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2 Australia’s live animal export industry
Cattle
Exports of live cattle are an important segment of Australia’s cattle market and add significantly to the total value of Australian exports. In 2006-07, exports of live cattle accounted for around 7 per cent of total Australian cattle turnoff and 6 per cent of the total value of cattle production. In 2006-07, Australia exported 638 000 cattle (figure a), valued at close to $437 million (abare 2007a).

The live export market sources cattle from both the north and south of Australia, each region having its own distinct production system. Within Australia, the markets targeted by live cattle producers vary across states. Dairy cattle for breeding, for example, are shipped principally from the southern ports of Devonport, Adelaide and Portland. Feeder and slaughter cattle on the other hand are shipped principally from ports in western and northern Australia. Appendix A provides a breakdown of the number of cattle loaded at each port. Shipments destined for south east Asia make up the majority of live cattle shipments and are loaded mainly in Darwin but also in Wyndham and Broome (Norris and Norman 2006).

Live cattle exports are very important to the economies of some regions of Australia. Just over a third of the Australian beef herd is located in northern Australia (map 1). In recent years, more than 80 per cent of total live cattle exports, including most slaughter and feeder cattle, have been sourced from northern Australia. As such, the economic impacts of changes to livestock export standards or fluctuations in relative prices are concentrated on particular producers and regions. According to abare farm survey data, 75 per cent of properties in the northern regions that carry more than 300 beef cattle were either partially or substantially reliant on receipts from live export cattle over the ten years 1995-96 to 2004-05 (abare 2007b).

Farm cash incomes for northern Australian properties were at record high in 2000-01 and 2001-02 on the strength of high cattle prices and high cattle turnoff for both live export and other markets (table 1). Farm cash incomes then fell sharply in 2002-03 as lower cattle prices reduced total cash receipts and farm expenditure on cattle purchases and fodder increased. In the period from 2001-02 to 2004-05, average farm cash incomes declined by 40 per cent to around $207 000 before increasing by 60 per cent in 2005-06 as a result of higher cash receipts and lower beef cattle purchases. Over the medium term it is forecast that increased availability of cattle suitable for live export and an assumed depreciation of the Australian dollar will make live exports more attractive to importing countries. These factors are forecast to underpin further increases in live cattle exports.
Sheep
In 2006-07, exports of live sheep accounted for around 11 per cent of total sheep turnoff and 15 per cent of the total value of sheep meat production. In 2006-07, Australia exported around 4.1 million sheep, valued at approximately $290 million (abare 2007a). Most sheep exported by Australia are destined for markets in the Middle East, particularly Saudi Arabia, Kuwait, Jordan, Bahrain and Oman (table 2). Exports to these markets represented almost 90 per cent of the total value of Australian live sheep exported in 2006-07.

More than 80 per cent of the sheep are loaded in Western Australia, with 11 per cent and 7 per cent of shipments sourced from Victoria and South Australia respectively (figure b). Details on the specific ports of loading are provided in appendix B. As for cattle, the impact of changes to livestock export standards, the cessation of exports to a particular market, or increases in the Australian price are felt most acutely in certain regions.

According to abare farm survey data, the number of broadacre farms in Western Australia with more than 300 sheep decreased by 9 per cent between 2003-04 and 2005-06 (table 3). However, the proportion of sheep sold for live export per property increased from 22 per cent in 2003-04 to 40 per cent in 2005-06. In 2005-06, the average number of animals sent to the live export market rose to 691 per property, an increase of 28 per cent over the previous five year average. Despite this growth, broadacre farms that carried sheep earned only 7 per cent of their total cash receipts from live sheep exports in 2005-06. Typically, broadacre farms in Western Australia generate the majority of their farm cash income from cropping receipts. In the three years 2001-02 to 2003-04, average farm cash incomes for Western Australian broadacre properties increased by 30 per cent to around $182 000. However, in 2004-05 and 2005-06, farm cash incomes fell because of lower cropping and cattle receipts combined with higher costs for sheep purchases.

In the medium term, further growth in Australia’s trade in live sheep is forecast to be constrained by the availability of suitable sheep following flock liquidations arising from the recent drought. Despite the anticipated gradual depreciation of the Australian dollar, the positive effect that lower supplies will have on prices will make live sheep exports to the Middle East less competitive than those from other exporting countries such as Sudan and China.
1 Financial performance of beef properties with more than 300 cattle – northern live exporting zone  
average per property,  financial estimates are in real terms expressed in 2006-07 dollars
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2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
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physical
area operated at 30 June
ha
136 488
-8
131 642
-9
122 343
-29
136 970
-12
114 857
-6
114 208
-10
beef cattle  at 30 June
no.
5 047
-7
4 933
-8
4 652
-5
4 799
-8
4 263
-7
4 202
-10
beef cattle sold
– total
no.
1 176
-11
1 130
-12
1 054
-7
1 127
-8
1 110
-9
897
-22
­– for live export
no.
334
-15
404
-24
345
-18
269
-26
200
-21
180
-30
turnoff rate a
%
30
-6
31
-8
31
-5
33
-5
33
-7
33
-10
average beef cattle price
– sold live to export
    markets
$/hd
565
-3
649
-3
475
-5
503
-4
581
-5
550
-3
– sold to other markets
$/hd
650
-5
653
-6
596
-4
606
-5
677
-4
675
-3
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receipts
beef receipts
$
736 021
-11
736 943
-10
586 521
-7
655 314
-10
732 209
-8
582 920
-22
proportion of receipts
  from live export sales
%
20
-16
25
-19
20
-16
14
-26
13
-19
11
-31
total cash receipts
$
954 792
-9
1066 117
-9
825 888
-6
956 535
-10
919 444
-7
932 641
-15
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costs
beef cattle purchases
$
48 511
-18
71 422
-21
72 379
-21
59 409
-27
137 950
-47
62 128
-18
total cash costs
$
591 552
-9
722 660
-10
679 799
-6
734 927
-11
712 740
-14
604 248
-10
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financial performance
farm cash income
$
363 240
-13
343 457
-16
146 089
-24
221 608
-27
206 704
-37
328 393
-29
farm business profit
$
353 103
-14
285 719
-20
51 602
-85
45 731
-93
144 923
-28
141 671
-35
rate of return b
– exc. capital appreciation
%
7.5
-12
5.3
-16
1.5
-40
1.4
-37
2.7
-21
2.4
-24
– incl. capital appreciation
%
21.1
-6
13.6
-11
9.2
-17
9.4
-20
4.6
-45
8.1
-20
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estimated population of
   properties
no.
1 359
–
1 395
–
1 350
–
1 385
–
1 448
–
1 395
–
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a  includes beef transferred to other properties. b Calculated as farm business profit adjusted to full equity as a percentage of total opening farm capital. Note: Figures in parentheses are standard errors expressed as percentages of the estimates provided.

2 Australia’s  live sheep exports to the Middle East
in 2006-07 dollars
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2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
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A$m
A$m
A$m
A$m
A$m
A$m
A$m
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Saudi Arabia 77 147 182 15 0 88 105
Kuwait 71 105 114 111 70 69 59
Jordan 27 42 35 65 65 41 34
Bahrain 19 28 28 33 34 42 37
Oman 27 31 24 19 21 26 25
United Arab Emirates 37 39 22 18 13 17 13
Qatar 19 22 18 13 11 13 12
Israel 3 19 13 5 2 0 1
Egypt 15 13 8 0 0 0 0
Palestine        1 1 4 0 0 0 0
Lebanon 3 0 3 3 0 0 0
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total to Middle East 299 446 451 283 217 297 286
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Source: ABS (2007).

3 Financial performance of western Australian broadacre farms with more than 300 sheep
average per property, financial estimates are in real terms expressed in 2006-07 dollars
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
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physical
area operated  at 30 June
ha
9 450
-27
9 432
-21
3 810
-28
4 730
-26
7 240
-14
4 576
-20
sheep at 30 June
no
3 606
-7
3 715
-7
3 723
-8
3 859
-10
3 926
-11
3 882
-9
sheep sold
– total
no
1 519
-9
1 395
-8
1 325
-7
1 361
-9
1 396
-9
1 744
-11
– for live export
no
343
-20
353
-17
156
-22
299
-19
367
-19
691
-25
turnoff rate a
%
41
-8
38
-8
37
-8
40
-8
36
-7
45
-9
average sheep price
– sold live export
$/hd
33
-4
53
-4
73
-13
56
-4
49
-4
51
-3
– sold to other markets
$/hd
30
-12
49
-6
54
-6
61
-4
52
-4
53
-4
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receipts
sheep receipts
$
47 197
-16
69 519
-10
74 000
-9
81 489
-9
71 793
-10
90 708
-11
proportion of receipts
   from live export sales
%
3
-21
4
-18
2
-23
3
-17
3
-15
7
-22
total cash receipts a
$
347 273
-6
507 062
-5
518 618
-6
601 492
-7
558 373
-6
503 199
-7
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costs
sheep purchases
$
5 609
-16
11 186
-18
15 085
-14
18 107
-18
12 913
-19
18 426
-23
total cash costs
$
310 209
-6
365 992
-5
400 171
-5
419 156
-7
450 497
-7
422 828
-8
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financial performance
farm cash income
$
37 064
-33
141 069
-12
118 447
-18
182 336
-12
107 876
-14
80 371
-21
farm business profit
$
–63 792
-23
64 131
-24
39 148
-52
107 324
-18
14 164
-120
–24 142
-68
rate of return b
– excl. capital appreciation
%
–1.4
-50
4.3
-15
3
-25
4.8
-14
1.7
-26
0.8
-45
– incl.  capital appreciation
%
2.5
-39
8.6
-10
9.1
-11
15.2
-11
10
-17
12.2
-34
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estimated population of
  properties
no
6 250
–
5 944
–
5 897
–
6 330
–
6 292
–
5 790
–
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a Includes sheep transferred to other properties. c Calculated as farm business profit adjusted to full equity as a percentage of total opening farm capital..  Note: Figures in parentheses are standard errors expressed as percentages of the estimates provided.