Live exporters have roller coaster ride

Speaking on behalf of the WA Live Exporters Association, Steve Meerwald said the live export space remained challenging.

"There is a shortage of cattle across Australia, brought on by the heavy sell-off during the drought in the eastern States," he said.

"WA has been a big supplier in the past 12 months, because we had the same herd size."

Mr Meerwald believed WA's herd should be closer to 3 million instead of about 2m.

"It would be sustainable, but it will only be sustainable if there is money for the producer," he said.

"We have a lot of country in WA that could be good cattle country, but it isn't being used for production, it could be, but that has never been thought of.

"With cattle values close to $3 per kilogram, the value is there."

Mr Meerwald said WA's value had grown but it, and production, needed to continue to increase.

In 2011, live exports were worth $177 million to WA, which grew to $280m in 2015.

In comparison, boxed beef was worth $77m in 2011 and $184m in 2015.

Mr Meerwald said producers needed to concentrate on value and volume would follow, but then increase volume with quality.

"What we should be doing is increasing our production to where it is profitable to do so," he said.

"But we must increase the value. There is no use producing more and everyone going broke doing it, we need to produce products that command and demand a premium.

"We need to produce products that our customers want above product from other places."

Globally, there has been growth in markets but international markets were under pressure.

"In 2015, Vietnam was a bigger market for WA than Indonesia," he said.

"We also have a solid market in Israel and Malaysia."

In Indonesia, no import permits were issued for the September to December period, there were political sensitivities and it had approved the importation of Indian buffalo meat.

Mr Meerwald said the market was signalling 700,000 feeder cattle from Australia in 2017.

Vietnam, which was the largest export market for WA in 2015, has been oversupplied and the Export Supply Chain Assurance Scheme was still a challenge.

Other markets, such as the United States, were also rebuilding herds.

Mr Meerwald said the US had allowed the import of Brazilian beef, and that decision had already been felt in the WA market.

He said Brazil was a competing supplier as its cattle herd was more than 200m with 55m beef cows.

Brazil is pressing for access into the Asian markets, as its domestic consumption was lower due to the slower economy.

In WA, demand and pressure on prices would remain short-term.

While a correction is looming, Mr Meerwald said it was too hard to determine when it would occur, due to the strong domestic drivers.

"Take advantage of the good times," Mr Meerwald said.

"Reinvest in efficiency and productivity and have strong relationships with your customers."

For some of the live exporters the year presented many hurdles, including for Australian live exporter Wellard Limited, which floated on the Australian Securities Exchange (ASX) late last year.

The year started off with a blow, as two of its vessels the M/V Ocean Swagman and M/V Ocean Outback failed due to mechanical issues.

Wellard chief executive officer Mauro Balzarini said all its vessels were repaired.

The M/V Ocean Outback was stranded off Perth's coastline for two weeks over the New Year period and sailed on one engine from Fremantle port to Vietnam in mid-January.

The 5500 cattle and 7500 sheep on board were destined for Israel, but the vessel suffered engine trouble on December 29 before leaving the harbour.

The sheep were offloaded and transported to a pre-export quarantine feedlot, and after being inspected by a federal Department of Agriculture veterinarian, a Department of Agriculture and Food WA animal welfare officer and an RSPCA inspector, they were cleared to continue shipping.

Wellard said the vessel successfully discharged 5607 cattle in good health in Vietnam before getting repairs and has booked a program to load 40,000 cattle in March from Australia and South America.

The animals will be transported to various destinations in South East Asia and the Middle East.

Following the mechanical issues Wellard announced a string of consecutive profit downgrades and went into a period of voluntary trading suspension.

It informed its shareholders of the profit downgrade in a report to the ASX and lifted the trading pause.

"It has been a challenging time for our company with a difficult trading environment and a number of unexpected events," Mr Balzarini said.

"Despite this Wellard has maintained its market position and increased market share in some countries and all our ships are being utilised."

Wellard said it was completing a review of its assets to determine if any adjustments were required.

The company also faced a polling issue at its first annual general meeting, which called for a change of results.

Mr Balzarini said he looked forward to the new year.

Elders quit its live shipping operations due to poor profit margins in the live cattle export trade.

Elders, a pioneer in the export of breeder cattle and stock for processing in Asia, halted its long haul live export business to China this year and was selling its short haul shipping operation and its sheep and cattle air freight service as a going concern.

Elders managing director Mark Allison said a comprehensive review of the company's live export business had decided the "poor margins and capital inefficiency in the long haul business warrants an immediate cessation of that business".

"While we continue to support our clients who participate in the live export industry, the export, logistics and shipping of live cattle to long haul destinations is no longer central to Elders' strategy," he said.

Elders reported a $2.9m loss in its live export division in the first six months of 2015-16, including $3.8m lost by its long haul business.

Other key live export players, including Wellards and farm services player Ruralco, reported dramatic drops in revenue from the trade, partly because of the soaring cost of sourcing livestock in Australia in the past year.

Most of Elders' long haul business involves sea shipments of dairy and beef breeder cattle to China.

"That business is not producing a return on capital or margins at levels that meets Elders', or its shareholders', expectations," Mr Allison said.

Elders' short haul business, the North Australian Cattle Company, involves buying and sea-freighting live feeder and slaughter cattle to Indonesia, Vietnam and Malaysia.

Elders' air freight business freights live breeder sheep and slaughter cattle to China.

The exit decision will result in restructuring costs totalling about $6m, but the company expects to gain about $25m in working capital it can deploy elsewhere in the business when the process is finalised.

In May, Australia's live cattle export trade to Japan was temporarily suspended.

At that time, the market was valued at more than $14m a year.

The temporary suspension came as a response to cattle exported from Australia testing positive for Bovine Johne's Disease (BJD) on arrival in Japan.

But in a statement in August, Agriculture and Water Resources Minister Barnaby Joyce said Japan and Australia had worked together to reach an agreement on improved export certification processes for all cattle consignments.

"To re-open markets in such a short time is a testament to the close trade relationship Australia enjoys with Japan," Mr Joyce said.

He said Japan was one of three key trading partners to sign a free trade agreement with Australia under the Coalition government.

Live exporter Frontier International Agri also reached WA shores for the first time this year, as it loaded its first Fremantle vessel of 2238 head of cattle destined for Vietnam.

Frontier International Agri is a Ruralco partnership focused primarily on live export which was formed in October 2013 and exported more than 130,000 head of cattle last year.

The 12-month-old vessel, the Gelvray, built in Broome, was filled to capacity for a trial shipment from the port.

Operations manager for South East Asia Ashley James said Frontier had the option of shipping from Townsville or Fremantle when the wet season pushed it to move exporting out of the north.

"It's a slaughter market for Vietnam, and due to the wet season, it pushed us down south,'' he said.

"We had the option of Townsville or Fremantle and thought we would give WA a go."

Politically it was a challenging environment with a heavier focus from anti-live export groups.

Many anti-live export images and descriptions of images and video footage taken by anti-live export and animal rights groups were incorrect, according to specialist live export veterinarian Peter Arnold.

Mr Arnold said he watched video footage that was provided to ABC television by anti-live exports campaigners, sparking widespread outrage.

"I have been involved in the industry for more than 40 years," Mr Arnold said.

"Like everyone else I don't like those images - but they were hand-picked, selected images."

A major voice for the industry, Australian Livestock Exporters' Council chief executive officer Alison Penfold resigned from the organisation to pursue other professional opportunities.

Ms Penfold started at ALEC in February 2012 and has been at the helm during the industry's recovery from the controversial Indonesian cattle ban the previous June and moves to improve animal welfare standards.

Former mining executive Simon Westaway was appointed to fill the position.

After more than seven years with one of the world's largest exporters, Wellard Group's Middle East general manager Harold Sealy resigned.

Mr Sealy has more than 16 years' experience in the livestock industry and was one of the live export industry's key spokesmen.

He was appointed chairman of the WA Livestock Exporters Association (WALEA) just 10 months ago.

Mr Balzarini said Mr Sealy had left a large footprint on Wellard.

"Harold helped establish our sheep breeding operation, overhauled the operations of our Baldivis feedlot and helped to establish a regular sheep trade to China, as well as professionally managing our Middle East operations," Mr Balzarini said.

"Due to a range of external factors our activity in the Middle East has reduced over the past couple of years.

"As a result, Harold decided that he wanted a new challenge, a role I know he will perform with professionalism and enthusiasm."

Mr Sealy will take up a position with a company seeking to develop its agricultural business throughout WA, with a changing of the guard at WALEA.

After being named the association's new chairman in November, 2015, Mr Sealy resigned from his position as WALEA chairman at the annual general meeting in September this year.