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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 northwest coast and Bass Strait islands.

At June 2005, there were 3.3 million sheep and lambs in Tasmania across 1,500 establishments. The sheep industry in Tasmania is dominated by the production of wool, with 76 percent of sheep intended for wool production in 2002/03. Sheep meat production is of secondary importance.

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.

Wool Industry

In recent years wool growers have changed to finer-woolled breeds. The Merino is now the major breed in Tasmania. As a result, the Tasmanian wool clip is on average one micron finer than that of the mainland, and importantly it is also relatively free of vegetable matter.

In 2003-04, total Tasmania’s wool industry sales were $77.2 million, representing 3.2 percent of Australia’s wool output. Due to lower wool prices, Department of Treasury and Finance estimates that the value of Tasmania’s wool production will decrease to approximately $74 million in 2004-05 a drop of 4 percent compared with 2003-04.

The key determinant of the value of wool is the price. ABARE estimates that the average price for 2004-05 was 746 cents per kilogram, some 9 percent lower than in the previous year. Wool prices have declined because of weaker demand as processors have continued to substitute away from wool in favour of synthetic fibres.

The main wool processing that takes place in Tasmania is at Launceston’s Waverley Woollen Mill and Devonport’s Tascot Templeton carpet mill. Waverley buys a majority of its wool from interstate, as Tasmanian woolgrowers are unable to provide the volume and thickness they require. Tascot Templeton buys partly processed wool from interstate and overseas.

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

Graph 1: Gross Value of Wool

Source: Australian Bureau of Statistics, Value of Agricultural Commodities 7503.0.

Sheep Meat Industry

Tasmania produces both lamb and mutton. In 2003-04, the value of sheep meat production was $46.8 million, approximately 5.5 percent of the total value of Tasmanian agriculture output.  Due to lower sale yard prices and overall lower production, Department of Treasury and Finance estimates that meat production will have decreased to approximately $43 million in 2004/05. The average sale yard prices for mutton and lamb remained relatively strong in 2004/05, which was due to the export and domestic demand and growth in price of other meats such as beef. However, prices were not as high as in 2003/04, as increased supply contributed to a 7.5 percent drop in average sale yard lamb prices in 2004-05 to 344 cents per kilogram and for mutton a 18.6 percent decline to 162 cents per kilogram.

Exports of fresh, chilled, frozen sheep meat increased by 29.8 percent in 2004-05 to $7.9 million. nearly double 2002-03.

Live export sales were $7.2 million in 2004-05, 70 percent higher than the previous year.

Graph 2: Gross Value of Lamb and Mutton

Source: Australian Bureau of Statistics, Value of Agricultural Commodities 7503.0.