27 March 2015
Matt Brann and Warwick Long
The temporary suspension of the live cattle trade to Indonesia in 2011 is still being felt by many producers across Australia’s north, but there’s some optimism in the air.
The current production environment is looking good, with high cattle prices, strong demand, extra markets, a new abattoir and a supportive government.
Hundreds of cattle producers from across the north are in Darwin this week for the annual Northern Territory Cattlemen’s Association (NTCA) conference.
With that in mind we asked four people in the northern cattle industry to give their views on its past, present and its future in an ABC Rural ‘Farmer Forum’.
- David Stoate, Cattle producer from the Kimberley in Western Australia
- Jo Bloomfield, Cattle producer in the Northern Territory
- David Warriner, Outgoing president of the NT Cattlemen’s Association and owner of DWsAgricon
- Ashley James, Live cattle exporter from Frontier International Agri
Nearly four years on from the ban on live export to Indonesia how is your business faring?
David Stoate: “We are still feeling the effects of the live export ban today.
“The years after the ban were quite difficult, with reduced volumes of cattle being exported, thus restricting sales of cattle from the property.
“Obviously the dry conditions in Queensland over the past few years have compounded these problems.
“The strong Australian dollar prior to this year also contributed to the poor prices over these years.
“The significant reduction in business equity combined with poor returns has meant that many producers have deferred capital investment over the last few years.
We have been in the fortunate position over the past three years to have had above average seasons in 2012, 2013 and 2014, so we have increased our herd size.
“The 2015 season has been well below average, so I am hoping that better market conditions prevail in 2015 and I can sell more stock.”
Jo Bloomfield: “We’re battling and though improving, I’m not sure we can ride this one out.
“The ban hit us when we were at a particularly vulnerable time of herd build-up and significant property development to accommodate the increasing herd.
“The ban forced us to withhold sale cattle for the next three years.
“That increased the already stretched infrastructure pressures.
“We knew the market effect of the ban wouldn’t be short lived but never envisaged it would last the three years that it did.
“We were forced to sell cattle at less than $1-a-kilo at point of sale and sell extremely young animals just to maintain a cash flow over the period following the ban.
“Due to the need to cover operating costs and provide for herd welfare, we tripled our debt load by accessing personal assets.
“Legal and financial implications of those decisions mean our business is now forced to rectify the debt load over the next five to 10 years.
“Our herd is not at maximum capacity and we do not think that repayment is a viable option through normal operational trade and sell off the base herd.
“We have listed our property for sale as a precautionary measure.”
David Warriner: “Business is going better than it has for a long time.
“However, we still need improvement before this investment stacks up beside other options.
“It is the perceived outlook that is being invested in, and not the status quo.
“We still need more improvement in terms of trade so financial metrics are competitive.”
Ashley James: “Four years on from the ban in Indonesia and apart from a few permit issues, business is generally good.
“It is however a difficult business to plan when import permits are released quarterly.
“This causes exporters and importers to play in a spot market which can be very volatile when the Indonesian government is looking for consistency in the wet market.
“It also becomes very hard logistically when ships are chartered long term but supply is not.
“Indonesia has been northern Australia’s long-term partner in live animal exports.
“They feed cattle as well, if not better than we do in our own country.
“As a partnership it works perfectly; we can grow them in the north, but can’t fatten them.
“Indonesia has difficulties in growing them, but can fatten them.
“With our close proximity to Indonesia it makes a perfect partnership.
“Vietnam has become a new trading partner of Australia for live cattle.
“It is still in its infancy but will continue to grow year-on-year I believe.
“It is a great market that can work hand-in-hand with Indonesia being a predominately slaughter market and Indonesia a feeder market.
“It offers growers more choices on what they do with slaughter cattle.
“In the past they have had to send them south, and freight, as we all know, is expensive.
“They can now send them to Darwin or other northern ports to go live without the penalties of the processing sector.
“It just offers more choices on where pastoralists can market their cattle.”
What has the new Exporter Supply Chain Assurance System (ESCAS) done for the welfare outcomes of Australian cattle?
David Stoate: “It is difficult for a producer to know the answer to this question.
“It certainly seems to be a much more rigorous system which has identified a number of problems in overseas markets and meant that these problems are rapidly addressed.
“Hopefully the presence of Australian welfare training in overseas markets means an improvement in welfare outcomes for all livestock, not just Australian livestock.”
Jo Bloomfield: “Exporters, through adherence to ESCAS, have significantly increased animal welfare through investment, training and perseverance.
“Animal welfare has been directly improved at every point of the supply chain processing Australian cattle.
“Infrastructure development in holding boxes and of course stunning equipment are the most obvious improvements at point of slaughter.
“These improvements are only a small part of the overall advancement in positive animal welfare goals achieved in all supply chains.
“Some already existed, others were developed post ESCAS.
“Training has increased welfare through skills improvement, knowledge and awareness.
“Perseverance has required huge monetary investment overall, including direct employment of people in other countries who are solely responsible to ensure application of ESCAS directly to animal welfare and ESCAS accountability requirements.”
David Warriner: “ESCAS is a very positive tool that has saved the live export trade.
“However, it is expensive and should not be necessary in order to achieve animal welfare outcomes.
“But it is necessary as Australia’s expectations are higher than other populations in the world.”
Ashley James: “ESCAS has greatly improved animal handling and slaughtering techniques in all countries it has been introduced in.
“It has been a great cost to the importers and exporters and one that is well worth it.
“Not only does it improve animal welfare for Australian cattle in foreign countries, but it has also had a flow-on effect to local cattle being handled and slaughtered in the country of origin, a point which has been sadly missed by our critics.
“We need to remember that Australia is the only country in the world that has implemented anything like this and for the activists to say it doesn’t work is misleading and false.
“It is true that there are some problems which have arisen in countries who are new to ESCAS, but these breaches are being worked through by exporters with their customers along with the in-country help given by industry body Meat and Livestock Australia.
“Each Australian exporter has a number of staff in different locations around the world managing data transfers for traceability and animal welfare officers visiting feedlots and abattoirs on a daily basis working out where training is needed and implementing it.
“In the four years since the ban, ESCAS has come a long way in Indonesia, from anger and not understanding what it was to a fully compliant industry where it is common practice to follow OIE (World Organisation for Animal Health) standards now.”
What’s the biggest threat to the live export industry?
David Stoate: “By far the biggest threat to the live export industry is the risk of negative government intervention like we saw in 2011.
“There are other threats to the industry such as lack of investment in infrastructure, but by far the biggest threat is the government making a mess of the industry such as occurred in 2011.”
Jo Bloomfield: “Ourselves. No markets must be entered into without full ESCAS compliance understood and actioned.
“Animal welfare must be the highest priority at all times in all markets, irrespective of location or animal type.
“We desperately need increased markets to regain financial equity lost during and following the ban, but if we enter animals into markets that are not readily compliant to ESCAS, or who don’t understand the importance of it we will inevitably fail in animal welfare outcomes.”
David Warriner: “A shutdown or severe diminishing of the trade due to political pressure or animal welfare regulations.”
Ashley James: “Competition from other countries such as Brazil will become greater over the next few years.
“Indonesia is looking at what the best outcome is for them with their growing population, growing middle class and an increasing taste for beef.
“This may be for them to change their FMD status for supplying countries from free to regional freedom of FMD.
“This would open up parts of South America to supply Indonesia.
“Lack of communication with Indonesia at a government to government level on this issue is also a threat.
“Both countries need to work together and understand what each country needs to grow.
“Another threat to the trade is uneducated and misrepresented opinions that grow legs with some media outlets who do not challenge them, and that these views become publicly accepted as fact.
“As exporters we need to be better at passing on information in a non-emotional and factual way and be more transparent with the general public.
“The Australian Live Exporters Council (ALEC) is doing a lot of work in this area along with state chapters forming up our Social Licence to Operate guidelines.”
What will the new abattoir near Darwin mean to your business?
David Stoate: “I am situated in the south-west Kimberley (south of Broome) with the property being about half way between Perth and Darwin.
“All that means is that I am still a long way from the new abattoir.
“However, the presence of an abattoir in Northern Australia can only be a very positive thing for the industry in general.
“There is also the potential for the Yeeda Pastoral abattoir to open between Broome and Derby, which will be important for processing those cattle that are not suited to the live export trade.”
Jo Bloomfield: “Livingstone will be a significant complement to market availability, more so for herd management than financial gain.
“Being a relatively low turn-off property of sale cattle, we have two main issues; low numbers and lack of consistency across lines of animals that aren’t suited to the live export trade.
“We have significant issues with dog-damaged animals that are earless, tail-less or have some other form of visible healed damage to their body.
“We have not yet sold to Livingstone Beef processing facility, but it is hoped that we will be able to send variable lines of animals to them that may be large horned bulls, dry cows that are not pregnancy tested and animals that are suitable to kill but not suited to live export in type, breeding, weights etc.
“Current containment of these animals on property causes significant issues in organisation and control.
“Currently we have to withhold numbers until we obtain suitable consignment loads to abattoirs that warrants the freight costs.
“If we can offload these often difficult to sell animals to Livingstone consistently and in smaller consignments, it will increase herd management and realise a return for these animals that otherwise are of minimal achieved return due to freight costs and competition in other markets to which they would be sold in eastern states.”
David Warriner: “Livingstone Beef provides more competition to the north Australian cattle market.
“Therefore can only be a good thing, providing it can viably compete with the live trade and is not used as a mechanism by detractors to close the live trade.”
Ashley James: “This question is more relevant to the growers.
“I think it’s great for the Territory and offers more competition for the pastoralists which in turn mean higher prices.
“AACo should be congratulated for investing in a state of the art facility like this.
“Everyone has an opinion, some good and some bad but they have pushed on and now the north has an abattoir again.
“This has to be a good thing, doesn’t it?
“Who knows, we may even sell a few to them ourselves!”
What is the future for live cattle exports from northern Australia?
David Stoate: “Northern Australia can produce an inexpensive form of protein and is adjacent to large populations which are desperately short of protein.
“These facts mean that the industry should have a bright future.
“The possibility of abattoirs being located in the north should be complementary to the live export trade and improve the overall market offering from the region.
“The future of the live export trade is by no means guaranteed and will require ongoing work by industry and Government to ensure it can thrive.”
Jo Bloomfield: “Live cattle exports will steadily increase in numbers to become a significant portion of all cattle turn-off from Australia in the long term. I
“It’s fundamentally and absolutely necessary for not only those directly involved, but the Australian cattle industry as a whole due to its competitive ability to underpin all Australian cattle market values.
“Due to operation costs in Australia, some processors will move offshore to retain costs and will become part of the live export supply chain through establishment in other countries.
“Live export will increasingly broaden its extent from the now predominantly Bos Indicus animals to cover all breed types throughout Australia and will require an increase in port establishments in both size and number.
“Live exports’ ability to underpin cattle values across Australia will enable producer’s long-term sustainability and viability of their property operations.
“This will increasingly allow debt reduction and property development, in turn impacting positively on local and overall Australian communities.
“Existing customers and other countries will increase their demand for protein as their own land resources and food safety diminish.
“Indonesian markets for live export will always be significant, but will suffer impacts by outside influences of currency and politics, more so than cattle availability and real market requirements.
“Indonesian weight market specifications of less than 350kg per animals is too light to be sustainably profitable for many northern producers.
“Increased competition will come from others prepared to buy weights above 350kg but not necessarily slaughter ready animals.
“The prices must stay up around the $2.50 a kg ex-Darwin for viability of supply to all markets, [because] $2 a kg is only breaking even at this point in time.
“Exporters need to be congratulated for their effort to comply with ESCAS, but those who consistently breach requirements at a critical level must be held accountable, even removed.
“Those who attack or question live export, advocating its shutdown, will always focus solely on the animal welfare of only those animals exported directly in relation to it.
“Scrutiny of live export will always remain and in fact increase.
“The live export industry itself needs to acknowledge, recognise and pro-actively address why and the reasons that some advocate to shut the trade down.
“Live export trade will face significant negative forces from politicians, Australian meat processors and those within Australia who believe that stopping live export and solely focusing on Australian meat processing is actually a logical and viable alternative to any form of live export.
“Darwin port needs to improve its efficiencies of loading or it will lose market share to Townsville as producers outside of the north increase their turnoff to live export markets.
“Producers will need to significantly increase above current efficiency of production and land systems, optimising but also balancing maximum output with sustainable long term land management.”
David Warriner: “Until beef processing is clearly competitive and viable in the longer term and more abattoirs are built to handle the turnoff, then the future is great.
“Without more abattoirs and the live trade, the northern cattle industry is doomed, I’m afraid.”
Courtesy of ABC Rural