Farmers, exporters brace for hip pocket pain
Sheep ships to the Middle East are moving again.
But WA farmers and livestock exporters can expect to continue bearing the brunt of massive costs resulting from this month's live export permit delays.
The delays effectively arrested the trade for two months and have left an estimated 200,000 sheep and 10,000 cattle stranded on farms across the State awaiting export.
Sheep prices have dropped by about 30 per cent since the last livestock shipment left WA in the first week of August and exporters estimate they have lost tens of millions of dollars in the past few weeks from idle vessels - costing up to $60,000 a day - loss of contracts and a wide range of indirect costs.
And no relief is expected in the short term because additional regulatory conditions imposed on new live export shipments will add to the ongoing expense of taking stock offshore, domestic processing space continues to be tight and demand for processed meat remains sluggish.
The Department of Agriculture, Fisheries and Forestry (DAFF) this week granted approvals to Wellard, Emanuel Exports and Livestock Shipping Services (LSS) to export about 190,000 sheep and 400 cattle from Australia to the Middle East.
The approvals have stipulated new animal health and welfare requirements, including employment of additional stock handlers on ships, carrying more feed, water and veterinary supplies and providing more detail about contingency plans if a shipment is delayed or refused unloading overseas.
The permits were the first to be released by DAFF for Middle Eastern markets since the start of September when a freeze was imposed due to Bahrain rejecting a sheep shipment on the grounds that some animals had scabby mouth.
These animals were unloaded in Pakistan, where on Tuesday this week they had been declared healthy and free of disease by independent testing but still faced the prospect of being culled because of a dispute over their health status that is being negotiated in the local court system.
Lack of exporter activity in the saleyards associated with disruptions to the live sheep trade in recent weeks has seen wether prices fall by up to $35/head in the saleyards and ewe prices drop by about $30/head.
National Livestock Reporting Service analyst Graeme Curry said wethers that were making $90/head at the start of September were this week selling for about $55 to 60/head and bare shorn ewes had come back from about $53/head three weeks ago to about $45/head, depending on grade.
He said these levels had plateaued at sales on Tuesday this week, after big falls the previous two weeks, but remained well down from early January prices of about $105/head for wethers.
Saleyard crossbred lamb prices have also fallen to about $3.60/kg from $5.45/kg at the start of the year and ewe mutton is down to $1.65/kg from $3.80 in January.
Mr Curry said exporters were notably absent from the main WA saleyards last week and there had been minimal exporter activity in the past three weeks.
"Numbers in the yards are also unusually low, with only 9000 sheep offered at Katanning and 8000 at Muchea last week," he said.
"I think it is a combination of farmers holding on to stock and the general decline in sheep numbers that has taken place across WA in the past five years.
"There is a lot of uncertainty around and everyone's confidence levels are at rock bottom."
York farmer Peter Boyle took a 30 per cent price hit this week when his wethers started moving off-farm for the next Emanuel Exports shipment.
"This week I sold my best sheep for the worst price," he said.
Mr Boyle said he had planned to sell a consignment of wethers and ewes on August 24 when prices were about $100/head for wethers and $80/head for ewes and the sheep were due to leave the farm on September 4.
He said a two-week delay due to a lack of export permits for his buyer meant he'd had to carry the stock through and this week the sheep left the farm at $75/head for wethers and $55 to 60/head for ewes, which had eaten into his expected margin and put the sheep's value potentially below costs of production.
"And the exporter could only take 30 per cent of the original planned consignment, leaving me with 60 per cent remaining on farm," he said.
"It is totally due to the backlog of stock on farms."
It is estimated by various industry sectors that about 200,000 sheep and 10,000 cattle across WA are awaiting export due to shipping delays and the backlog could take some time to clear.
It is understood that LSS is aiming to only top-up sheep numbers destined for Jordan when its ship berths in Fremantle next week after loading in South Australia this week.
Wellard has a permit to send 65,000 head of sheep to Qatar from Fremantle and loading started early this week.
But most of this shipment is likely to comprise sheep that the company had already bought and was feedlotting.
This leaves Emanuel Export's next shipment as the main export market for new stock off-farm.
Mr Boyle said this meant farmers would not be clearing shipping stock for some time because livestock vessels typically had a 30 to 40-day turnaround.
"We are agisting thousands of sheep at considerable expense and this will now be prolonged because it will take time to sell them," he said.
Mr Boyle said prices being offered by sheep processors were below export prices and kill space was very tight, with waiting lag times up to December for lambs.
The live export trade was crucial to the future success of the WA sheep industry and new regulations imposed on export permits this week were another blow to the sector.
"The extra costs put on exporters as part of their new shipping requirements are partly to blame for the fall in prices being offered to farmers, who will bear the brunt of these changes," he said.
"Sheep price falls and the slowdown of the live export trade is a disaster for farmers, many of whom are facing tough seasonal conditions.
"It is also a looming problem for the whole industry if producers decide not to mate ewes for next year's lambs because conditions are too difficult and it is easier to lock in wheat at high prices."
Mr Boyle said sheep farmers needed to maintain pressure on politicians to keep the live export trade going and he called on Prime Minister Julia Gillard to step up and ensure the future of the sector.
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