Market Morsel: Sweeter after difficulties.

Market Morsel

I hear the saying regularly; there is a fight for acres. It’s a largely nonsensical comment. There is no fight between industries to get acres into a particular enterprise. It’s not the west side story with the sheep and cropping gangs fighting over the area. Individual enterprises work out the best approach with help from the industry.

Farmers are smart enough to determine the best option for their land, both from an economic and social perspective.

The first chart shows the size of the sheep flock against the cropping acreage. According to MLA projections, the sheep flock is set to regain ground back to its highest level since 2013. After years of drought, the recovery is back on. As per the latin expression ‘dulcius ex asperis’, sweeter after the difficulties.

The reality is that cropping seems to have taken area away from sheep. The second chart shows the relationship between cropping and sheep from 1990 to the present. The start of this period coincides with the end of the wool reserve price scheme. The chart shows a strong inverse relationship. As cropping area increases, sheep numbers decline.

The third chart below shows how much Australian agriculture has changed over the past 120+ years. Sheep are close to the levels of the early 1900s, and changing farming practices have opened previously marginal land into cropping production.

The reality is that in agriculture we are focused heavily on supply, ‘building the flock’ etc. We need to have an equal focus on demand, and that is something that sheep meat has going for it.

The size of the flock doesn’t necessarily have a considerable bearing on the profitability of individual farmers.