A year of turmoil for live export industry

The impact has been felt among exporters, sheep producers, transport operators, regional towns and feed mill operators – with the issue becoming a potential political timebomb in the lead-up to next year’s general election.

At the start of the year things looked to be tracking along fine, including the first consignment of Dorper breeders sent to Russia by Landmark International for its client Miratorg.

The success of the initial consignment saw Landmark sourcing more Dorpers in the past few months for a follow up voyage to Russia in January 2019.

In February, however, Farm Weekly reported on the mortality rate of the Awassi Express during its voyage in August 2017 – which moved the State Agriculture Minister Alannah MacTiernan to undertake an investigation into Emanuel Exports and its handling of the voyage.

The incident saw 3.76 per cent – 2400 head – of its 63,804 sheep aboard perish from severe heat stress en route to the Gulf States.

It was treated by then Federal Agriculture Minister Barnaby Joyce as an “isolated incident” and no further action was taken.

News reports from the Middle East during August 2017 revealed that an extreme heat wave occurred at the time causing birds to fall from the sky and trees to catch fire.

There were also political tensions around Qatar at the time which affected the vessel’s captain’s decisions.

The majority of the animals perished off the coast of Qatar.

Qatar was blocked by its Gulf neighbours, being labelled a terrorist sponsor, although Australia has continued to trade there.

In April, footage obtained by Animals Australia on what it said were five voyages of the Awassi Express during 2017, aired on 60 Minutes depicting graphic scenes of animals suffering and a lack of welfare and sanitation on board.

The incident put Emanuel Exports into the spotlight and prompted new Agriculture Minister David Littleproud to instigate the McCarthy Review into the northern summer trade and the Moss Report into the Department of Agriculture and Water Resources for its handling of the live export trade as the independent regulator.

Both reports recommended changes to ensure a long-term animal welfare focussed trade could continue, which Mr Littleproud accepted and implemented, some without delay.

The new regulations would ensure an independent observer would be on board all vessels, at a cost of $1290 a day on weekdays to the exporter (and $1690 during the weekend), to ensure transparency and thorough reporting of each consignment.

The reportable mortality rate was lowered to 1pc and the reduced stocking densities would see 17.5pc less sheep exported on any given vessel, regardless of the time of year.

The regulator suspended and then cancelled Emanuel Exports’ licence in June, as well as its affiliated company EMS Rural Exports, citing undisclosed concerns, which the company said it would appeal with a court date expected about March 2019.

The decision to suspend and then cancel the licences saw 60,000 head of sheep set to be loaded aboard the Al Shuwaikh stranded in a Peel feedlot for weeks, until they were all processed locally to avoid an animal welfare disaster.

Any attempts by other export licence holders to take over the contract would have been met with an injunction during the northern hemisphere summer after Wellard and Harmony Agriculture and Food Co confirmed that they had received a letter from Animals Australia warning them of such action.

Due to the threats and the change in the level of regulations, there were no sheep shipments for months until it was deemed more viable.

Kuwaiti company Al Mawashi, which incorporates Kuwait Livestock Transport and Trading (KLTT), which owns and operates the vessels Emanuel Exports uses to export sheep to the Gulf States, also began looking to South Africa as an alternative source of animals at this time, as Australia became an unreliable source to fill its market requirements.

Al Mawashi never stated whether they did establish new markets, although the Awassi Express was seen to be active in the North African region before it changed its name to the Anna Marra, taking thousands of sheep under less stringent regulations than Australia to sure up the Gulf State’s food security.

In May and June, WA sheep producers began voicing their concerns about what was happening and the decisions being made at their expense – with WAFarmers hosting a live export rally in Katanning in July which saw one of the largest turnouts of the industry since the 1980s, with about 1300 in attendance.

The issue became polarised as the State government tried to steer the sheep industry toward a “Plan B” of breeding a “multi-purpose Merino” and processing more sheep meat locally to avoid situations such as the Awassi Express incident, as well as the announcement of a proposed five-year phase out of the trade by Federal Labor at the next election.

The animal activist group Animals Angels was also granted approval by Transport Minister Rita Saffioti to monitor the loading of livestock at the Fremantle Port on a case-by-case basis, which upset exporters and industry groups.

The RSPCA also began a campaign to end live exports, which some criticised because of the political stance it had taken.

During this time a flurry of activity occurred from WAFarmers and the Pastoralists and Graziers Association of WA (PGA), which supported the trade’s continuance, but had differing views as to what a campaign to preserve it should look like and how it should be run.

WAFarmers managed to pull together industry groups in a collaboration for its Promote Agriculture Fund, which has since lacked financial support and momentum.

A GoFundMe initiative attracted less than $30,000, with no donations since September, according to the site.

The PGA tried to fire up the industry to invest in itself but struggled to attract support outside of its members.

Its 12-week campaign was awarded Best Campaign in the Rural Media Awards of WA in November.

There were calls for industry levy-funded organisations, such as Meat and Livestock Australia and Australian Wool Innovation, to step up and support farmers and the trade with a counter campaign to the barrage on the news funded by Animals Australia, but these groups all said they could not engage in political campaigns under their existing charter.

Up until June live sheep exports tracked close to 2017 levels during the first half of the year (at 784,000 head, back 5pc year-on-year) but, with no trade occurring for about 12 weeks, 2018 is expected to see export numbers finish at the lowest level in decades at 1.15 million head.

This figure would be down 39pc on last year.

The lack of exporter activity saw about 500,000-700,000 sheep left on paddocks across WA.

Some of these were sent off to the processors in order to keep cash flows on farm, which kept the abattoirs busy and resulted in a massive jump of about 40pc in the throughput across all sheep meatworks in WA.

Many producers took advantage of the high price for wool at this time as well, which compensated for the lack of premium prices for their export quality sheep at the saleyards.

When exporter activity slowed through July-September the price for wethers dropped by $20-$30 per head, with some farmers claiming they had lost more.

Since exporters re-entered the market and Rural Export and Trading WA (RETWA) was granted its export licence (after delays and much scrutiny by the regulator), the price for wethers lifted to $100-$130 per head at the Muchea Livestock Centre, in line with prices received earlier in the year.

A string of vessels taking more than 150,000 sheep departed Fremantle for Israel, Oman, Kuwait, Qatar and the United Arab Emirates among others.

All reports from the voyages have come back with positive results and minimal livestock losses.

The Australian Live Exporters’ Council declared a self-imposed moratorium on sheep exports during the northern hemisphere summer for 2019, beginning on June 1.

This change will see the trade continue, pending its political survival, operating for nine months of the year.

While it may provide some certainty for sheep producers as they plan for next year, it will cause some adjustments in the scheduling of vessels to ensure numbers are sent to markets when they are required, especially around the Islamic holy months and festivals.

Due to the financial pressures on some export companies it is likely that more changes will be seen in the live export landscape in the future.

Recently Wellard announced it was restructuring to focus on its core exporting business, while selling off its Beaufort River Meats to Iranian buyer International Meats and its Wongan Hills feed mill and Baldivis pre-quarantine export depot to Livestock Shipping Services, with contracts expected to be finalised in February 2019.

Harmony Agriculture and Food Company also moved to restructure its business by listing two of its properties for sale, including Rancho East, near Esperance.

Some staff lost their jobs due to the changes.

It announced a refocus on processing high quality beef brands for local and export markets, while scaling back its export operations to opportunistic voyages to its customers.

To correct misconceptions among some producers, Harmony director Steve Meerwald said they would still be involved in live export of sheep and cattle, though it wouldn’t be the main focus.

It is also unclear if Emanuel Exports, the nation’s largest sheep exporter, will regain its export licence in the near future – though after its appeal court hearing in March 2019 that should be a lot clearer.

Having survived a few political attempts to end the trade, with the last during the final sitting week of parliament by one vote (72-71), and as the Labor Party has a policy to phase out the trade over five years if elected, live sheep exports will undoubtedly be topical for the foreseeable future as the industry competes against greater regulations and seeks to maintain its “social licence to operate”.

In January 2020 two tier vessels will be phased out in an effort to improve the standard for vessels into the future.

The Bader III, MV Maysora and the Al Shuwaikh are the only two-tier vessels that ship out of Australia.

KLTT’s new $100 million vessel is expected to bring new life to the trade with purpose built state-of-the-art technology fitted for improved animal welfare.

During 153 reported voyages a total of 973,651 sheep were exported, with a mortality rate of 5982 head or 0.61pc.

Meat and Livestock Australia revealed that live cattle exports for the calendar year-to-November totalled 1,008,000 head, up 27pc year-on-year.

The trade made up ground throughout 2018, underpinned by a reasonable 2017-18 northern wet season (followed by dry conditions over swathes of the rest of the country) and a more favourable price point supporting an uptick in shipments to Indonesia and Vietnam.

The emergence of China as an importer of slaughter cattle, three large shipments of feeder cattle to Russia and strong numbers shipped to Israel (up 100pc to 56,000 head) also buoyed the live cattle trade in 2018.

Live export steers out of Darwin averaged close to 300 cents a kilogram throughout 2018, which was back from an average of 345c/kg across the same period last year.

Steady demand from Indonesia and Vietnam also supported live trade out of the north, with shipments out of Darwin, Townsville and Fremantle leading the way, up 27pc, 27pc and 56pc year-on-year respectively.

The establishment of slaughter cattle exports to China, combined with a lift in breeder cattle shipments this year, has seen the live trade to the market increase 62pc year-on-year, to 99,000 head.

Exports of slaughter cattle continue to face barriers to entry in the market and the trade for slaughter cattle appears to be slowing down - there were no recorded shipments in November.

A value added tax on imported cattle, the 14-day imposed processing timeframe for imported slaughter cattle and regional limitations on sourcing cattle from Blue Tongue virus zones, underpin the commercial challenges faced in this market.

Fremantle, Broome and Geraldton were the main ports for exporting cattle in WA.

While it was denied that the phasing out the live sheep trade would also affect the cattle trade and see a similar attempt by activists and politicians “with no skin in the game”, as a repeat of 2011, producers and farm lobby groups have expressed their distrust and concern that cattle would be the next step in the campaign to end the trade completely.

During the season many cattle from WA’s top end were trucked to Darwin, which was the main cattle export port, followed by Townsville, due to the drought conditions in the Eastern States.

Most of the cattle voyages were made up from small consignments into Indonesia, South East Asia, Malaysia and China.

Cattle exporters were also not immune to the regulatory changes with independent observers, reduced stocking densities and a lower reportable mortality level.

There have also been challenges with the continuation of imported Indian buffalo meat into Indonesia, undercutting prices and increasing its share of the market.

Elders pulled out of its feedlot operation in Indonesia citing challenges in the market.

In October International Livestock Exports was presented with a show cause notice – due to its links to Emanuel Exports.

This was however resolved and the company continued to trade.

The incident highlighted the fragile nature of the industry with an independent regulator determined to be more thorough than it has been in the past.

In November 4000 cattle had to be offloaded from the MV Jawan at Portland after the vessel began seriously swaying after embarking.

An investigation was still underway into the cause of the incident, but the industry was sure that had there been any devastating losses the activists would have been after the end of the cattle trade as well.

There were two incidents involving cattle this year, involving Australian Rural Exports (Austrex) and Harmony Agriculture and Food Co’s subsidiary company Pheonix Exports.

On the Austrex voyage in January 29 cattle died from Bovine Respiratory Disease (BRD) triggering an investigation.

In June, Pheonix Exports sent cattle to Lianyungang in northern China, resulting in the company being suspended from trading into China until further notice.

The company lost 46 cattle from its 3180 consignment from Fremantle.

The deaths were said to be related to respiratory issues after hitting  warmer temperatures near the equator.

During the 153 reported voyages during 2018, 473,620 cattle were exported with a mortality rate of 666 head or 0.14pc.