LIVE sheep exports to Saudi Arabia by sea could resume from Western Australia after September this year if supply chain standards, protocols and Federal Government approvals are finalized.
The prospect of the trade resuming into the Middle East country — formerly one of Australia’s largest live sheep customers – was raised by the Osama Boodai, chief executive officer of the Kuwait Livestock Transport & Trading, during a visit to Western Australia this week.
The news has come as confidence among WA sheep producers is at a low ebb, with some reportedly euthanizing male lambs at marking due to poor price and seasonal prospects, and others considering dispersal of their flocks this year.
The dire state of industry confidence, the persistence of the Albanese Labor Government to phase the trade out after its first term and the advent of Saudi Arabia’s re-entry, has prompted a renewed call for a producers to fund a federal lobbying campaign.
Live sheep have not been exported to Saudi Arabia from Australia since August 2012 due to the country’s concern that the Exporter Supply Chain Assurance System would impinge on its sovereignty. In 2009, Saudi Arabia was Australia’s third largest Middle Eastern market for live sheep, importing over 576,000 head valued at A$55 million. Nearly 1.2 million sheep a year were exported at the trade’s peak.
In April 2021, then Minister for Agriculture, Drought and Emergency Management David Littleproud said his department had been working with Saudi Arabia on new arrangements to ensure the health and welfare of the exported animals. A departmental spokesman said exports of live sheep to Saudi Arabia may occur at any time other than when the prohibition of export of sheep to the Middle East is in effect during the Northern Summer. The live export of sheep to most ports in the Middle East is currently banned from 1 June to 14 September.
In WA this week, Mr Boodai told the ABC’s Country Hour that although Saudia Arabia has been buying sheep from neighbouring countries, including Somalia and Sudan, the quantities from Australia can increase again, with increased orders in the past five months.
“The changes that are happening over there are letting them accept the ESCAS rules, because there was no-one who really clarified for them the meaning of ESCAS in the market.”
He said KLTT was looking at making shipments of Australian sheep into Saudi Arabia every month starting next year, but after Department of Agriculture Fisheries and Forestry approval of KLTT’s supply chain, initial shipments could start after the Northern Summer moratorium ends.
“Currently they are importing around 8 million head, so I think easily we can supply them with one million annually, with all these rules,” he said.
Mr Boodai said KLTT wanted a closed loop supply chain and did not want “any mistakes to happen to the supply chain.” He told the ABC that regardless of generational change among consumers, the demand for fresh sheep meat processed in the Middle East would continue.
He said the proposed live sheep trade phaseout created uncertainty for KLTT, but it would be really difficult and take up 30 years to create a similar supply chain in another country. He has been told official meetings between the Australian and Kuwaiti government were planned for July.
“I hope that something will change.”
KLTT owns the biggest shaded sheep feedlot in the world in Kuwait – capacity of 200,000 head – and a slaughterhouse that can process up to 15,000 head a day with 35 retail outlets.
Saudi importers are working on meeting ESCAS standards
KLTT is also the parent company for Perth-based exporter Rural Exports and Trading WA. RETWA general manager Murray Frangs said the remaining outstanding approvals for the Saudi Arabia supply chain could take some time.
“But it (the first shipment) will probably be in the latter half of this year – the shipment certainly won’t occur before the middle of September and it’s more likely not to be the first shipment after the moratorium period ends.”
Mr Frangs said the Saudia Arabia importers had some work to do to meet ESCAS standards and the proposed trade phaseout was a real concern for them.
“We were going down the path of working with them to set up their infrastructure, management plans and protocols over there to meet ESCAS, but right in the middle of going through that process, unfortunately, they now ask the question: ‘What happens if we do all this, because if this doesn’t then continue, is this all worth it?
“They do have to make some substantial inroads into adjusting and setting up their protocols in a sovereign country to Australian requirements – it’s a big step.”
He said Saudi Arabia had increased its processing capacity and demand for sheep meat.
“There are some supply concerns from existing Saudi importers due to drought in North Africa and civil war in Sudan, and this has made them question whether their existing supply is that reliable.”
Saudi Arabia wanted a solid consistent supply of quality product and saw Australia as being able to supply that, Mr Frangs said.
The current prices of Australian sheep were also more in line with long-term levels, he said.
During 2020-22, a lot of the sheep and lambs turned off in Western Australia sold to processors in WA and in the east at higher prices.
“It does add to the capacity for us to talk to them about re-opening supply.
“We need to take the opportunity when it is in front of us and it is a lot easier to take that opportunity when prices are where they are right now.”
Pay now to save the trade – Seabrook
Pastoralist and Graziers Association of WA president Tony Seabrook said the Saudia Arabia interest was great news.
“But until the Labor Party withdraws their policy to shut the trade down, it will only be a flash in the pan until after the next election, then it will be gone and done.”
Mr Seabrook wished that the ALP would recognise the importance of the Saudia Arabian interest and change its policy.
“But I don’t think that (Minister for Agriculture) Murray Watt has a great deal of clout in the Labor caucus.
“I think that the State Government in WA is offering up lip service supporting the trade; I don’t see McGowan raising his voice and banging the table in Canberra and saying’ you’ve got to change the policy’,” he said.
“At the end of the day, the numbers men in the Labor Party are doing the numbers on whether it is to their benefit electorally to close it.
“If the trade is prepared to commit enough effort, money and time to destabilise some of the Labor seats so that the numbers men suddenly realise it’s going to cost them more to go ahead and shut it down then they’ll pay attention,” he said.
“But at the moment, it’s to their electoral advantage to maintain a policy of shutting it down and it won’t change unless our industry steps up and recognises the fact that this has to be changed in Canberra.”
He said they key to retaining the trade it to get the Labor Party to recognise that the policy has to be dropped by the next election.
Rather than express frustration at meetings with the panel tasked with determining the terms of the phaseout, Mr Seabrook said issued a challenge to producers to fund a federal lobbying campaign to target marginal electorates in the next election.
“There are about 12-14 million sheep here and if every producers was prepared to kick in 50 cents a head that would give you a fund of $6-$7 million dollars and with that you can save the trade – there is no doubt whatsoever.
“You could engage the right people and you could embarrass the Labor Government to the point where they would have to reconsider it,” he said.
“If the producers are serious, they are going to have to work out to put together a concerted campaign that will attack politicians in their electorates.
“It is eminently winnable, there is not shadow of doubt – the logic, the Saudi market, everything is in place – this is absolutely winnable, but not for free.”
Mr Seabrook said the situation in the WA sheep industry was serious.
“There is no shadow of doubt that it will not be the same industry in 2-3 years’ time as it is now.
“People are getting half of what they were getting 12 months ago for stock they are selling.”
He knew of a producer who sold wether hoggets for $60 that were worth $130 last year. Some areas of WA have had good rain, but in other areas producers might have to soon destock quickly, he said.
“The abattoirs are so far behind where they need to be right now that they won’t find a place for them.”
He said sheep to Muchea a few weeks ago and was paid $10 for some old sheep that he believed because of freight costs and yard fees he would have been better off destroying and burying on farm.
“There is no demand for anything except topline stock.”
WA farmers should join their state farming bodies
WAFarmers vice president and former WoolProducers director Steve Maguire is also concerned about the impact of the phaseout on the selling options for producers and the future for wool sales in Fremantle.
“We need a diversification of options in meat and wool, and in markets, slaughter and live export, and export to the east, to be resilient and sustainable without government hand-outs.
“Saudia Arabia is just another possible market that will take a sheep that we produce.”
He said being able to export live sheep during the current dry conditions would ease farmers’ concerns.
Mr Maguire supported funding a campaign to retain the trade, but preferably through producers joining their state farming organisations or by accessing the Australian Farmers Fighting Fund.
“When you have a government who is prepared to throw an agricultural industry under the bus for no scientific or logical reason, purely to garner votes in inner-city electorates, then we in agriculture, we’ve got a problem, a big problem.
“If all the farmers would just join their organisations we would probably have enough money to do something about it and get involved.”
Strong negative sentiment among WA sheep producers
The Australian Wool Production Forecasting Committee’s April report said there is a strong prevailing negative sentiment among sheep producers in Western Australia. Sheep turnoff is currently double the processing capacity in Western Australia with the phase out of live export heavily weighing on sheep producers’ minds, the report said.
The committee said live export numbers are currently slightly up as is the mutton kill; however, processors will begin to book in lambs for processing mid-May and move away from mutton. The report said current negativity will impact sheep production in the new season and into 2025. Low sheep meat prices and wool returns are making wool production gross margins unfavourable for mixed faming enterprises. The committee expects many mixed farmers to move out of sheep following their Spring shearing. The value of mutton will be a key factor determining the speed of the move away from sheep (i.e. a slow exit or dramatic sell-off), the committee said.
McGowan has gone very quiet on this issue. He has obviously done a compromise with the inner-city PM and Gold Coast-loving agriculture minister. This will affect mutton prices Australia-wide just like the Indonesian shambles did with cattle.