Domestic price of lamb

The domestic price of lamb is forecast to fall by 24.5% in 2023-24, to 502.8 cents per kilogram. Sheep meat production is expected to rise in the current year, as turnoff rates surge for the second year in a row. Total sheep numbers have bounced back strongly since 2020-21, and drier conditions in key sheep farming regions have encouraged elevated turn-off rates as restocker demand falls.

Domestic lamb prices typically fluctuate from year to year. When farmers increase their turnoff rate, this reduces the size of the national sheep flock, which limits the number of lambs that can be born. A reduced supply of lambs typically causes the domestic price of lamb to increase. However, flock expansion can also cause prices to increase, since farmers keep lambs to raise them to become breeding or wool-producing sheep, which limits the number of lambs available for slaughter. Domestic lamb prices are also influenced by export demand. For instance, farmers can divert stock away from domestic markets when export demand is high. Therefore, local players have to compete on price with international buyers.

Wool prices and production can also influence lamb prices. When wool prices are relatively higher than the price of lamb, farmers are encouraged to expand their flock to increase wool production and benefit from these more attractive returns. This typically limits the supply of lambs for slaughter, which pushes lamb prices upwards. However, when lamb prices increase more quickly than wool prices, farmers will often return to meat production, increasing the supply of lambs for slaughter and consequently depressing lamb prices.

Lamb meat has fallen out of favour with Australian consumers, with per capita consumption more than halving since 1994, according to ABARES. Alternatives such as poultry and seafood have become big competitors to red meat, largely due to health and price concerns. Growth in demand for Australian lamb from overseas markets has slowed over the past five years. Greater local supply has weighed on domestic lamb prices. Subdued demand conditions due to the COVID-19 pandemic weighed on demand for sheep meat, causing prices to fall in 2020-21. Overall, IBISWorld anticipates the domestic price of lamb to decrease at a compound annual rate of 4.4% over the five years through 2023-24.