RISING lamb prices and farm incomes over the past three years have encouraged slaughter lamb producers to boost sheep numbers and invest in farm capital.
"Over the past decade, Australian producers have realised historically high prices for lambs as a result of strong growth in international demand for lamb meat and constrained growth in Australian production," ABARE deputy executive director Paul Morris said when releasing the report.
In 2009-10, slaughter lamb producers are expected to realise a farm cash income, on average, of $109 700 per farm, 4 per cent higher than in the previous financial year, according to the report.
Larger scale producers (those who sell more than 2000 lambs for slaughter) are expected to realise the highest average farm cash income of $186,700 per farm because they had a greater focus on producing heavier lambs targeted at the premium slaughter market.
While individual farmers make decisions suited to their circumstances, the report showed that producers who sold lambs directly for slaughter and to live export markets earned higher farm cash income per hectare than producers mainly focused on selling lambs to feedlots or other producers.
It also found that, while only a limited number of slaughter lamb producers used grain to finish lambs for sale, these farms averaged a much higher annual farm cash income per hectare than other producers.
In 2008-09 slaughter lamb producers invested, on average, around $123 000 per farm on new capital, according to the report.
Lamb producers had maintained a high level of capital investments over the past five years, it said. Most of this was dedicated to purchasing land, although the proportion allocated to purchasing plant and machinery increased sharply in 2007-08 and 2008-09.
