This is the first instalment of a three-part blog series which summarises the importance of the live cattle trade to Australia. The information contained within this blog was sourced from a Mecardo report commissioned by Livecorp/MLA and released in November 2018 entitled “Value analysis of the Australian live cattle trade - key highlights”.
In the last thirty years, the Australian live cattle export trade has established itself as an important component of the overall Australian cattle market - providing jobs for regional Australians, sustaining farm land values and supporting cattle prices through additional buying competition, particularly during times of drought.
The flow diagram displayed in Figure 1 outlines the proportional flow of Australian beef product for the last five years. Live exports represent 12.5% of the Australian cattle turnoff.The significance of the live cattle export trade to the Northern Territory cannot be understated with 38% of Australia’s live export cattle exiting the country via the port of Darwin, at an average of 400,000 head per annum over the last five years. Western Australian and Queensland ports also contribute significantly to the trade volumes at 25% and 21%, respectively.
In terms of beef processing, 46% of beef is processed in Queensland. In contrast, the lack of domestic processing opportunities for Northern Territory and Western Australian beef product is evident. Western Australian beef processing makes up 5% of total Australian processing, while the minimal processing levels in the Northern Territory means that the data there is no longer being collected.
Limited access to domestic processing facilities and feedlots in the Northern Territory and in Western Australia’s northern regions, combined with long road transport distances to south eastern markets/facilities and biosecurity factors underpin the live cattle trade as a crucial element of the Northern cattle industry.
The bulk of Australia’s live cattle are sent to Indonesia, averaging 53% of the volume in the last five years. Nearly 80% of cattle exported each year will be sent to either Indonesia, Vietnam or China.
The inherent value of the live cattle export industry to the northern regions of Western Australia and the Northern Territory is highlighted in the following regional representations. They show the average percentage of cattle sold to live export as a proportion of total cattle sales within each zone over the 2012-2017 period. The colour shades identify the key source zones for live cattle within each state/region.
NB Live cattle sales proportions shown within zones do not include dairy farms, however, state volumes for annual head of cattle exiting ports within that state include dairy cattle figures.
38% of Australia’s live cattle exit the country through the port of Darwin at approximately 400,000 head per annum. The Top End zone, encompassing Darwin and the NT Gulf, has the highest proportion of live cattle sales as a percentage of total sales at 96.8%. However, this region holds just 3% of the NT cattle herd. The Katherine - Victoria River District has the bulk of the cattle, at 48% of the herd, and 91.5% of sales in this zone go to the live trade.
A quarter of live cattle leaving Australia do so via Western Australian ports each year, representing about 265,000 head. The Kimberley region holds the bulk of WA cattle at nearly 35% of the herd and is a key component of the live trade with 71% of cattle sales in this zone identified as live export sales. The Pilbara-Central Pastoral zone is also significant, with 29% of the herd and about 60% of sales reported as live export transactions.
Live cattle leaving the port of Townsville or Brisbane represent 21% of the total annual volume exported each season at around 220,000 head. In QLD, the Central North and Cape York/Gulf zone are the live cattle export hot spots with 17.7% and 16.4% of total cattle sales within these regions earmarked for the live trade, respectively. The Central North is particularly important, as it has the second highest herd concentration level in QLD, behind the Darling Downs.
VICTORIA, NEW SOUTH WALES, SOUTH AUSTRALIA & TASMANIA
Ports within the south eastern states send approximately 160,000 head of cattle offshore each season, consisting of about 16% of the trade annually. The bulk of cattle sent from the southern region consists of breeding stock. Dairy farmers within these zones are particularly reliant on the live export trade as an additional avenue to destock during times of hardship.The high proportion of cattle entering the live export trade from Australia’s northern region demonstrates that in this region, the business model is centred on a high volume, low margin trade based on a ¢/kg measure. In contrast, the southern trade, which is dominated by breeding stock, has a business model centred on lower volumes and higher margin trade based on a $/ head measure.
The significance of the cattle live export trade to regional employment
Total employment consists of the direct on-farm employment plus the estimated proportion of full-time jobs created indirectly (off-farm) with businesses engaged in live cattle trade. Indirect employment includes transport operators, veterinarians, stock agents, finance and legal staff, fodder suppliers, port workers, administrative and exporter operator staff etc.
During the 2012 to 2017 period, the level of on-farm employment was estimated to average 2,029 workers (including farm owners) and a total national workforce of 9,7991 people. The chart below displays the historical trend in total employment estimates relating to the live cattle trade, nationally and by state, since 1995.
The value of the live export trade to employment is heightened due to the regional distribution of the workforce. Many of the live export-related employment opportunities are in remote centres of Australia, often where there is little transferability of jobs and skills to other industries.
The trade also supports the employment of Indigenous Australians. For specialist beef farms in the NT, indigenous employment accounts for 10.7% of the workforce, while in north-west WA it is 15%.
The live cattle export trade sustains a raft of industry support services including veterinary, transport and agency businesses. This is identified across Australia but is particularly important in the vast expanse of Northern Australia where services are separated by often significant distances. Any reduction in the trade would place enormous pressure on the continuation of these services, particularly in remote communities where the live cattle export sector is the only, or one of the few, industries offering employment opportunities, particularly in indigenous communities.
In Part 2 of this blog we will assess the live cattle value chain and outline the reliance that participants across the supply chain have on annual revenue earnt from their involvement in the live cattle export industry, including the value it brings to Australian farmers and the regional community.
Photographs: Courtesy of NTCA