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Context Climate and market shocks challenge sheep management in Australia. How might sheep managers best respond to these challenges? Aims Demonstrate how a detailed whole-farm mathematical programming model can be used to evaluate optimal tactical responses to climate and commodity price shocks, and to examine how these responses vary with the initial state and underlying strategy of the farm. Methods Multi-year whole-farm programming models were constructed and applied to two different farm operations in south-western Australia. One farm was crop-dominant, the other a sheep specialist. Each farm was subjected to a simultaneous climate shock of a dry spring and a market shock of reduced livestock prices of different durations, with tactics identified that optimise farm profitability over a sequence of years. Key results Dry springs and livestock price downturns greatly reduced farm profits, especially on the sheep specialist farm. Nonetheless, embracing tactical responses greatly limited the lasting negative ramifications of these shocks. Tactical destocking, additional supplementary feeding, crop grazing, purposefully altering liveweight patterns and altering rotations were among the suite of tactics that bolstered farm profits and aided financial recovery. The results demonstrated that appropriate tactical responses were often farm-specific, influenced by the farm’s initial resources, the optimal farm strategy and the expectations of the duration of price shocks. Conclusions The combined shocks of a dry spring and reduced livestock prices erode farm profits to different degrees, depending on the nature of the farming system. The analysis shows that economically beneficial tactical responses exist and vary with the initial state and underlying strategy of the farm, highlighting the potential role of whole-farm optimisation in evaluating farm-specific adjustment pathways. Implications Volatile climate and prices characterise sheep farming in Australia. Effective and profitable sheep management is shown to entail flexible responses to climate and price shocks. This implies that sound sheep management in the face of climate and price shocks requires farmers to astutely use their arsenal of tactical adjustments that are tailored to their farm business.