The cost to Western Australian farmers of a ban on live sheep exports could be more than 10 times previous estimates, as much as $150 million, according to a report released today.
The cost to Western Australian farmers of a ban on live sheep exports could be more than 10 times previous estimates, as much as $150 million, according to a report released today.
The analysis by Victoria-based economic consultancy Mecardo was undertaken on behalf of WAFarmers, in response to a report by Pegasus Economics released on the weekend for Animals Australia.
It comes as former Liberal minister Susan Ley has announced she’ll be canvassing support for a private members bill to end the trade, after video emerged earlier this month of awful conditions on a vessel transporting cattle from Fremantle to the Middle East.
According to Mecardo, live exports represent about a third of WA’s annual sheep and lamb offtake, and moving to send the output into the domestic market could drastically lower local prices.
Mecardo market analyst Matt Dalgleish told Business News that extra supply flooding into the WA market would lead to price falls of at least 18 per cent, and possibly as much as 35 per cent.
And it wouldn’t be easy for the excess supply to be sent to the east coast either, he said, because the two markets were reasonably disconnected due to high transport costs.
That meant prices for exports and WA meat were more closely correlated than local prices were to the east coast market.
Lost revenue would add up to between $80 million and $150 million, the report found, compared with the number cited by Pegasus of around $9 million.
Mr Dalgleish said a major issue with the Pegasus report was that it assumed much of the sheep stock would be kept and grown for wool.
But there were capacity constraints in land availability, he said, with most agricultural land already highly utilised.
“Assuming that the live export trade was banned and the current 1.6 million head currently being sent overseas per annum from WA were held for a period of four years to be shorn for wool, there would be an additional 6.4 million head of sheep requiring pasture after the initial four-year increase in the WA flock size,” the report said.
“The last time the WA flock size was at around 21.4 million head was back in 2007 when only 5.5 million hectares was under cropping rotations (compared with 7.5 million today).”
A second capacity constraint existed in shearing, with at least 43 per cent more shearers needed.
“Producers already comment on the difficulty in finding shearers to complete the current requirement each season, let alone if this requirement was to grow in order to satisfy the “ban and shear” plan,” the report said.
WAFarmers president Tony York said the ban would mean losses of $100,000 for some of the state's farmers.
“The current live sheep export trade volume represents one third of the sheep and lamb offtake in WA every year, and the state itself represents 85 per cent of the national live sheep export trade,” he said.
“WAFarmers recently released a series of recommendations relating to the future of the live export industry, and while we acknowledge the potential increase in costs along the supply chain, we consider it to be the best option moving forward given the alternative would be devastating to the WA agricultural economy.”
