tralia and 92 per cent of mut­ton.

“The in­ter­est is China. China’s lamb im­ports have been grow­ing. That’s not go­ing to change, the pop­u­la­tion is grow­ing and as their in­come in­creases they’re go­ing to con­sume more meat pro­teins,” Mr Her­rmann said.

“The mut­ton ex­ports to China have been dra­mat­i­cally in­creas­ing over the past two years. Even though they’re a volatile im­porter they can step up and take the whole lot at any time. In spring last year vir­tu­ally all the mut­ton that was slaugh­tered went to China.

“What we have to un­der­stand is their cook­ing is dif­fer­ent to ours. Mut­ton which is a bit tougher goes into the cookpot and it can be cooked for longer and it’s a good source of pro­tein and con­tains the flavour and at the end of the day still pro­vides some­thing with a lit­tle bit of tex­ture.”

Mr Her­rmann said in the long term, lamb and mut­ton prices would con­tinue to im­prove within their nor­mal fluc­tu­a­tions.

“Aus­tralia pro­duces eight per cent of the world’s sup­ply of lamb and mut­ton, but we’re the largest ex­porter. Be­cause most other coun­tries that pro­duce lamb and mut­ton are con­sum­ing it them­selves,” he said.

“In 2003 we were slaugh­ter­ing 17-18 mil­lion lambs for 400c. Fast for­ward and you’ve got in­creased sup­ply, 23-24 mil­lion lambs, and the price has gone up.

“Eco­nomic mod­el­ling says as you in­crease sup­ply, price goes down, but the only time that doesn’t work is when you in­crease sup­ply and de­mand in­creases.

“De­mand is in­creas­ing, which is al­low­ing us to pro­duce more, slaugh­ter more and re­ceive more for it. That’s a re­ally good story.”

Mr Her­rmann said the out­look for wool pro­duc­tion was also look­ing good.

“One of the rea­sons we saw sheep num­bers de­cline was be­cause sheep grow­ers were dis­ap­pointed in the wool prices and they moved gen­er­ally into crop­ping,” he said.

“That has re­cov­ered now. There’s been a cor­rec­tion re­cently but I’m not go­ing to fo­cus on daily move­ments. The gen­eral po­si­tion of wool is that it’s very strong at the mo­ment.”

Mr Her­rmann said pre­mi­ums for fine wool were al­most non-ex­is­tent in the cur­rent mar­ket.

“It’s re­ally volatile. You can see there is a long pe­riod be­tween Jan­uary 2012 and Jan­uary 2017 where the pre­mi­ums were al­most non-ex­is­tent,” he said.

“That was the re­sult of a cou­ple of things, farm­ers pro­duce more fine wool ei­ther de­lib­er­ately or as the re­sult of a drought it au­to­mat­i­cally be­came finer.

“We’re see­ing that now again. Even though the gen­eral wool mar­ket has im­proved, the fine wool pre­mium has col­lapsed again. So it tells us that end of the mar­ket is quite frag­ile.

“So the fo­cus for se­ri­ous wool grow­ers is to pro­duce plenty of vol­ume. The fine wool pre­mium is great when it comes, but don’t build your busi­ness based on fine wool pre­mium.”

Mr Her­rmann asked the ques­tion: are sheep some­thing that can be fac­tored into a model busi­ness in this area again?

He said there were many op­por­tu­ni­ties for sheep in the cur­rent mar­kets but they came with chal­lenges.

“The chal­lenges are: the man­age­ment skills re­quired are unique, the in­fra­struc­ture re­quired is a chal­lenge, the dog man­age­ment is a chal­lenge, and sheep re­quire spe­cial­ist labour,”

Mr Her­rmann said.

“There is the is­sue of get­ting shear­ers and crutch­ers.

“AWI is slowly work­ing at this mech­a­ni­sa­tion that needs to come into the sheep in­dus­try. Crop­ping has ad­dressed that labour is­sue. The sheep and wool in­dus­tries are yet to do that.”

But he said the op­por­tu­ni­ties avail­able may out­weigh the chal­lenges.

“Sheep ex­ports avail­able to the grow­ing pop­u­la­tion is go­ing to re­main Aus­tralian – Aus­tralian sheep­meat and wool. We will be the driv­ers of that mar­ket, there are no com­peti­tors that are go­ing to knock us around.

“In the beef in­dus­try there is South Amer­ica and the US who af­fect what hap­pens in the mar­ket.

“Wool is a ‘now’ prod­uct. Wool is nat­u­ral, it’s re­new­able, it’s sus­tain­ably grown, it’s not a plas­tic.

“If we’re go­ing to see a record low sup­ply at the same time as there is this de­sire for peo­ple to have prod­ucts that are sus­tain­able and re­new­able, then it’s likely to stay strong for wool.”

The Young Beef Pro­duc­ers c

Fo­rum was held in Roma, Queens­land, last week. More cov­er­age on Pages 6-7.

PHOTO: FILE AND CAS­SAN­DRA GLOVER

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