ANZ’s economist Paul Deane used its annual sheep meat industry report this week to criticise the accuracy of the ABS sheep flock projections, claiming it had missed an estimated 1.5 million marked lambs in its forecasting.

ABS recently reported the nation’s flock had fallen by seven per cent in a year to 71.6 million head - 19.5 million head or 21 per cent less when compared to 30 June 2006.

In the report Mr Deane said irregular survey response rates – 91p in the 2006 census year and 79pc in 2008/09 year – created an uneven sample size to base trends on.

This inaccuracy created problems estimating sheep numbers in between census periods.

"Take the period between 2000/01 and 2005/06. ABS sheep numbers were kept flat for the 2003/04 and 2004/05 season but then after the census in 2006 numbers were dramatically revised lower - by more than 10 million in one season," Mr Deane said.

"A more plausible scenario was a decline throughout this period rather than in just one season," he said.

ANZ Agribusiness forecast the Australian sheep flock to fall to 68 million head by July 2010, a four million head or 6pc decline year on year.

"The ABS flock forecast looks correct but its forecasted shortfall of lamb for slaughter is off."

Its report found that around 40 million head of sheep and lambs were removed through slaughtering, live exports and deaths from the flock this season.

At the same time it found 33.5 million lambs were marked – a sustainable rate if ewe breeder numbers do not continue to decline.

In contrast, record high levels of sheep slaughtering and live sheep exports was found to be not sustainable, with it tipped to decline 15-20pc in the current season.

The ANZ agribusiness report said total breeding ewe numbers at June 30 of this year was at 37 million – 28 million in the east coast region and 8.7 million in the west.

It predicted this figure was back 2.5 million on June 30 2008 figures.

An ABS spokesman said its data is based on survey response of around 155,000 agricultural businesses.

ABS director for environment and agriculture Adrian Bugg said the estimates released earlier in the month were preliminary estimates based on a response rate of 79pc from a sample of approximately 38,000 agricultural businesses selected in the 2008-09 Agricultural Survey.

He said final estimates – due April next year – were based on a higher response rate and could vary from the preliminary estimates.