Research

Productivity the key to Australian sheep industry growth

13 October 2026 13:59 RaboResearch

Australia's sheep industry can achieve long-term growth despite declining sheep numbers if productivity improvements continue to increase output per animal.

Intro

    Following poor seasonal conditions, rising costs and structural change, Australia’s sheep flock is estimated to have contracted in 2026 to its second-lowest level in more than 100 years, behind only 2020. Strong demand, limited global competition and tighter supply have pushed Australian sheep and lamb prices to record highs, while wool prices have moved into the upper historical deciles. Despite favourable prices and strong producer incomes, structural challenges mean Australia’s sheep flock is projected to remain broadly stable over the next five years. A steadier flock should reduce some production volatility and support more consistent returns. With flock numbers broadly stable, production growth will need to come from higher productivity. In a constrained-supply, high-price environment, the industry will need to protect consumer demand by strengthening its value proposition and improving product quality.

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