Australia farmers are giving sheep away for free

Australia’s mutton glut sent prices tumbling, and some farmers are culling or giving away their sheep to save costs instead of rearing them on-farm.

Mutton prices have slumped 70% over the past year to $1.23 per kg, data provided by Meat and Livestock Australia (MLA) showed.

“Australia has had several very good seasons over the past few years, which means that the sheep flock has reached 78.75 million head – the largest since 2007,” said MLA’s global supply analyst Tim Jackson.

Driving the large sheep flock were three years of above-average rainfall in Australia’s sheep regions, such as New South Wales and Victoria. Rainfall is ideal for growing grass, which is conducive for feeding and breeding the livestock. 

“The more it rained and the longer the market stayed buoyant, the more it drove producers to retain sheep they’d otherwise turn off, and as a result numbers continued to grow,” chairman of Sheep Producers Australia, Andrew Spencer, told CNBC via email, referring to ranchers keeping more sheep on-farm instead of fattening them and sending the livestock to slaughterhouses and markets.

“Farmers have [since] seen a massive fall in profitability …  Many sheep may not have a market which could lead to farmers destroying animals,” Steve McGuire, vice president of agricultural advocacy group WAFarmers, told CNBC.

He added that farmers would much rather give the animals away than cull them, but there hasn’t been many takers for the free sheep.

Australia’s sheep flock is expected to expand 23% from the 100-year low in 2020, stats from MLA showed.

Consequently, the oversupply of sheep sent prices of the livestock lower, marking a reversal of the windfall that farmers enjoyed from record mutton prices three years back.

The discounted prices are a double whammy for farmers, who now have to feed a huge flock for longer, even as weather conditions have taken a turn for the worse this year.