The production of sheep for meat is widely distributed throughout the world. While China dominates the market in sheep consumption, they are also the world’s largest importer. The global export market is very concentrated compared to production. Australia accounts for 8% of global sheep production, and acts as the world’s largest exporter with 34% of the market, according to the World Sheep Market to 2025 report.
Australian Sheep Production
Bar graphs from the Meat & Livestock Australia report.
The sheep meat industry accounts for 36% of all agriculture businesses in Australia, helping employ nearly 200,000 people in the red meat industry, including on-farm production, processing and retail.
The gross value of Australian lamb and mutton production (including live exports) was $3.9 billion, contributing 6% to the total farm value of $62.8 billion in 2016-17, according to the Meat & Livestock Australia report.
Meeting China’s Demand for Sheep Meat
China’s demand is changing the dynamics of the global sheep meat market. Their import demand is being met by Australia and New Zealand, the world’s second largest exporter. Both countries have signed Free Trade Agreements, giving them a competitive advantage over other suppliers. The value of import trade in China in 2014 amounted to $1.21 billion, compared with $138 million in 2008, while the average price increased from $2,230 to $4,030 per tonne over the same period.
Higher income consumers are getting a taste for sheep meat, even though the product is very expensive. The modern retail sector and up-market hotel and restaurant sectors can contribute to demand growth for sheep meat, as they place more emphasis on western foods. The up-market hotel and restaurant sector is growing rapidly, initially driven by expatriates, overseas Chinese entrepreneurs, and foreign tourists and officials on expense accounts. Now it is being increasingly driven by the ever-growing middle class consumers eating out more and returning Chinese tourists who may have gained an appetite for western food.
Global Market Forecasts
Line graph from the World Sheep Market to 2025 report.
The OECD-FAO projections to 2023 (that include goat meat) point to most change taking place in developing countries, led by China. Global production will increase by 28% by 2023 or 3.8 million tonnes, compared with the 2011-2013 base period, representing annual growth of 2.3%.
For Australia, the OECD, MLA and GIRAG all indicate a steady growth in sheep meat production and exports. Projections indicate a growth of 2% per annum in total sheep meat production, with exports rising by 4% per annum as domestic consumption is projected to decline. Low cost enterprises (large flocks and low stocking densities) are likely to continue to increase in importance. Sheep meat prices are expected to rise by 3% per annum, with export demand growth growing in the Middle East market.