THE Middle East is now Australia's biggest customer for lamb.

The mantle, held for so long by the US, has been handed to the Middle East, which increased Australian lamb imports by 10 per cent in the past financial year.

Middle Eastern countries took 36,522 tonnes of lamb and 39,272 tonnes of mutton in 2010-11, making them by far Australia's biggest sheepmeat importers.

It's welcome news for the industry, which now has a huge spread of countries importing either lamb, mutton or both, including growing demand from China.

Meat and Livestock Australia's chief economist Tim McRae said the US had always been Australia's No.1 market.

"It's the first time that the US hasn't been our biggest market in a fiscal year," Mr McRae said.

"But you have to remember that lamb is a small portion of the US protein market."

The US recession was blamed for a tailing off in demand, with lamb deemed too expensive.

"Australian lamb in the US is a relatively expensive meat," Mr McRae said.

Lamb exports to the US in 2010-11 totalled 33,359 tonnes, down 10 per cent on the previous year's figure.

In contrast, Mr McRae said the Middle East market had grown steadily during the past five to 10 years.

"The economies there are strong and they are looking for cheaper products to fill the needs of the migrant population which come in to work there," he said.

"That's why the Middle East is such a good market.

"It takes a range of products and the demand across the product spectrum is strong."

Mr McRae said prospects for further growth to the Middle East looked good.

"I would expect to see faster growth in the Middle East than other markets in the next few years," he said.

"We are still seeing growth there and that's also influenced by the fact they do not have pork in the mix of proteins available."

Sheepmeat Council of Australia president Kate Joseph said lamb meat and live sheep export markets to the Middle East were "dependent upon each other".

If the live sheep trade was interrupted, due to government interference as seen last month with cattle to Indonesia, that could have negative impacts on Australia's meat trade, Ms Joseph said.

"I believe any disruptions could easily affect those markets, but I hope there aren't any because of the good work the sheep industry is doing with the government to address any issues," she said.

"We have a lot of people working in the industry who are passionate about animal welfare."