Opportunities for WA Sheep and Wool
Live sheep to Bahrain
In 2012, the rejection of a shipment of live sheep by officials in Bahrain led to a voluntary suspension of all live sheep exports to that country.
The value to Australia of sheep meat and live sheep exports to Bahrain grew significantly from just under A$20 million (FOB) in 2000/01 to A$90 million (FOB) in 2012-13. Up until 2009/10, over 90% of the export value was derived from live sheep. Following the suspension of live exports in 2012, Australia’s sheep trade with Bahrain has fallen to around $60 million.
In the five years prior to 2012/13, Western Australia’s share of the sheep trade had averaged 44% based on its preferred status for sourcing live sheep. In 2011-12, live sheep exports from WA were worth A$39 million. Since 2012/13, Western Australia’s share of the sheep trade has halved.
Since the resumption of live exports from March-April 2014, Western Australia has regained some of that lost market share.
Other live sheep export markets
Saudi Arabia
Both trade and government in both countries are continuing to look for opportunities to re-open the trade while maintaining assurances that animal welfare standards will be maintained. Saudi Arabia has in the past been a valuable importer of Australian sheep. In those periods when Saudi Arabia has been importing sheep out of WA, the FOB value of those sheep has averaged 7% above that of sheep exported to all markets in the same period. A resumption of live sheep exports to Saudi Arabia would be of proportionately greater benefit to WA than to the rest of Australia.
China
There currently is no Chinese import protocol for Australian sheep for slaughter. However, if this market were to be open to Australian sheep, it has enormous potential. The demand for sheep meat in China has been growing at a rate that has seen the Chinese flock under downward pressure and imports of sheep meat rising sharply. The sheer scale of the population and the rapid rate of urbanisation can be expected to see demand continue to rise over the next decade.
Australian Sheep Population
Severe dry conditions in eastern Australia and the prospect of an El Nino suggest that the Australian flock will struggle to grow despite the strong demand for Australian sheep meat expressed through solid prices.
Sheep slaughter for mutton production across Australia during 2013/14 has increased 23% on 2012/13. This surge in turn-off can be attributed partly to the dry conditions, but also as a result of the maturing of the large cohorts of sheep retained following the break of the drought across Eastern Australia in 2010 and 2011.
As a result of these constraints on sheep availability, and in the absence of a further massive sell down, prices can be expected to hold or rise in response to the strong global demand.
When conditions improve in currently drought effected areas, a further tightening of supply can be expected as flock rebuilding starts again.