Sheep enterprise gross margins and emissions in Western Australia: A spatial and structural analysis

Document Type

Article

Publication Date

1-2026

Journal Title

Australian Farm Business Management Journal

ISSN

1449-7875

Number of Pages

21

Keywords

sheep production, greenhouse gas emissions, gross margins, emissions intensity

Disciplines

Agricultural and Resource Economics | Environmental Indicators and Impact Assessment | Sheep and Goat Science

Abstract

In this study a spatial and structural analysis of sheep enterprise gross margins and emissions in Western Australia’s agricultural region is conducted. Specifically, self-replacing Merino sheep enterprises are examined in 14 agroecological zones using five years of farm level data (2019-2023). Emissions calculations are based on the Australian Sheep and Beef Greenhouse Accounting Framework. Results reveal significant variability in gross margins and emissions across agroecological zones and across farm performance groupings. During the study period sheep enterprises in the high rainfall and medium rainfall southern zones displayed higher gross margins ($243-295 per winter-grazed hectare) than enterprises in the northern and low rainfall zones ($106-148 per winter-grazed hectare), although significant temporal variation was evident due to volatility in climatic conditions and commodity prices. Total emissions per annum ranged from 462 kg CO2-e per winter-grazed hectare in low rainfall regions to 1,455 kg CO2-e in high rainfall regions, with the top 25% of farms generating 2,300 kg CO2-e per winter-grazed hectare. Emissions per kilogram of liveweight sold ranged from 5.6-6.6 kg CO2-e per kg of liveweight for meat whilst for wool, emissions were 20.1-23.4 kg CO2- e per kg of greasy wool, decreasing from northern to southern zones. Survey results reveal a greater potential for emissions reduction on farms in the high rainfall region. Each dollar of forgone gross margin on these farms generates more emission reductions than is possible for farms in other rainfall regions. However, the practical concern for all farms is that there is currently no strong commercial penalty or reward for altering emissions from sheep production. The current gross margins for sheep production, especially in the high rainfall region, signal that maintained or greater intensification of sheep production is worthwhile, even though emissions per hectare or emissions per kilogram of sheep or wool may increase.

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