Sheep meat production

IBISWorld expects sheep meat production to fall by 1.1% in 2024-25, to 441.7 kilotonnes. This fall in sheep meat production is largely a result of poor prices in the lamb and mutton markets. In Q2 2024, mutton prices dipped to the lowest level since 2015-16. Lamb prices have also been down in 2024-25 but have not decreased as drastically as mutton. Prices have recovered slightly in the second half of 2024-25, enticing some farmers to ramp up slaughtering. However, sheep meat production is still expected to decline over the 12-month period. Drought conditions impacted the breeding rate among ewes in 2023-24, placing downwards pressure on lamb production in 2024-25. Declining lamb production is also being driven by the lagged impact of favourable conditions in spring 2023 that saw lambing percentages and sheep meat production expand in 2022-23, reducing the ewe population in 2024-25.

Over the past decade, sheep meat production has been trending downwards in New Zealand. The total sheep flock in the country has been gradually declining, reduced from over 30.0 million in 2011-12 to under 25.0 million in 2023-24. The same trend has been evident among breeding ewes, falling from over 20.0 million to around 15.0 million in the same time period. This trend is largely a result of many farmers exiting the industry or deviating operations to alternative, more profitable livestock, such as cattle. The decline in the sheep population has led to reduced output from the sector, as indicated by declines in sheep meat production over the long run.

Annual fluctuations in sheep meat production are heavily linked to wool production. Over the past five years, both sheep meat and wool prices have been volatile, which has caused the production of sheep meat to fluctuate. Demand for sheep meat has been increasingly driven by Asian markets over the past two decades, supporting sheep meat prices in the long run. However, sheep meat prices have fallen on average over the past five years, driven largely by the decline in mutton prices in Q2 2024. On the other hand, wool prices have rebounded recently after performing poorly during the pandemic years. This has enticed more farmers to limit their slaughtering to capitalise on stronger wool prices, further impacting declines in sheep meat production over the past five years. Domestic sheep meat consumption has also fallen significantly over the same period. Rising health consciousness over the past five years has led to consumers increasingly moving away from traditional red meats and more towards leaner sources of protein like chicken, limiting downstream demand for sheep farmers. Overall, IBISWorld expects sheep meat production to fall at a compound annual rate of 0.4% over the five years through 2024-25.