What you’re not being told about Live Export – Economics (Part 3/4)

Host: Dampier Downs Station
Written by Anne Marie Huey – co-Manager, Dampier Downs.

Find part 1 here and part 2 here.

Live export underpins the economic viability of the northern beef industry.  The beef industry in turn contributes significantly to the economic prosperity of northern Australia. There are few other industries (mining and gas extraction being two) that provide the opportunity for people to live and work in Australia’s vast rangelands.

However, in the live export debate the economic importance of the trade is often under-stated, over-looked or flat out misrepresented. It is easy to make sweeping statements that are superficially convincing but dig a little deeper and you will find – as always – another side to the story.

Live export destroyed the beef processing sector in Australia

This is simply not true.  The beef crash in the 1970s, caused by the loss of key markets of USA and Japan and compounded by drought, really marked the beginning of the decline for meat processing in Australia. Ongoing industrial relations issues and general operating inefficiencies also contributed to the closure of many meatworks throughout the 1980s and 1990s. The resurgence of live export was actually a response to the lack of domestic markets.

This is still true today. Until the 2015 opening of the AACo facility near Darwin, it was possible to draw a line from Townsville to Bunbury and not find an operating abattoir north of that line. In 2016 another abattoir opened near Broome. In 2018, The AACo plant was moth-balled due to being economically unviable, leaving just the one abattoir remaining.

It is simply ludicrous to suggest this plant could process the additional 600,000 + cattle shipped out of northern Australia last year. And neither does it aspire to. This abattoir, like the AACo plant before it, was not designed to replace live export, but instead to complement the trade.

Of course, there is always talk of new abattoirs being proposed for northern Australia. I sincerely hope these plans come to fruition as I firmly believe we desperately need a variety of reliable, high-value markets that will allow us to turn-off a broad range of animals.

However, it is important to remember that even if the feasibility studies on these new facilities are positive, it will take years for any new plant to come on line. The red-tape required to plan, design, build and commission a new abattoir is laborious, time-consuming and expensive to wade through.

In the meantime, producers need reliable, stable markets for their cattle. This increases business confidence and promotes investment in a range of ways – from infrastructure development, to upgrading equipment and adopting innovative technologies. All this investment has a flow-on effect to the wider economy and builds resilient, rural communities.

Why can’t we kill the animals here and send boxed beef overseas?

The short answer is because many of our customers simply don’t want boxed beef.  Imagine if you went to your local butcher to buy a leg of lamb but he told you that, in his opinion, you wouldn’t know how to cook it properly so he would only sell you chicken. You might make do in the short term but pretty soon you would find another less arrogant, less patronising butcher who would supply you with lamb.  It is the same with our customers.  If they can’t buy live animals from Australia they will source them from one of the 100+ countries that also export live animals.

There are a host of reasons why some markets prefer live animals, some cultural, some practical.  In many developing countries, such as Indonesia, a major reason is the lack of reliable refrigeration. Once meat has been chilled it must stay chilled. Maintaining basic food safety standards is extremely difficult where the power supply required to provide constant refrigeration is notoriously unreliable.

Then there are the millions of households that do not own a fridge. The most effective way for these people to access safe, healthy sources of protein is to shop in the wet markets where freshly butchered beef is sold. Consumption patterns in other parts of the world may be different to ours, but they are no less valid.

If we were to switch to the boxed beef trade we would lose access to local feedlots and butchers and instead be forced to compete in the high-value, restaurant quality market.  Our high cost of production compared to our competitors would make this very difficult. For example, one analysis estimates the cost for processing an animal in Australia to be $370.  n the USA, the cost is closer to $150. Obviously, this puts Australia at a significant competitive disadvantage.

A strong trading partnership with our customers also ensures income for countless local people, right through the supply chain. This contributes to greater economic stability for the region and as the standard of living improves for people, so too will the standard of treatment of animals.

I honestly believe the best way to improve animal welfare anywhere in the world is through education and economic development. Live export ticks both these boxes. We are currently the only exporting nation in the world investing in training and infrastructure to improve animal handling techniques in destination markets. Anecdotal evidence suggests that this investment is also having an impact on the handling of non-Australian animals, lifting the standard for all.