Impact of the Live Sheep Export Trade's Self-Imposed Moratorium and Regulatory Changes

Summary

The live sheep export trade in Western Australia supports a large and diverse network including farmers, veterinarians, shearers, fodder growers, consultants, exporters, agents and small business.

The trade is the prime outlet for sheep that aren’t suitable for domestic slaughter and functions as an important risk management tool allowing farmers additional management options through poor seasons.

The operation of the live sheep export trade was temporarily halted in late June 2018 following the airing of distressing footage on television, and the licence of a key livestock exporter was cancelled.

The Federal Department of Agriculture, Water and the Environment implemented regulatory chances which required exporters to have a heat stress management plan for each voyage to/through the Middle East plus a raft of additional measures.

In 2019, exporters self-imposed a moratorium to manage the risk of heat stress during the northern summer, which was later mandated and extended by the regulator.

This project examined how the 3 – 4 month halt in exports affected people and businesses involved in the trade. A wide variety of participants in the live sheep export value chain in Western Australia were consulted in addition to a desktop analysis. The project also examined changes to sheep delivery rates following the introduction of new regulations and management practices.

Objectives

This is the second of three reports, aimed at providing an economic analysis of the impact from the industry’s self-imposed three-month moratorium and the regulatory changes introduced in 2018.

Key findings

• The live export market provides a stable price floor in the sheep market. Fewer buyers are present in WA sheep markets compared to eastern markets. Thus, competition is heavily reliant on the presence of buying activity for the live export trade to improve competitiveness and prices received for stock. During the shipping suspension in 2018, the normal price discount in WA compared to eastern markets, widened further due to lack of competition.
• Sheep producers have some ability to adjust their management if a moratorium continues and sell into domestic markets. However, the industry also supports participants such as livestock carriers, shearers and feed suppliers and manufacturers. Many are highly reliant on livestock exports and experience negative mental health as well as financial impacts and may consider moving on if year-round work is not available.
• The reduction in live sheep exports during June to October 2018 is estimated to have cost the industry $83.6 million in lost revenue nationally.
• The moratorium during the 2019 season is estimated to have cost the industry $65.8 million in foregone revenue nationally.
• Mortality rates on live sheep shipments for each month in 2019 were half the average for that month over the period 2013 to 2017. This is put down to changes to shipping practices during and since 2018, including the introduction of heat management plans, reduced stocking densities and the introduction of Independent Observers, as well as the moratorium.

Benefits to industry

This analysis provides a clearer understanding to policy makers and the industry of how the 3-4 month annual halt to the live sheep trade has affected the economic wellbeing of the full supply chain, as well as the social and emotional impact on both workers and regional communities.

Future research

This is the second report in a series of three, carried out under this project. Industry may look to undertake future research to continue to ensure the WA sheep industry has access to diversified markets.

Phase 1 is an analysis of sheep delivery success rates and the impact that regulatory changes have had on sheep mortality and welfare.

Phase 3 is an analysis of a range of farm level decision-making options influencing national sheep flock numbers, with a primary focus on Western Australia.