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Stranded sheep costs rocket as export impasse threatens $250m trade

Terry Sim, August 3, 2018

ALEC CEO Simon Westaway.

AN impasse between live sheep exporters, Minister for Agriculture David Littleproud and his department is a real threat to the nation’s $250 million sheep trade, Australian Livestock Exporters’ Council chief executive officer Simon Westaway said yesterday.

The costs of feeding stranded sheep and having empty livestock ships anchored off of Perth has become a multi-million blowout for the live sheep trade, which Mr Westaway said is also the cornerstone of Western Australia’s rural economy.

WA live sheep exporter Emanuel Exports and its Middle East sheep importing client are facing a mounting cost bill already exceeding $4 million associated with sheep held in a pre-quarantine feedlot south of Perth.

The daily cost of the stranded shipment is growing while the exporter, and the importer Kuwait Livestock Transport and Trading, seek alternatives after the licence suspensions of Emanuel and its subsidiary EMS Rural Exports.

The exporters were suspended following the release earlier this year of footage showing dead and dying overheated sheep on several voyages to the Middle East, including the deaths of about 2400 sheep supplied by Emanuel Exports in one shipment in 2017. This has prompted community outrage, government inquiries, new loading density rules and legislation to phase out the Middle East northern summer trade.

As the cost of the trade hiatus mounts, WA exporters and farmers continue to seek meetings with Minister Littleproud and his department to clarify the future of Middle East shipments and the importance of potential legal action from Animals Australia.

The animal rights body has threatened the Department of Agriculture and Water Resources with legal action if it approved a permit for a Middle East sheep shipment between July and September, claiming it is not possible for the DAWR secretary to reach the required level of satisfaction to grant a permit for such a shipment.

Sheep Central understands exporters have been offered meetings with Mr Littleproud’s advisers and his department, but they and WA farmers are seeking a face-to-face audience with the minister. Mr Littleproud has publicly refused to meet with the suspended exporter, Emanuel Exports, but highlighting his seeming failure to commit to a meeting with other exporters was the minister’s comment yesterday afternoon that he was working with WA Farmers on a visit to WA “very soon”.

Waiting live export vessels costing more than $47,000 a day

About 45,000 sheep which were retained in the feedlot after the Emanuel and EMS licences were suspended have cost about $4 a week to feed since mid-June, costing the exporter an extra $1.5 million in extra feed costs alone.

KLTT, the owner of the live export vessels Al Shuwaikh and Al Messilah, is facing costs of US$35,000 (currently A$47,400) a day for each vessel while they remain anchored off of Perth. The Al Shuwaikh has been off Perth since mid-June and the Al Messilah since mid-July, which puts the anchorage cost at more than $2.5million.

These estimated costs don’t include the margin loss of selling some of the initial 60,000 sheep in the feedlot to WA processors; the loss of Middle East market share and goodwill, and; the average purchase cost of the sheep, estimated at $100.

However, with Qatar believed to have ordered 79,000 sheep from Sudan, Somalia and Armenia to replace sheep normally supplied from Australia, this meant the trade loss to KLTT at this stage could be at least almost A$8 million.

ALEC does not direct members on commercial matters

Mr Littleproud this week angered exporters when he suggested they step up to ship the sheep, also stating: “Australian Livestock Exporters Council members need to show us they haven’t been taking us for mugs the whole time.”

This prompted Mr Westaway to state yesterday that ALEC does not direct its exporter members on commercial matters, but is determined to find a way for the trade to resume and for viable reforms to be achieved.

“Exporters understand their responsibilities to producers and the community to secure an ethically and economically sustainable trade and welcome the support of producers and the Government in this objective,” he said.

“We understand and are working hard to improve certainty, especially for farmers in the lead up to spring when sheep are sold in greater numbers and live export demand adds vital buying competition in the saleyards and at the farmgate.

“We agree that all parties in the supply chain need greater certainty about when trade to the Middle East might resume,” he said.

Mr Westaway said exporters and producers are united in their goal of working cooperatively with the Federal Government to provide long-term certainty for the sheep export industry and for upholding Australia’s reputation as a reliable trading partner and exemplar of world’s best practice.

Responding to the Minister’s reported unwillingness to meet with Livestock Shipping Services —  Australia’s second largest sheep exporter and one of the largest cattle exporters – Mr Westaway said: “Open-door communication between industry, the regulator and the minister is always in the best interests of producers, exporters and our overseas customers.”

Real possibility of no live sheep trade in August  – ALEC

ALEC confirmed that no sheep have been exported to the Middle East since early June and there is a real possibility that there will be no trade in August.

Individual exporters have been working through the new requirements arising from the McCarthy recommendations to ensure the longer term viability of export businesses and the trade more broadly, ALEC said. However, LSS has already decided northern summer shipments were unviable due to the new department requirements and Harmony Agriculture and Food also pulled out of a planned shipment to Oman, citing uncertainty due to Animals Australia’s threatened legal action against the department.

The threat of legal injunction against the Department of Agriculture and Water Resources to stop further sheep shipments has added further complexity, ALEC said. A council statement said exporters are unwilling to risk the possible scenario of having a loaded vessel being blocked from sailing by last minute injunction and subsequently being stranded with tens of thousands of sheep.

“These factors, which are beyond the control of exporters or producers, mean it is unlikely that there will be any resumption of the trade soon, and certainly not in any significant volumes.

“If stocking and ventilation restrictions change as the Northern Hemisphere moves into the cooler autumn period, and if the Federal Government can provide clarity about the threat of legal action against the Department of Agriculture and Water Resources, a path towards the resumption of trade may become clearer,” ALEC said.

Australia exported more than 400,000 sheep to the Middle East from June to August in both 2016 and 2017. About 70,000 sheep were shipped to the Middle East in early June, but other than that there might be no trade for the 2018 winter if the industry stalemate continued.

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Comments

  1. Susan Manning, August 7, 2018

    Mr Westaway has been front and centre in this trade both in his employment and as a member of ALEC, a body which could also have taken steps to prevent the current situation from ever developing. It is quite disappointing that this article continues the obvious trend in the WA print and electronic media of reporting little or nothing of the reasons which have provoked the actions and threatened legal actions of Animals Australia.
    An uninformed reader could be forgiven for thinking they were acting without reasonable cause, without massive public support and that the export companies were somehow victims in this matter. This is far from the truth. As someone who has spent the past three months reading every available piece of news or background material on the subject, I have little or no sympathy whatsoever for the export companies or ALEC, nor the Kuwaiti entities whose interests are being served by the live export trade, at the expense of our national character and reputation. I do have some sympathy for farmers and transporters caught up by this, but many industries have had to adapt to changing market conditions and this particular industry has exploited the privileged position extended to it by government and regulatory bodies for long enough. Editor’s note: Point taken Susan. Appropriate background has been added.

  2. Johny Bussy, August 5, 2018

    Why should Littleproud be bullied by those who run the live export trade? Run the trade legally or suffer the consequences.
    Animals Australia shouldn’t have to hold them accountable either; let the Department of Agriculture do its job.

  3. Jennifer Macdougall, August 4, 2018

    Emanuels had the opportunity to take up offers for the stranded sheep to be processed in Australia, so if it chooses to hold those 45 000 left in the hope they can be exported live, then it will just have to fork out the money to feed them. Seems like poor economics to me. There is no sympathy for a company that on two shipments alone lost over 5000 sheep to the horrible deaths we saw of heat stress. Instead of bleating about the loss of revenue, that company should reflect upon the suffering of those sheep carried in its name.

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