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Beyond the Bale : June 2017
The highest wool prices in decades have seen a surge of confidence in Australia's wool industry, with farm consultants predicting growers will increase their Merino flocks by up to 10 per cent in the coming 12 months. Western Australian wool producers Scott and Melanie Ewen are doing exactly that, with plans to grow their Merino flock to 5,200 breeding ewes this coming year, capitalising on wool prices that they say, are as good as those seen back in the late 1980s. "Wool is the most profitable part of our farming enterprise," Scott says. "It's much more profitable than the cropping part of the business." In what many believe is a long overdue turnaround in wool prices, this sentiment is being echoed across mixed farming business throughout Western Australia. Scott says two years of high prices have put his farm business in a solid financial position. "In 2016 we banked around 860 cents/kg greasy sweep the floor, with top prices over 1,000 cents/kg, so that was pretty exciting for the business," he says. "2015 was also very profitable, with averages up around 780c/kg, so wool has been very profitable for several years now. "There certainly has been a level of confidence injected into the industry as a result of the stronger prices over the last few years. And it's been long overdue." PROFITABLE WOOL IN SOUTHERN WHEATBELT OF WA Mixed enterprise farmers Scott and Melanie Ewen from Darkan in Western Australia's southern wheatbelt region are pleased they retained their Merino flock after venturing into cropping eight years ago because wool is now the most profitable part of their farming enterprise. Scott Ewen from Darkan in WA plans to grow his Merino flock to 5,200 breeding ewes this coming year to capitalise on high wool prices. FOCUS ON MERINOS Scott and Melanie farm 2000 ha of owned and leased land north west of Darkan in Western Australia's southern wheatbelt region. Scott says he will be increasing his Merino flock this year, despite venturing into commercial cropping only eight years ago. Prior to 2009, the business was 100 per cent sheep, as a combination of cross breeds and Merinos. These days, the Ewen's sheep business is all Merinos. "We no longer have any cross bred sheep," he says. "We are keen to concentrate all our efforts on value adding our Merino flock." Scott says 2016 grain prices meant wool was easily the winner for their business. "That became particularly obvious when the bottom fell out of the oat and barley market halfway through harvest," he says. "We made the decision to move into cropping eight years ago to increase our cash flow opportunities, and while it's been a good move and a huge learning curve, sheep and wool are the more profitable business for us now." With so much rainfall received last year, and so much available feed, the Ewens cut around 6 kg of wool per head, which, according to Scott, is a 25 per cent total fleece increase on 2015. Scott says the downside to the availability of excess feed was the broadening of the micron across the flock. "The hoggets ended up at about 19 micron in 2016, whereas in 2015 they were 18 micron," he says. "The ewes also blew out to 21.5, compared to 20 micron in 2015." But Scott says the increase in fleece weight more than compensated for this broader average micron. SHEEP AND WOOL MORE PROFITABLE THAN CROPPING Manager of AWI's Sheep's Back program in Western Australia, and farm consultant with Icon Agriculture, Andrew Ritchie, agrees sheep and wool are now more profitable than a typical crop rotation, particularly in the Southern Wheatbelt. "High prices combined with the much better season locally have seen some wool clips double in value with the sheep gross margin reaching record levels by a considerable number," he says. "It's routine to see sheep gross margins reach $45/dry sheep equivalent (dse) to $50/dse at the moment, with the previous five and 10 year averages being $25/dse and $23/dse for our client base." But Andrew says sheep numbers will inevitably rise over coming years. "We are seeing more growers retain more ewes, generally at the expense of cropping land that has got weedy, or instead of growing oats and barley, and I anticipate average ewe numbers to go up by 10 per cent. 34 ON FARM