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Livestock exports a global growth industry.

Mick Keogh - Tuesday, August 06, 2013

Much of the public discussion about Australian participation in live sheep and cattle exports over recent years has been to the effect that Australia should ban livestock exports, and instead focus on processed meat exports. The rationale has been that livestock exports are a dying industry globally, and Australia could generate more value from processing livestock domestically and exporting that product. 

A review of Australian and global livestock export trends, contained in the most recent Australian Farm Institute Insights newsletter, highlights how misguided such thinking is.

Three simple graphs highlight the reality of global trade in live animals, and the role that Australia plays in the trade.

The first two graphs show the numbers of live cattle and sheep exported by Australia and other nations involved in the trade for the most recent year that complete international statistics are available. They highlight that while Australia has an important role in the trade, there are many other nations also involved and competing for available markets.

The third graph is probably the most important. It highlights that Australia's share of global markets has been declining over recent years, while the number of live sheep traded internationally has remained relatively static, and the number of live cattle traded has been steadily growing. 

This confirms that a reduction in livestock exported from Australia simply results in the demand being met from alternative sources, and does not reduce global livestock exports.

In both markets, the share of the trade accounted for by livestock sourced from developing nations has been steadily increasing, and it goes without saying that none of these nations has animal welfare standards and international livestock trade protocols that are anywhere near the equivalent of the Australian system. 

The graphs reinforce the absolute fallacy that animal welfare standards in importing countries would somehow be improved by Australia withdrawing from the market. Australia's withdrawal would simply hand these markets to competing exporters, and none of them have any programs in place to improve animal welfare standards in destination countries.

Australia has been, and can continue to be a force for improved domestic animal welfare standards in destination markets, while at the same time generating economic activity in rural Australia. Abandoning live exports would mean abandoning both these outcomes.


Jenny James commented on 08-Aug-2013 09:44 PM
Please tell me - if nth Au cattle producers have made losses over 9 of the past 10 years as cited by Mr Phil Homes, then how the heck can we get better results when we will end up also paying for the ESCAS.
Does someone imagine exporters are not going to pass on the costs to the growers?
Adam Tomlinson commented on 12-Aug-2013 02:23 PM
Jenny you make two interesting points – one that northern Australian cattle producers are making losses, and two that growers will end up paying for the ESCAS. On the first point, the farm survey data reported by ABARES supports your comment that some zones in northern Australia have experienced more years of negative return or breakeven than profit over the last decade. The NT Top End and the Gulf zone (Darwin region) experienced three years of negative return, four neutral years and three years of positive return between 2003 and 2012. The survey results also showed that average annual returns excluding capital appreciation ranged between -2% and 3% per farm. There is no doubt that international trade disruptions which have dampened the sentiment in the live cattle export industry have impacted on these results. The financial performance in the Darwin region however is not the same picture as some other northern Australia regions such as the Katherine region (Victoria River District). During the same period the Katherine region experienced ten years of consecutive profits with annual returns excluding capital appreciation ranging between 1% and 7%. The farm survey results also showed that the farms in the Katherine region carried three times more cattle than the farms in the Darwin region. However, financial performance trends for the Katherine region are indicating a general decline in annual rates of return, with the region's five-year annual average between 2003 and 2007 at 5% compared to the most recent five-year annual average of 2%. On the second point, you raise the cost impact of the ESCAS. Unfortunately it is not easy to assess the full extent of the impact that the ESCAS has had on farm business financial performance at this stage. However, what can be shown is the trends in live cattle export values in both A$ and US$. The trend in approximate A$ per kilogram values of live cattle exports has not altered significantly since the year 2000. However, when looking at the trade trends in US$ - which is the currency mainly used in facilitating international trade – the live cattle export value per kilogram has significantly increased. This means that a weakening A$ should present a significant advantage for the live cattle export industry, as the higher prices having been paid in US$ is a development that the international market is becoming accustomed to.
Peter Small commented on 12-Aug-2013 02:50 PM
The Australain Farm Institute's (AFI)report on the live animal trade is comprehensive and balanced and obviuosly intended as it should be to influence policy makers and the animal activist lobby. AFI's objective of encouraging rational co-operation and effective policy, is commendable. However what is lacking is authentic voices representing the companies, and the family businesses that have investment in the cattle industry particularly in the north. We desperately need voices with the capacity to impact on the voters in the wealthy suburbs of our Nation's cities. Northern Australia through poor public policy from the past already has one "mob" of dispossessed people. Is Canberra's policies and pannicking Banks about to create another with pastoral properties being sold to overseas investors and their current owners dispossessed too?
Peter Small commented on 17-Aug-2013 03:07 PM
In respect to Adam Tomlinson's reference above to the cost of ESCAS. We all know who pays additional costs, the producer.
Recently I visited a feedlot in Japan to inspect cattle that had originated from our herd in southern Australia. While the Japanese are enormously polite it was apparent that they were culturally affronted by the inspection process imposed on their operations by the Australian Government. It was also clear that the 50AUD cost to them of our audit system would be passed back down the pipeline.
It is difficult not to be very sympathetic to the Japanese position, particularly when their feedlot regime is far superior to anything achieved so far here in Australia.
I would like to make three policy recommendations:
1.That all foreign feedlots and abattoir facilities that pass the first audit with exemplary reports be allowed to move to a system of self assessment, only subjected to random audits from time to time. And
2.that all costs associated with ESCAS be transparent to the Australian Cattle Producer. And
3.because of the enormous damage afflicted on the cattle industry by bad public policy in respect to the live animal trade, that the Federal Government pays 50% of all costs attributable to ESCAS.
Peter Small commented on 25-Aug-2013 11:55 AM
In respect to the very high live cattle exports out of France, we have a French Agricultural Science student from Purpan University in Toolouse and his view is that France exports a lot of young cattle out of France to be "grown out" in second countries and then return to France for slaughter and consumption. In respect to the blogs above I am surprised that such an important issue has gained so little discussion!

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