Impressive growth in lamb production forecast

3 March 2004

Australian lamb production could increase by nearly 50% over the next five years to reach record levels, according to forecasts released by Meat and Livestock Australia (MLA). Releasing Australian Cattle and Sheep Industry Projections 2004, MLA chief market analyst Peter Weeks said that the recent investment in the prime lamb industry should be finally rewarded from spring 2004, providing the drought breaks. 'Lambs available for slaughter are expected to rise by 5% for the year and weights are tipped to increase by 4.5%, leading to a jump in lamb production of 10% for 2004', Mr Weeks said. Further investment in the industry, rising productivity and higher weights could see lamb production exceed the 2000 record by 2005. MLA predicts that by 2008, production will be 33% higher than the 2000 level. Driving the interest in lamb production is the tightening global demand/supply balance for lamb, as domestic and export interest in the product grows but sheep flocks decline. 'The flush of lambs from spring 2004 should also herald the end of the period of extraordinary lamb prices, allowing for a rapid expansion in exports and providing Australian consumers with some relief', Mr Weeks said. 'We anticipate domestic consumers to show a greater interest in lamb, driven by the continued success of the lamb marketing campaign and the increased quality and greater range of product'. Lamb exports are forecast to rise by 17% in 2004, to a record 123,000 tonnes, assisted by higher supplies, lower prices from spring, and further demand growth, particularly in the US and Asia. Lamb exports to the US are forecast to lift 26%, as the supply of heavy lambs lifts to partly meet the recent growth in US consumer demand for the product. The recent drought has left the Australian sheep flock at its lowest level since the 1947 drought, following a further 7% fall in 2002/03, to 98.4 million head. The flock size is expected to further decline this year, to 97.5 million head, before recovering from 2005. 'However, sheep producers have clearly signalled their intention to halt the 13-year liquidation of the flock, with sheep turnoff down 27% in 2003', Mr Weeks said. Mr Weeks said that with continued tight supplies and strong Middle East demand producers could expect sheep prices to remain historically high, though the suspension of the live trade with Saudi Arabia and the rising Australian dollar will lower returns from their recent records. 'The absence of the Saudi Arabian market will keep the number of live sheep exported lower in the short-term, although increasing supply and interest from other Middle Eastern countries should partly make up for the loss of this valuable market', Mr Weeks said. Mutton exports are forecast to fall by 13% in 2004 to 101,000 tonnes, with lower shipments expected to all major markets except the Middle East.

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