Wool versus meat is a balancing act

Finding the right balance between wool and meat in your sheep enterprise was the challenge posed by Meat and Livestock Australia southern livestock extension project manager Richard Apps at the Merino 2020 conference this year.

Mr Apps said while there was no magic answer because each enterprise differed in its approach, what he wanted producers to get out of his talk was that management decisions might need changing to better reflect where farms were now earning most income.

“Since the wool floor price has been taken away, combined with the growing profitability of sheep meat, we have seen enterprises change from a 80:20 or 90:10 income ratio in favour of wool to a 60:40 or 50:50 ratio, ” Mr Apps said.

“Many have not altered their management decisions since this change and are still selecting their Merino genetics based on the old 80:20 income ratio.”

Mr Apps said producers needed to take a step back and understand what had changed in their sheep enterprises over the past 20 years and what this now meant for their businesses going forward.

He said this would also require some crystal ball analysis to determine where each producer believed the industry was headed.

“While wool prices are now coming back, I really don’t see us going back to the 80:20 income ratio, ” Mr Apps said.

“We are about to see lamb exports hit the 50 per cent mark relative to domestic consumption.”

Mr Apps said the equal divide between Australian lamb being consumed domestically and overseas showed that the export market had really been cracked.

He said the growth of the sheep meat industry was illustrated by 2011 lamb and mutton prices, which continued to rise, as well as higher prices paid by live exporters for sheep and restockers paying record prices for ewes.

“For the first time on record the per kilogram price of mutton was higher than the eastern young cattle indicator this year, ” Mr Apps said.

“While wool won’t go away or become unviable, if you don’t know where you sit when it comes to the balance of wool versus meat in your sheep enterprise you need to work that out quickly.”

The challenge he put to producers was to use good objective information when it came to flock genetics.

Sheep breeding values were not just to benefit higher carcase or reproduction rates — correlations between increased muscle and staple strength had already been proved.

“Producers have a significant opportunity to maintain, or even improve, their wool quality while also improving meat attributes in their sheep, ” Mr Apps said.

He said work which began many years ago through the Merino Validation Project showed the benefit of improving fat and muscle in Merinos to make them more resilient in poor seasons.

“More fat and muscle also makes sheep more resilient to worms, ” Mr Apps said.

While across Australia there was no single trend when it came to finding the right wool and meat balance in sheep enterprises, producers needed to move away from their historical position on selecting Merino genetics.

“Income balance varies from flock to flock, dependent on where you are located and the type of sheep you run, ” Mr Apps said.

“Producers of superfine, high-value wool used for the elite end of the market may still earn the majority of their income from wool.

“Those producing sheep with higher micron wool in general have seen more financial benefits in focusing on sheep meat production and trading lambs.”

Looking to the future, Australia’s capacity to rebuild flock numbers would also put further strain on wool and meat production with many making the choice to retain numbers instead of turning off sheep at a younger age.

“This will be a challenging business decision for individuals to determine where the best value lies, ” Mr Apps said.

“More recently, we have seen producers who turned off lambs at once-shorn now holding onto ewes or wethers for another year or two because it could be beneficial in terms of increased wool production and high wether prices.”

Mr Apps said these were all areas producers needed to consider when evaluating the balance of wool and meat in their businesses.