Australian Government Media Release - 19 June 2009
Producers of slaughter lambs are well placed to expand production in response to strong export demand and high prices, according to a new ABARE report. The report, Australian lamb: financial performance of slaughter lamb producing farms, 2006-07 to 2008-09, was released today.
In 2007-08, seasonal conditions remained hot and dry in most of the major prime lamb producing regions of Australia, resulting in many producers increasing their turn-off of sheep and lambs. Increased turn-off and higher prices, particularly for lambs and grains, in 2007-08 resulted in slaughter lamb producers realising a 34 per cent increase in average farm cash income to around $92,000 a farm. Revenue from sales of prime lambs fell in 2007-08, despite the increase in turn-off, as many producers sold lambs earlier in the season prior to them being fully finished. Consequently, the number of non-prime lambs sold increased substantially in 2007-08. Improved seasonal conditions in 2008-09 are projected to result in producers' farm cash incomes increasing by another 21 per cent to average $111,700 a farm. Farm business profit is projected to average $8300.
In recent years, the slaughter lamb industry has undergone a period of significant new investments in capital, particularly land. This, combined with high equity levels, will enable most producers to finance their recovery and expansion. Many farms' high equity levels have been driven by a steady increase in land values in recent years. Producers' capacity to borrow additional short-term funds is partly dependent on land values remaining high.