ESCAS causing lost trade

A major Middle East livestock importer representative claims the Australian Government is continuing to stifle trade opportunities and has cost the industry hundreds of millions in lost sales.

Saudi Arabian livestock company Suleiman Al Jabri Trading imports more than two million sheep, goats, cattle and camels every year, predominantly from markets other than Australia.

Company export manager and former WA Live Exporters Association chairman John Edwards said as each year passed, the restrictive marketing regulations imposed under Australia's Exporter Supply Chain Assurance System would continue to strangle the trade and limit marketing opportunities, not only for Saudi Arabia but all the Middle East markets.

He said until the Australian Government was prepared to have a constructive dialogue with the Middle East importers and their governments, the Australian livestock industry would continue to miss out on the lucrative trade the region offered.

Mr Edwards recently returned from nearly three months in the region, where he experienced the phenomenon first hand.

He said Saudi Arabia was a growing market and was once Australia's largest customer for live sheep.

"The region has rapidly expanded its supply base, evident by the nearly eight million sheep, goats, cattle and camels imported into the country during 2014," he said.

"In the absence of Australia as a supplier to the region, millions of dollars are being spent developing alternative sustainable markets in countries like Somaliland, the Sudan and eastern Europe."

Exports to Saudi Arabia were abruptly halted after the country refused to comply with ESCAS requirements in 2012.

At its peak, the Saudi trade represented about 32 per cent of all livestock exported to the Middle East.

The "one size fits all" animal welfare scheme hurriedly developed by the Gillard Government to reopen Australia's live cattle export trade to Indonesia after the 2011 suspension remains in many instances unworkable and flawed in the Middle East markets for Australian sheep and cattle.

Australia's live sheep export to the Middle East has also struggled to regain ground on significant declines since the second half of 2012, when trade issues led to a voluntary suspension of shipments to Bahrain.

Continued market challenges in the Middle East have led to the lowest numbers of sheep exported to the region in 20 years, with a decline of more than 3.3 million head since 2000.

Mr Edwards said the Australian Government continued to fail to address cultural, religious and food security concerns in the Middle East.

"These same markets understand that there are limited numbers of countries that have the equal capacity of Australia in terms of sheep numbers and the infrastructure to supply in volume, but in their search for alternative and sustainable supplies without regulatory impost (they) have made approaches to myriad smaller nations that have a live export trade capacity," he said.

"These countries are now filling the gap and in doing so have also helped stimulate development within their economies, which enables them to further bolster their supply capacity to deliver to Middle East markets.

"Places like Somaliland now supply well over four million sheep and goats into the region, the Sudan over three million sheep and shipments from Iraq, Iran, Pakistan, Syria, Turkey, Uruguay, Romania, Bulgaria and Georgia, to name a few, are all becoming commonplace."

Mr Edwards said the Saudi market had to adapt quickly in the face of livestock supplies drawing to a close with the last shipment of Australian sheep and cattle being imported by Al Jabri late in 2012.

"As a long-time importer and a major investor in the kingdom's livestock trade, the Al Jabri company had already been bringing livestock from other destinations for many years; however, in the face of no more supplies from Australia, the company quickly expanded its supply chain footprint in countries like Somaliland, Sudan and other destinations from which to source even greater numbers of livestock," he said. "In setting up and expanding supply chains in source countries, our company has invested heavily in quarantine stations, local transport systems and vessel capacity to meet the requirements of the Saudi market.

"Parallel to having to future-proof its supply sources for the commercial live trade in Saudi Arabia has been the company's prominent role as a major supplier of sheep and goats to the Islamic Bank's sacrificial slaughter program meeting the needs of Muslim pilgrims performing the rights of Haj each year."

Mr Edwards said in the past Australia had been a prominent supplier of long-tail ram lambs for the Haj, which many WA farmers were contracted to supply.

"Western Australia was in a unique position to supply when the lambing/weaning cycle of sheep production aligned with the lunar phase of migrating dates for the Hajj each year," he said.

Now, in the absence of Australia as a major supplier of sheep for the Haj, the company has had to seek alternative supplies given the increasing numbers required for the religious pilgrimage every year.

Since its first involvement with the Haj as a fledgling supplier nearly two decades ago, Al Jabri has increased its stake to the point of this year being the sole supplier for the Islamic Bank's annual sheep requirement for the festival.

"With the company's investment in its facilities in Somaliland and the maturing of that country as a major livestock supplier, it was a logical fit," Mr Edwards said.

"Combined with the significant feedlot and transport infrastructure the company has also developed in Jeddah, around both the commercial imperatives of being in the livestock import trade and that of being able to successfully deliver on the Islamic Bank's Haj supply requirements, it was no easy task to assemble and deliver 900,000 head of sheep and goats, but it was done very successfully," he said.

Mr Edwards said Saudi Arabia and the Middle East more broadly would always place significant emphasis on buying live animals.

"The Middle East market requires freshly slaughtered meat, and our customers will continue to source live animals from alternative suppliers if they can't get it from Australia," he said.

"If we don't engage and continue down this path, the isolation of Australian stock caused by ESCAS in the Middle East markets will continue to reduce the marketing opportunities for Australian stock directly, thereby volumes of trade reduce, exports reduce, demand reduces, and returns to farm gate reduce."

A spokesman for Agriculture Minister Barnaby Joyce said access to Saudi Arabia for Australian sheep exporters remained a high priority for the Australian Government.

"Ultimately it is a matter for the Government of the Kingdom of Saudi Arabia to allow for the importation of Australian sheep and the Australian Government fully respects their Government's right to make decisions about its trade affairs," the spokesman said.

"Minister Joyce discussed the live export trade during his visit to Saudi Arabia in April, 2014, and the minister continues to engage with his Saudi counterpart on this issue through diplomatic channels and via direct correspondence," he said.

"Due to community and industry concerns about animal welfare, future trade must be underpinned by the principles of ESCAS requirements. To date an ESCAS has not been established within Saudi Arabia."