Murray Ellis: Future looks bleak for WA sheep industry but a swing to meat production ‘is possible’

Once again, the WA sheep industry appears to be in a state of decline. In stark and real terms, the relative price of wool is diminishing, and sheepmeat prices in the last 18 months have been abysmal. Add in the imminent ban on live shipping, and dim-witted Labor governments gleefully hindering the sheep industry, and the future looks bleak. Returns from wool production have been in relative decline for too long, from basically a single market where the buyers are treating producers with disrespect, maybe even contempt. Over the last 40 years there have been a plethora of VIP wool bodies formed with the aim of improving the wool enterprise, many offering trendy marketing strategies, chic brands and labels, and all sorts of designs and fashionable woollen clothing. All these approaches have been to no avail because they have made no improvement to the raw wool price paid to the grower. None whatsoever. And the wool price received by the grower is the bottom line, measured by net product return on their investment per hectare, and additionally, return for their effort. The wool industry is not about chic fashion. It never has been, and it is unlikely it ever will be. To a degree, wool was accepted as both what was available and fashionable in the clothing market of yesteryear, when suits and uniforms were common. However, in the modern world people have opted for more trendy clothing fashions which are more comfortable, easier, and certainly cheaper. The once-suited businessman has been replaced with a highly paid executive nerd working from home. Similarly, the highly paid bureaucracy worldwide do not wear woollen suits, and in fact they wear little wool at all. In short, while the world’s population doubled, worsted wool production halved — the reality of which speaks for itself. It may be that like the draught horse, lugged wheels, and hessian bags, wool has had its time in human evolution and it is time to move forward. One nail in wool’s coffin is there are too few innovative options left to improve production — no new husbandry techniques as there were in the past with improved pastures, supplementary feeding regimes, fodder conservation, stocking rates, genetics, measurement, and management techniques to improve the quantity and quality of wool, and the economics of wool production. Another nail in the coffin was the moronic decision by the Albanese Government to ban live sheep exports by sea. It was a decision made without any thought or reason that will decimate the Merino wether industry, and with it the production of quality wether wool. Farmers will not run sheep they are unable to sell profitably down the track. Further problems with wool production are the marketing lies told by buyers as reasons for the volatility in wool prices. These furphies include global financial crises, COVID-19, the wars in Ukraine and the Middle East, interest rates, the price of oil, and anything else deemed plausible enough to pull the wool over the producers’ eyes. These dumb excuses and the static price of wool have now come back to haunt, if not bite, the buyers and the end-market processors, because the volume of wool production in WA is waning. Given all the negatives facing the wool industry, including the severe 2023-24 drought, wool production in WA is expected to decline further, with many producers never likely to reinvest in Merino sheep. The swing away from Merinos will not be rapid. Many farmers will dispute my economic reckoning; many will stay in wool because of sentiment, or tradition, or simply for preference. And in some situations, environs and locations, meat production can prove difficult. While wool is not a necessary commodity for people to survive, protein is, and sheepmeat is a high-protein animal product. Sheepmeat, mainly lamb, is eaten by people in most countries of the world. It is affordable, palatable, healthy, appreciated, and yummy. And unlike wool, where farmers are price takers from basically a single market, sheepmeat has flexible competitive markets comprising different processors, carcase preferences (age, cuts, freight, and presentation), exporters, export countries, and local markets. Recently WA has experienced some exporters not being completely honest with producers, but once the sheepmeat industry evolves and has integrity restored, meat markets should absorb every kilogram produced in WA. That evolution will include realistic prices of around $8/kg of dressed carcase — a return per lamb of about $160. In economic terms, sheepmeat production is clearly better than a Merino-based flock. Some modern specific sheep breeds are able to lamb three times in two years, and many of these births produce twins, so yearly lambing can be 200 per cent. In simple terms, an extra bonus lamb at least, valued at about $160. Compared with a yearly total wool return of $60/ewe and 85 per cent of a merino lamb, well-farmed specific meat production clearly beats a Merino enterprise relying on a main income from wool. In my opinion, a swing to meat production is possible. It will still be farming sheep, it will require only a few husbandry tweaks to adjust management systems. The farm infrastructure is in place. Change can happen over a few breeding years, and what is both significant and important is that, unlike wool, customers want and appreciate their meat product, and are prepared to pay for it. It may well get even better, with $10/dressed kg paid to the producer being quite conceivable, and realistically affordable to both local and export markets. Certainly worth thinking about. Murray Ellis is a former sheep farmer at Wannamal.