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Should east coast sheep producers be concerned about a live export ban?

  • By: "Prime" Ag News
  • May 14, 2018

By Robert Herrmann - Mecardo

The recent devastating vision of sheep suffering en-route to the Middle East has placed un-precedented scrutiny on the Live Export industry, however the focus has been predominately on any impact to the W.A. sheep industry.

However, those on the east coast should also be concerned.

The Mecardo report commissioned by WAFF & Sheep Producers Australia identified that WA producers could see an immediate decline in prices by 18 to 35%, and when calculated across the breadth of the W.A. slaughter the financial impact is near $80 to $150 million.

The total live export volume of sheep departing Australia has been in decline in line with the reduction in the national flock size, although it has stabilized at around 2 million head over the last five years – Figure 1. The Western Australian sheep industry dominates the live export trade out of Australia, averaging nearly 85% of the total annual flows out of the country each season over the last five years.

1

Throughout the season the proportion of WA sheep exported live as a percentage of the monthly total trade can normally fluctuate between 65% to 100% – Figure 2. Based off the current trade volumes, WA send approximately 1.6 million head of live sheep offshore annually.

While it is clear that W.A. sheep farmers sale prices will be affected, East Coast sheep producers should not be ignoring the risk to live export. Although the Mecardo report was W.A. focused, any ban on live sheep export will have an industry wide impact.

Over time there have been relatively frequent periods where sheep have crossed the Nullaboor. Usually it is at times of increased supply in the West – generally caused by dry conditions. For this to happen the added freight cost must be covered, obviously by the lower W.A. sheep and lamb purchase price.

2

In the past, when sheep have made the long journey to East Coast abattoirs the W.A. farmer has benefited from the competition, however the prices paid have always allowed for the freight with a discounted price to Eastern States comparable prices.

One school of thought has been that banning live exports will result in farmers running wethers to older ages again and benefitting from the strong wool market. At first glance this appears possible, however it is unlikely.

The WA flock has declined from around 40 million head to level out at around 15 million head since 2010. This decline has happened alongside the growth in crop acres, currently 7.5 million acres are under crop.

Should the current 1.6 million head currently being sent overseas annually from WA be held for a period of up to four years to be shorn for wool, there would be an additional 6.4 million head of sheep requiring pasture after the initial four-year increase in the WA flock size. This would require sheep to take back cropping acres, the last time the WA flock size was at around 21.4 million head was back in 2007 when only 5.5 million hectares was under cropping rotations.

Furthermore, these increased numbers would require a 43% increase in the number of available shearers at the end of the four-year growth in the flock, to cope with the extra sheep to be shorn. Not an appetizing thought for sheep producers currently managing tight shearer availability – Table 1.

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To have an additional 1.6 million sheep hit the W.A. abattoirs would certainly impact on W.A. prices, and would make them attractive to East Coast processors providing additional supply “over East”, and therefore directly impacting on all sheep and lamb prices.

The emotional argument to end live exports is easier than the answer to the question for the sheep industry of “why do we do it?” Australian sheep farmers support live export for an obvious reason, it provides an economic benefit to the industry.

It is right for everybody (including sheep producers) to be outraged and ashamed that Australian sheep suffered unnecessarily on live export boats, and to demand that the industry improve animal welfare to acceptable standards.

While the debate rages, sheep producers should be under no illusion that the impact of any ban on live exports will be felt not only by the Sand gropers; the economic impact will resonate right across the sheep industry landscape.

http://www.mecardo.com.au/