Aussie sheep farmers are taking drastic measures to reduce their flocks amid a 75 per cent plunge in prices that has caused chaos in the industry.

Sheep prices are near their lowest level in 16 years, according to Bloomberg, sending Australian sheep farmers into despair.

Mutton prices have plunged 75 per cent over the past year, says Tim Jackson, global supply analyst at Meat & Livestock Australia.

Sheep prices have also slumped, with older animals fetching an average of just $34 in October. Some reports have included animals that sold for less than a dollar a head, Mr Jackson said.

Many abattoirs are at capacity and reports have surfaced of farmers taking drastic measures to decrease supply, including giving away their sheep for free or euthanising them to avoid continuing to care for them at a loss.

“Some farmers are getting almost nothing,” Andrew Spencer, chair of Sheep Producers Australia, told Bloomberg.

“It’s been a very volatile time over the last couple of years.”

Where sheep are low quality, some farmers have given animals away for free to pet food producers, he added.

Why are sheep prices falling?

The sharp slump has surprised many farmers, who less than three years ago were enjoying record high prices of lamb and mutton.

It’s primarily an issue of oversupply.

Three years of higher than average rainfall led to abundant grass and forage for livestock, which allowed farmers to increase their sheep herds.

There are now an estimated 79 million sheep in Australia — about three times more than there are people — making for the country’s largest number of sheep since 2007.

The government’s plan to phase out live sheep exports by sea, which are considered by animal welfare groups to cause excessive and unnecessary suffering, has added to concerns of oversupply.

A phase-out will mean farmers need to reduce their sheep numbers, export them only by air or slaughter sheep onshore before they can be shipped off.

A date for the phase-out has not yet been announced, though the government has said it will not happen before 2025.

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