By Patrick Francis
It is interesting to review some of the key issues raised in the recently released ABARES report “Live export trade assessment”. While there is plenty of information presented, it seems convenient for current federal government policy towards live exports that the analysis surrounding sheep live exports lacks details around its current and future viability
While live cattle exports from Top End pastoral stations to relatively nearby south east Asian countries operate successfully from marketing and animal welfare perspectives, the same cannot be said for sheep live exports. The relevant sheep business characteristics are completely different to cattle as most are produced on predominantly grain growing farms in south western Australia which is serviced by numerous domestic and export abattoirs. The ABARES report does not provide information about the distinct differences between the two sectors. It is important omission because the live sheep market is contentious from animal welfare, farm business and market perspectives.
Here are some important points and omissions in the report about the live sheep export market:
- Live sheep exports and its value have declined significantly since the mid-1990s as Australia sheep population has declined and demand for sheepmeat has increased. See figures 5 and 6.
- Western Australia farmers who supply around 90% of live export sheep have significantly reduced sheep numbers in favour of planting more crops. Figure 8.
- The live sheep export trade as a percentage of total sheep turnoff is in decline nationally (17% at its peak in 2001 to 6% in 2013, figure 40) and in WA (50% at its peak in 2001 to 30% today, figure 41). Interestingly the report comment for WA compares total sheep turn-off in 2013 to what is was in 2012 – a drop of 9%
- There is no mention of the fact that there is little or no genetic selection, eating quality or environmental integrity associated the live export Merino sheep – usually a two year old, 60 kg live weight Merino wether. It demonstrates how the market is commodity driven, not value added driven which farm businesses need to lift profitability. This point is reinforced in the report: “Production of shipping wethers, rather than prime lambs, is suited to crop-dominant farmers who prefer a sheep enterprise that requires less time and management.”(page 9).
- Data about farm business in WA demonstrates that cropping dominates returns and profitability while live sheep exports are a small side line and the number of farmers having such a side line is declining. Irrespective of which state the farm business selling live export sheep is located in, total cash receipts per farm for live export sales averaged around 7% of total cash receipts for the two years ending 2012-13, page 44. There is no reference to the profitability of the live sheep enterprise versus sheep soled into other markets on the farms involved, Table 11.
- The Report uses a degree of deception about prices by comparing live export sheep prices to average saleyard prices, Figure 49. The former is for a specific sheep item with sex, breed and weight specifications, the latter is for all sheep irrespective of weight, age, breed or sex, so it is not surprising that the live export sheep value is higher than the average saleyard sheep price in WA. The useful comparison should have been between WA live export wethers prices and the prices WA processors are paying for Merino lambs and first and second cross lambs. There is no mention of the fact that quick grown dual purpose Merino lambs can compete in the domestic and export sheep meat markets because many Merino seedstock breeders are selecting for carcase as well as wool traits using Sheep Genetic Australia sheep breeding values. The sale of a finished Merino lamb that meets market specifications which a processor can add value to through boning out is always more profitable than selling a lightweight store lamb which eventually ends up as an export wether.
- The Reports coverage of “Employment” associated with live sheep exports is also deceptive because it fails to compare live export sheep employment with potential employment if those sheep were processed locally. The quoted businesses that derive revenue form live sheep in Australia would derive the same revenue if the sheep were delivered to domestic processors rather than the port. There is no mention of potential jobs generated in processing works if the current live export sheep numbers were diverted for processing domestically. So the 4103 full time equivalent jobs attributed to live export industries for “Southern Western Australia” in Table 9 is a nonsense figure. Another hard to justify component of ABARES estimates on employment associated with live sheep is that it generates on-farm employment (1775 people page 56). It has been previously pointed out that the majority of farmers involved in selling live export sheep have business dominated by cropping and the sheep are a sideline which require minimal input and management. The Report’s data (Table 11 page 60) on average number of sheep sold for live exports per farm in WA demonstrates how baseless this employee estimate is. Table 11 reveals on the farms involved in live export, an average 1152 sheep and lambs are sold per year of which 498 go for live export. Given that there is virtually no difference in labour required to manage non live export sheep and live export sheep, it is unlikely the live export sheep could justify a significant additional labour input so the assumptions behind ABARES estimates for sheep live exports are undermined. Its assumptions are based on general labour intensities for sheep farming the majority of which involves sheep breeding businesses which are far more complicated and time consuming than running export wethers on crop stubbles.
- The Report’s analysis of “farm businesses selling sheep for live export” provides a deceptive conclusion as there is no comparison between selling for live export versus selling direct to domestic processors. As well, given the income from sheep whatever their destination is so small compared to grain income any financial result conclusions reflect the state of grain prices, yields and costs of production, rather than impacts of live exports. So for the Report to conclude “The financial performance of farms selling sheep for live exports was generally strong with positive average rate of return…” is misleading given average crop receipts per farm for 2011 -12 and 2012 -13 were $465,000 and live export sheep sales were $45,000 per year (Table 11).
- Under “meat processing” the report ignores the discussion about utilization rate of WA’s domestic sheep meat processing businesses.
- Under “animal welfare” there is no reference to the point that stunning prior to cutting the throat is not a prerequisite under World Organisation for Animal Health (OIE) standards. This is a critically important procedure failure to prevent animal cruelty through the Exporter Supply Chain Assurance System (ESCAS) in destination countries.
- Middle Eastern countries are increasingly substituting live sheep meat with imported processed sheep meat. The Report says this reflects growth in incomes and urbanization, along with the popularity of Western –style supermarkets. Figure 25.
ABARES does itself no credit by releasing such a poorly researched report as far as the viability of the live sheep trade is concerned. The business as usual approach it conveys does nothing to assist farmers who are value adding to their sheep enterprises through enlightened genetic selection and farm ecosystem management to produce sheepmeat consumers domestically and overseas want to buy.
Find out more:
The ABARES Live Export Trade Assessment was published 8 July 2014 at www.daff.gov.au/abares under publications