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Live cattle exports, climate and price risk management

Posted by Matt Dalgleish on 14 May 2018
Matt Dalgleish

The debate continues to rage around the live export of sheep to the Middle East and recently a Victorian MP, Sarah Henderson, lent their support to the banning of the trade of live sheep in the upcoming private members bill to be brought forward by Susan Ley.

All the focus in recent weeks has been on the sheep industry, but what about the cattle industry?Live sheep exports are the smaller proportion of the live export industry at around 15% of the total value of the live export trade and is largely centred within Western Australia, which has 30% of their annual sheep offtake heading overseas as live exports. Indeed, Western Australian exports of live sheep account for around 85% of the national trade in live sheep on an annual basis.

In contrast, the trade of live cattle is far larger, comprising of around 85% of the trade and is largely a northern dominated industry. In 2017 the value of the live cattle trade was estimated to be just short of $1.2 billion. A trendline overlay of the annual value of live cattle exports show a clear growth in value to the nation over the last two decades (orange dotted line).

Analysis of the trade flows of live cattle since the inception of the industry shows that since 1996, when the sector became mature, the average volumes of cattle exported live was around 850,000 head, but this figure could fluctuate according to the season – as highlighted in Figure 1. 

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Figure 1. Live cattle volumes and value

From a statistical perspective the normal range in live cattle volumes exported each year could see it range between 650,00 head to 1 million head. Furthermore, movement in the annual flows below 450,000 head or above 1.25 million head would be considered extreme.

During the very dry 2014/15 seasons when cattle turnoff increased significantly, particularly in the north of the country, the volume of live cattle exported extended beyond the upper end of the extreme range.

The importance of this increase in the live cattle trade volumes to farmers in terms of management of their pasture and price/supply risk cannot be understated. The cattle trade during this time acted as a release valve on a market that was struggling to process the excess supply of cattle being brought forward for slaughter because of the prolonged drought.

Indeed, the analysis of domestic slaughter levels from the period 1990 to 2017 shows that apart from the spike in slaughter in 2014/15 slaughter levels had been consistent, between the 7.2 to 8.2 million head range for most of the period – Figure 2.

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Figure 2. Live cattle export ratio and annual cattle slaughter

A measure of the live export ratio* during this time frame shows that after the industry had reached a mature stage (beyond 1996) the level of live exports to slaughter fluctuated between an 8% to 12% range, depending upon the season.

However, during the extreme and prolonged dry spell between 2013 to 2015 the live export ratio peaked toward 16%. Statistical analysis of the live export ratio suggests that any move above 13.3% would be considered an extreme event based off the historic data, so a move to 15.4% at the tail end of the drought was a significant event.

This indicates that the ability of producers to offload stock into another alternative pathway to domestic slaughter, such as live export, acted as a release valve for an industry under severe climatic burden.

Domestic cattle prices during this period were already under significant pressure as a result of  the high slaughter rates, had the live export industry not been able to take on some of the excess supply domestic prices would have suffered further.

Perhaps the lawmakers need to keep the importance of the live export industry in mind when they are framing policy that can impact an industry that plays a crucial part in the red meat supply chain. Undoubtedly, high animal welfare standards are a key component of making the industry viable, sustainable and profitable. Australia is a leading standard bearer of ensuring the best possible welfare conditions are adhered to.

liveex ships

Data on live export mortality levels for both cattle and sheep exiting Australia have shown continual improvement over time and Australia is recognised as a leader in this area with programs such as ASEL, ESCAS and LGAP. If animal rights campaigners and lawmakers truly wanted to improve the situation of live exported sheep and cattle they would work with the industry within Australia rather than attempt to ban it.

The footage aired on 60 Minutes, and which continues to run on the Animals Australia advertisements, of live sheep being exported is terrible but it is not representative of the industry at all – the data proves this.

This footage was a rare situation and was unforeseen by the exporting operator. Calling for a ban on live exports based on this single piece of footage is akin to calling for a ban on farming because of footage shown of animals dying and suffering after a bushfire has ripped through a rural region. We all know that images after a bushfire has ravaged a farming community isn’t representative of the industry and neither is the footage shown by 60 Minutes and Animals Australia.

There are countries within the world that do not have the same access to the standard of living we enjoy within Australia, such as access to reliable electricity and cold storage. They rely on the live export trade to satisfy the meat protein needs of their growing population. If we deny them access to well cared for live exported animals from Australia they will go elsewhere to countries that may not offer the same welfare standards, reporting and governance.

A ban to live exports from Australia will be bad for animals exported live globally and bad for our farmers and associated industries that rely on the trade – particularly in Western Australia and the Northern Territory.  It’s a lose – lose deal for all concerned. Let’s examine the data and think carefully before we rush in on this proposed ban.     

*The live export ratio is a calculation of the proportion of live exports to slaughter during a given season

Topics: live export, Australian cattle industry, cattle

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