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Most sheep are run in the eastern half of the State, particularly the Oatlands area, with a smaller number (about 20 percent) on the north-west coast and Bass Strait islands.

While the value of the Tasmanian sheep industry has generally increased over the past decade, the number of sheep and lambs in the State has declined due to the combination of poor wool prices, drought, irrigated cropping and the growth of tree farms.

A farmer survey conducted by the Australian Bureau of Agricultural and Resource Economics (ABARE) found that the average broadacre sheep farm in Tasmania has cut numbers by half (4,337 in 2007-08 to a projected 2,036 in 2008-09). ABARE assess that destocking coincided with the drought. According the Tasmanian Farmers' and Graziers' Association, some farmers had destocked by up to 70 per cent.

Wool

The forecast for Australian shorn wool production is a continuation of its downward trend in 2008-09, reaching a 50 year low of 387,000 tonnes.

For Tasmanian sheep farms, total cash receipts fell in 2007-08, despite an increase in sheep turn-off as wool and crop production fell. Average farm cash income for Tasmanian sheep industry farms is estimated to have fallen to $31,000 per farm in 2007-08, compared with an average of $56,800 per farm in 2006-07.

China is, and will continue to be, the largest buyer of Australian wool, accounting for approximately two-thirds of Australian exports of wool. However in 2008-09 supply constraints were expected to lead to a smaller volume of raw wool shipments.

In recent years wool growers have changed to finer-wooled breeds, with the Merino now being the major breed in Tasmania.

The 8x5 Wool Profit Program is a co-operative initiative between Australian Wool Innovation, the Tasmanian Institute of Agricultural Research (a division of the University of Tasmania) and the Tasmanian Department of Primary Industries. The Program is an extension program to assist Tasmanian wool producers to achieve an 8% annual return on assets managed within 5 years through access to benchmarking, best practice information, group improvement initiatives and a State-wide wool profit awards program.

The main wool processing that takes place in Tasmania is at the Waverley Australia Mill in Launceston and the Tascot Templeton carpet mill at Devonport.

It is estimated that around 90 per cent of the Tasmanian wool clip is exported overseas, with 55 per cent going to China. Other significant buyers include Europe, the United States and India.

As a result of the drought and the long-term climatic outlook, particularly for the Midlands area of Tasmania, sheep farming was not expected to be carried out on a large scale in future. As well as the lack of feed because of the drought, there has been a drop in demand for wool. The popularity of wool has fallen because of the lower prices of synthetic fibres due to the lower price of oil, making it difficult for wool to compete. According to the Tasmanian Farmers' and Graziers' Association, there would always be demand for wool, but it might only be a niche product.

The State and Federal Governments are jointly investing in long-term water solutions for the Midlands area to support the irrigation needs of farming communities. The Midlands Water Scheme will supply 40,000 megalitres of irrigation water to farmland in the region.  

Further information is available from the Department of Primary Industries and Water.

The State and Federal Governments are jointly investing in long-term water solutions for the Midlands area to support the irrigation needs of farming communities. The proposed Midlands Water Scheme will supply 40,000 megalitres of irrigation water to farmland in the region.  

 Sheep meat

The Australian Bureau of Statistics, in its March quarter 2009 Australian commodities report, stated that the purpose of the Australian sheep flock has been changing away from the production of wool towrd meat prodution since the demise of the Wool Reserve Price Scheme. The trend towards increased sheep meat production is expected to continue as high lamb prices and reltively low wool prices are expected to encourage producers to increase lamb slaughter and to continue reducing the number of non-breeding sheep. Reflecting strong expected producer returns, lamb production is projected to increase steadily by 2013-14.

Lamb prices are forecast to remain high in 2009-10 because supply is expected to remain relatively tight, and the demand for lamb is expected to remain relatively strong. The projections for lamb and mutton are dependent on an improvement in seasonal conditions, particularly in south-eastern Australia.

While per person consumption declined over the past 20 years, the trend stabilised in the early 2000s as lamb quality improved and mrketing efforts increased. Per person lamb consumption is expected to remain steady while total Australian lamb consumption is expected to increase at the rate of population growth.

Australia's export markets for lamb are highly diverse, including the United States, the European Union, China and the Middle East.