Current issues
Covid-19
The current Covid-19 crisis may create some headwinds for the sheep industry going forward. The WA sheep industry is very export-dominant so is exposed to the impact of the virus on our overseas markets. Global demand for sheepmeat and wool is expected to decline due to reduced retail spending and consumer confidence in markets as well as very limited food service and tourism industry. This is partly due to rising unemployment as well as social distancing measures encouraging people to stay home.
Demand for sheepmeat has slowed globally as the food service and tourism industries have closed due to lock down measures. Sheepmeat, especially lamb, is a high value luxury product in many overseas markets so reduced spending and the closure of restaurants and hotels could lead to a significant drop in sales. Furthermore, many top red meat markets are forecast to enter recession in 2020, which could impede red meat sales in the future.
There have also been some disruptions to supply logistics, including air freight, due to flight cancellations, refrigerated containers being held at port, labour shortages and slow customs clearance rates (MLA).
Currently, prices are being supported by eastern Australian restocking activities, however if the domestic market becomes oversaturated due to reduced export demand, this may put downward pressure on prices.
In the wool industry a large proportion of the wool has been passed in at auction due to reduced demand from processors in Italy and China. This may lead to stockpiles in Australia, impacting future prices. The Chinese mills have re-opened, but significantly reduced demand in end markets will impact the need for Australian wool. Negative economic growth in end consumer markets is likely to drive down demand. This is due to lockdown, limited spending and low consumer confidence.
African swine fever (ASF)
ASF is a highly contagious viral disease which affects both wild and domestic pigs and has been responsible for large production and economic losses in recent times. The disease is easily spread and is carried by live or dead pigs as well as pork products. It is also spread by contaminated feed products, ticks and infected clothes, shoes, vehicles and equipment. Over the last decade or so, outbreaks have been reported in many countries in Africa, Asia and Europe in domestic and wild pig populations (World Organisation for Animal Health).
There is no vaccine for ASF and it kills about 80% of the pigs it infects (it does not affect human health). Australia does not have ASF but it is a significant biosecurity threat which could threaten pig production, trade and the economy (DAWE).
Pork plays a prominent role in the diets in Asian countries and, for some countries, is the most consumed protein. Due to the widespread culling of pigs due to ASF in Asia, especially China, there has been a supply shortage resulting in increases in chicken, beef and sheepmeat consumption in the region (MLA).
China has reportedly destroyed 1.17m pigs due to ASF, resulting in large supply shortages of 10–20m tonnes of pig meat, which international supply will be unable to fill. This has resulted in imports of all meat categories to increase and caused China to open up their market to other countries, increasing imports from the USA, Brazil and Argentina (MLA).