Market Morsel: Shearing for a beer.

Market Morsel

Last week Matt and I covered the cost of a Hilux versus grain and livestock/wool, and how much it compares to the past. Whilst it was a bit of fun, it does have a somewhat hidden message inside it. What we are really looking at is the spending power gained from the sale out outputs over time.

We get many requests from subscribers, and we try and answer them, either in an article or just a quick response.

One request last week from Minyip farmer (and star of The Dry), Ryan Milgate, was for what he classes as essential shearing items. Ryan wanted to know how the shearing award rate compared to the cost of cigarettes and beer. Shearing is a highly physical task, and after a day hard at it, you can’t blame a shearer for wanting a cold frothy.

We have seen a similar analysis conducted in the past but could no longer find them published online. So we thought it was worthwhile gathering the data.

Collecting the data on beer and cigarettes wasn’t that difficult. It was available through ABS, and NSW retail traders association. The shearing rate for each year was found through examining the archives of the Fair Work Commission and various state gazettes. This was a bit more of a boring task!

I then converted the data into an index, with 1995 being 100. Due to the pace of the increase in cigarette pricing, I have created two charts. One with the axis for cigarettes one the right hand side, and one with them all sharing the same axis.

In the period 1995 to 2019, the shearing rate has experienced a compound annual growth rate (CAGR) of 3.1%, and beer has experienced a rise of 3.6%. Cigarettes, on the other hand, have experienced a CAGR of 8.2%.

So shearing and beer have been closer in their growth, really until this decade. Maybe it’s the advent of fancy craft beers? Darts have increased dramatically in comparison, mostly from increasing taxes, as governments attempt to discourage smoking.