After watching Australia's cattle trade to Asia shrink dramatically in the past year, big livestock exporter, Wellard, is hoping a U-turn in New Zealand's export policy will boost its shipping fortunes in 2024.
Despite Australia's beef cattle price slide this year, Wellard is cautious about expecting a notable near to medium term revival in trade to our biggest live export customer, Indonesia.
The company pointed to numerous feedlots which had shut, tight new trade protocols and nervousness in both countries about lumpy skin disease.
Cheap frozen buffalo and beef imports had also won market acceptance with Indonesian consumers at a cost to Australian exporters.
Australia's total live export numbers sank to a 10-year low of 600,000 head in 2022 and are tipped to be similar this year - about 40 per cent below the average for the past decade.
Dwindling sales to Indonesia forced Wellard to divert to other trade routes, partly because its ships were too big for the modest orders required by the fewer feedlots still buying Australian cattle.
"All the cattle on the 10 voyages departing the Port of Darwin during June could have fitted on Wellard's MV Ocean Drover, with room to spare," said executive chairman, John Klepc.
Perth-based Wellard's global shipping business has also been buffeted by historically high shipping fuel costs which contributed to the business posting an end of financial year loss of $300,000.
Serving South America
Mr Klepec, said fortunately its three previous years of profits had left the balance sheet debt-free and Wellard had taken advantage of export growth in the cattle trade between South America and Turkey.
The market for slaughter weight cattle in Vietnam had also improve of late following the crash in Australian beef prices.
Mr Klepec told Wellard's annual general meeting he was also heartened by the prospect of the dairy heifer trade between NZ and China reopening by the second half of 2024.
The currently-saturated China market was "almost at a standstill", but showing signs of improving.
NZ's National Party had vowed to lift the ban on breeder dairy and beef cattle exports after it formed government, re-opening its 200,000-plus annual dairy breeder trade with China.
However, Mr Klepec said reversing former Prime Minister Jacinda Ardern's decision to end the trade would not be on a National-led coalition government's first 100 day "to do" list.
Exporting dairy and some beef breeding cattle from NZ to China was a large and important market for Wellard before it was banned
- John Klepec, Wellard
The National Party was also committed to first drawing up a new "gold standard" for shippers before any export boarding gates re-opened.
"Exporting dairy and some beef breeding cattle from NZ to China was a large and important market for Wellard before it was banned in April," Mr Klepec said.
That ban had a significant impact on the business, and although China's heifer import appetite from Australia or elsewhere was subdued, he hoped the NZ Nationals would deliver on the party's election promise quickly.
He noted any NZ gold standard would require purpose-built vessels to fit new government safety and animal welfare expectations, including a version of Australia's Exporter Supply Chain Assurance System.
Gold standard
The standards would actually leapfrog Australia in terms of shipping safety requirements.
NZ's live export trade was shut down as a response to the 2020 sinking of the Gulf Livestock 1 near Japan, carrying more than 40 crew and 5800 NZ cattle.
Mr Klepec said Wellard had long supported the need for purpose-built livestock ships and maintaining high animal welfare standards in the trade, and it encouraged Australian regulators to follow NZ's plan.
Given NZ may not re-open its trade until later next year, he urged Australia to "lead NZ on this important issue".
Meanwhile, Wellard was watching its other major markets, particularly Indonesia, wary of "question marks" in the year ahead.
Mr Klepec said while Indonesia's lumpy skin disease "dispute" with Australia, which forced our key export quarantine yards to temporarily close in August, exporters and importers were still feeling their way, rather than reverting to previous trade activity.
For the Indonesian lot feeders who remained in business following the high Australian cattle prices ... there is now frozen beef from Brazil and Indian buffalo meat competing against fresh Australian beef.
- John Klepec, Wellard
"Buyers are being very cautious about hide conditions when selecting cattle, lest other conditions, bites or blemishes are confused with LSD, but there is another more fundamental issue," he said.
"For the Indonesian lot feeders who remained in business following the high Australian cattle prices of recent years, there is now frozen beef from Brazil and Indian buffalo meat competing against fresh Australian beef in their market.
"Frozen imports are now entrenched in that market.
"They remain at lower price points, further restricting the ability of feedlots to buy in large amounts of live cattle."
Wellard was watching to ascertain if this new level of competition and live export buyer reluctance was the new normal, or if sustained lower prices for Australian beef would entice feedlots to increase capacity.
The livestock shipper was also uncertain about its important route between South America and Turkey, currently serviced by two of its vessels.
The Turkish market had attracted other rivals on the route as it absorbed large numbers of cattle, but exporters were now waiting to see if more import quotas would be issued to help Turkey's economy fight high food inflation.
Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
