LSS has confirmed that it has been in the market for sheep the past few weeks after offering producers $85-$90 a head for their wethers.
The LSS chartered livestock vessel Maysora arrived off the coast of Kwinana last week and will be the first vessel to leave with sheep on board since June 6, more than 105 days ago.
While sheep will be on the vessel, the priority for the company appears to be destocking its cattle feedlot.
The export industry was brought to a standstill in June when Emanuel Exports had its licence suspended, which was subsequently cancelled by the independent regulator, the Federal agriculture department.
The company tried to use its subsidiary company EMS Rural Exports to export 60,000 sheep that it had in its Peel feedlot, but it also had its licence suspended and then cancelled.
The sheep were subsequently processed in the best interests of the animals and to reduce costs for the company.
Farm Weekly has been told the export licences were cancelled due to “very serious issues” relating to its documentation, although that could not be verified by the regulator.
The Maysora has anchored near the Al Shuwaikh and the Al Messilah which have been waiting for months to transport livestock to Kuwait and other Gulf States.
LSS has different markets to Emanuel Exports and is expected to export to Israel and Jordan on this voyage.
Up to 8000-9000 cattle can be loaded on the Maysora, as well as 30,000-40,000 sheep, but due to a reduced stocking rate, only a maximum of 25,000 sheep will be loaded.
The exact figures have yet to be determined due to the lack of certainty around stocking density and ventilation requirements.
Farm Weekly understands that the cattle have been in a feedlot for some time while LSS has been trying to negotiate with the Federal Department of Agriculture and Water Resources (DAWR) on stocking densities for sheep, which initially made the trade unviable for the company during the northern hemisphere summer.
The company has unsuccessfully tried to discuss the issue directly with Federal Agriculture Minister David Littleproud.
Last week, as predicted by WA farmers when the live sheep trade came to a halt in June, the value of export quality sheep had dropped dramatically.
WAFarmers livestock president David Slade said the drop in price from $115/head to what LSS was offering could not have come at a worse time for the industry.
“Producers have had to retain sheep on farm which has significantly jeopardised on-farm production costs as farmers have had to buy in feed to maintain sheep and support additional shearing costs,” Mr Slade said.
“Prior to the trade’s disruption, producers were receiving about $115 per head for 45 kilogram live weight export wethers.
“Producers have spent on average $15 extra per head to feed wethers since June; combined with a $30 drop in wether prices, plus an additional $25 net wool value, the total cost to farmers has equated to $70 per sheep.
“This is a significant value and this cost, coupled with the current average sale price of $85 for export wethers, means farmers are at a disadvantage and this is only going to worsen if the trade does not pick up.
“Exporters insist this price is reflective of the increased shipping costs due to the McCarthy recommendations and continuing uncertainty of the trade.
“Lack of competition in the live export market and between domestic processors to generate slaughter prices equivalent to those being paid in the east, is clearly impacting the prices paid for sheep buyers in the west.”
WAFarmers wants the Federal government and DAWR to fast-track the approval of other export permits to allow more competition in the market, which should result in increased sheep prices.
Rural Export and Trading WA general manager Mike Gordon said his company had been audited as part of the licence application process and was “about 70 per cent on its way to receiving a licence”.
He said it was a fairly lengthy process but considering DAWR had only had its application a few weeks, they were doing well.
As soon as it gets the approval the company will be in the market for wethers to load on the awaiting vessels to markets in the Gulf.
That process is expected to take at least three-four weeks as sheep need to be sourced and quarantined for two weeks prior to loading.
p Kuwait Livestock Transport and Trading (KLTT) announced last week that it was planning to establish a new live export subsidiary in South Africa to provide a 12-month supply to its customers after Australian live exports to the Gulf States were brought to a standstill when it’s trading partner Emanuel Exports had two licences suspended and then cancelled.
The Kuwait government owned Al Mawashi, which is floated on the stock exchange, has been forthcoming in the past about its plans to provide food security to its country and that it would seek alternative markets to Australia if it couldn’t provide the number of sheep required to feed its population.
An Australian Livestock Exporters’ Council (ALEC) spokesperson said the decision by Al Mawashi confirmed what it had been saying for months.
ALEC said the company’s move to work out of South Africa was a no-brainer due to its location and its similar flock type to WA, although it was twice the size at about 30 million head.
“It’s a significant story, but it’s also business as usual,” ALEC said.
“From an infrastructure perspective it would be quite easy for them to establish themselves in South Africa.
“There’s also no ASEL and ESCAS requirements to deal with.
“Although there is a risk of disease the company appears to be able to work with that.
“The decision increases the likelihood that KLTT will start importing from there by the end of the year.”
If the trade to South Africa is cheaper and more productive for the company WA producers could see a dramatic change in the number sourced from its flock.
Industry leaders have warned that removing the live sheep export trade out of the WA system, either through legislation or market access, would see a reduction in local prices and an overall reduced flock as people again left sheep, or stopped breeding as much, to focus on other more profitable production systems.