Australia’s sheep industry is at an “important inflection point”, with the national flock close to record lows and limited scope for production growth through sheer herd expansion, RaboResearch says in a new report titled Productivity the key to Australian sheep industry growth.
Report authorship and headline findings
The analysis, produced by RaboResearch’s animal proteins team, records the scale of long-term structural change in Australia’s sheep sector and says future growth will need to come from productivity improvements in genetics, reproduction, management and technology adoption rather than from a major rebuilding of flock numbers.
“The question now is whether those conditions will be enough to encourage widespread flock rebuilding,”
— Angus Gidley-Baird, RaboResearch senior animal proteins analyst
Historical contraction and current position
RaboResearch highlights the profound reduction in Australian flock numbers over recent decades. The report notes a peak of 180 million head in 1970 and records that the national flock has fallen to around 66 million head in 2026 — the second-lowest level in more than a century.
Against this backdrop of tightened supply, the bank says sheep and lamb prices have reached record highs and wool prices have recovered to levels not seen since 2019, creating exceptionally favourable market conditions for producers.
Why productivity not numbers
RaboResearch argues several structural challenges make a significant expansion of flock numbers unlikely. Instead, it says the sector’s ability to benefit from strong global demand will depend on raising output per animal and improving product quality and value propositions for consumers.
- Productivity levers suggested include genetics, reproductive performance, management practices and technology adoption.
- Market context: strong global demand, limited competition and constrained supply underpin high prices.
- Industry sentiment: while some producers are increasing numbers, the broader appetite for large-scale flock rebuilding is described as “relatively subdued”.
Implications highlighted in the report
RaboResearch says that, with flock numbers expected to remain relatively stable, the industry will need to focus on raising productivity and protecting consumer demand through clearer value propositions and improved product quality. The report cautions that individual producers may grow numbers, but widespread rebuilding is not anticipated given current structural constraints.
| Metric | Figure (as reported) |
|---|---|
| Australian flock peak (1970) | 180 million head |
| Estimated flock (2026) | around 66 million head |
The report’s author, Angus Gidley-Baird, emphasised the balance between favourable market conditions and the practical limits to rebuilding herd numbers. He said productivity improvements and stronger product positioning will be central to the sector capitalising on global demand.
RaboResearch’s assessment underlines how supply constraints in Australia — a major global exporter of both sheepmeat and wool — are likely to remain a defining factor for international markets unless widespread investment in productivity is realised.
