Live export ban could make WA sheep industry ‘unsustainable’ and ‘volatile’, analyst says

Western Australia’s lucrative sheep industries could become “unsustainable” and “more susceptible to market volatility” if Federal Labor’s plan to ban live exports is implemented, a leading analyst says. Labor confirmed last week it would phase out the live sheep trade if elected on May 21, after the divisive policy was leaked by animal rights group the Australian Alliance of Animals. Thomas Elder Markets analyst Matt Dalgleish said the demise of the $136m a year industry — which is almost exclusively WA-based — would have “pretty limited” impact in the eastern states. But it could potentially drive down the price of sheep in the west as the market was flooded with animals that would have otherwise been bound for Middle Eastern markets. “From a western perspective, I think it ends up making a market that’s more susceptible to volatility in terms of price,” he said. “Generally speaking, across the long term trend, western prices run at a discount to the east. “I think there is the likelihood that that discount would widen potentially further without live export, until such time that you were able to adjust the market place and potentially look to build other market opportunities in the frozen and chilled space, but that take time to develop.” Labor unsuccessfully took the policy to the 2019 election, promising to phase out live sheep exports over five years if elected and proposing that WA producers transition to the processing sector. But Mr Dalgleish said there was a real risk WA’s sheep industries would “continue to decline further” if live export was banned. “It’s not a foregone conclusion in my mind that you scrap live ex, which is a big part of the western industry, and then the industry just pivots and does something else and continues to grow, or at least stays the same size,” he said. “There’s a chance that in the west the industry could go to a level that’s probably not sustainable and you end up, potentially like we saw in Queensland, where the number of sheep drops down to levels that makes it quite a niche, small industry within the state. “I think there’s a risk that that could happen in WA, that you end up with just the diehards.” Labor has so far refused to put a timeframe on the proposed phase out, with Federal shadow agriculture minister Julie Collins saying consultation with industry and farmers was needed. WA Agriculture Minister Alannah MacTiernan has called for a “lengthy” phase out, but Mr Dalgleish said the duration would matter little to exporters and importers. “If there’s a signal that this is going to happen in X number of years, then you start planning now, you don’t wait,” he said. “If the market is going to be wound down — even if you say it’s going to happen in three or five years’ time — overseas participants like the Kuwaitis would just say ‘we may as well transition ourselves as quick as possible’.” He said farmers, too, would be quick to adjust their business plans. “Who’s going to say ‘I’ve got three or four years left in this sector, I’ll just keep going until the end and then figure out what to do next’?” he said. “You don’t do that; you start almost immediately.” Australian Live Exporters’ Council chief executive Mark Harvey-Sutton said major Middle Eastern importers would undoubtedly start “looking to other options” well before a phase out could take place. “Already, they are looking for alternative market suppliers,” he said. “If Australia stops exporting sheep, it doesn’t mean those countries stop importing sheep, and we are the only ones that have animal welfare (standards) right to the point of slaughter. “We’re cutting off our nose to spite our face here, and in the in the meantime, potentially doing a lot of irreparable damage.” Mr Harvey-Sutton said the policy showed “a complete misunderstanding” of the industry. “The (live) trade is actually very complementary to the Australian production system, so to say that you could transition to processing automatically shows a complete misunderstanding, and it’s a gross oversimplification of how the industry actually works,” he said.