Summary
This report is the output of a study commissioned jointly by Meat and Livestock Australia and the Australian Livestock Export Corporation Ltd. The study provides a quantitative and qualitative assessment of the value of the livestock export industry to the national economy and to regional communities. The study addresses value added, multiplier effects, employment and the impact of the industry on participating businesses and regional centres.
The study was completed between January and June 2000. The study team included live sheep and cattle industry specialists and specialist economic modelling input. Case studies were prepared for five relevant Australian regions.
Value Chain
The livestock export industry value chain has been shown to be complex and relatively long. Up to twenty five separate business types, each generating value added and employing people in both urban and regional Australia have been identified.
The value chain for live cattle shows that producers, transporters (road and sea) and fodder suppliers are the major recipients of revenue from the trade. For live sheep the major revenue recipients are producers, feedlot operators, agents, shearers, fodder suppliers and transporters (road and sea).
Value added per head for live cattle in the value chain, not including an allowance for value added by each business supplying the chain or for multipliers for those servicing the industry outside the chain, is estimated at $35/head. Assuming an annual export of 840,000 head, with similar per head returns, total value added is $29 million ($35/head by 840,000).
Similarly, value added per head for live sheep is estimated at $8.75/head or a total of $44 million when applied over annual exports of 5 million sheep.
Multiplier Effects
The case study analysis provided an understanding of the contribution of both the live sheep and cattle industries to regional Australia. Regional economic impact modelling (Input-Output Analysis) was able to demonstrate the contribution the industry makes to total economic activity in the region, the revenue created by the industry, industry value added and employment. Estimates of revenue, employment and value added were calculated for both the direct impact of the industry and “flow-on” or multiplier effects. Key results from each of the six regional case studies are summarised in the table below.
Multipliers are a means of measuring gross revenue, value added and employment generated outside the value chain but inside the region. From the table it can be seen that, on average, for every:
• $1 generated in value added within the value chain another $0.50 is created in flow-on economic activity; and
• For every job generated in the value chain in the region another 1.6 jobs are created.
National Economy
General Equilibrium modelling was used to determine the contribution the live export industry makes to the national economy. The results of GE modelling show an annual contribution to GDP (or total domestic value added) of $708 million and an estimated 9,080 jobs created. Jobs created, generate over $300 million in wages and salaries. In many instances jobs created provide employment in otherwise contracting rural economies or employ rurally trained people, such as stockpersons, in urban areas.
Qualitative Contribution
The study contains a large number of qualitative assessments of the business created as a result of the industries’ activities. The assessments are based on individual businesses and contain details regarding types of jobs generated, to whom flow on benefits accrue and discussion of the impact of the business if the industry were to contract.
