Australia is about to send its first major shipment of livestock to Saudi Arabia for more than a year, a returning market which exporters believe has the capacity to take more than 100,000 northern-type cattle every year.
However, despite the market’s strong potential for growth, the new shipment is likely to be the last from Australia for some time.
Exporters say difficulties in implementing the Australian Government’s Exporter Supply Chain Assurance Scheme (ESCAS) in Saudi Arabia are likely to prevent further sales to the market this year.
Saudi Arabia is included in the second tranche of the ESCAS rollout in international markets, which means exporters will only be allowed to deliver livestock to supply chains that are approved under the system after September 1.
In the past exporters were responsible for the welfare of animals through to the point of disembarkation in export markets. However, ESCAS requires exporters to now take responsibility for the welfare of all livestock delivered right through to the point of slaughter.
To achieve accreditation, exporters must be able to prove that each supply chain they sell into meets World Organisation for Animal Health (OIE) guidelines for animal welfare, incorporates full traceability, can guarantee control of all animals at all times and is independently audited.
Israel, Jordan, Japan, Malaysia, Oman, Philppines, the United Arab Emirates and Singapore are the other markets included alongside Saudi Arabia in the August 31 second-tranche deadline for ESCAS implementation.
When the second tranche deadline takes effect at the end of this month, 99pc of all Australian live export standards will be covered by the ESCAS system.
Saudi Arabia has traditionally been one of Australia’s largest export markets, once taking millions of sheep and cattle per year.
Shipments have stalled over the past 12 months due to a lack of shipping availability and the appreciation of the Australian dollar.
However exporters say Saudi Arabia maintains a strong preference for livestock from Australia due to its clean health status, and represents an important alternative growth market for northern cattle which would previously have gone to Indonesia.
Despite the market’s potential, exporters have reported there is 'no way' the Saudi Arabian trade will be ready to comply with ESCAS conditions by the August 31 deadline.
Australian Livestock Export Council chief executive Alison Penfold said Saudi Arabia was a traditional market with a complex distribution system that made it difficult to implement a ‘one-size-fits-all’ system like ESCAS.
“There are a whole range of reasons that make it difficult for ESCAS to meet the deadline of September 1,” she said.
“We’ve got a policy environment where industry has made a commitment to deliver ESCAS, that is the circumstances we find ourselves in.”
Some sources have explained that Saudi Arabia, as an existing signatory to the OIE, believes that animal welfare is already being addressed and is concerned about attempts by another country to dictate rules once animals arrive in the country.
However others have pointed out that there is also a very strong recognition in the market that improvements in welfare are required, and there is a strong desire to meet better standards.
Western Australia Live Export Council chairman John Edwards, who works for a Saudi Arabian livestock trading company, told Beef Central that Saudi companies were willing to advance their own animal welfare standards, not only for Australian livestock but for livestock from all origins.
He said this reflected the positive influence that Australian investment in improved animal welfare standards was having in the market.
The new requirements were coming at a cost to Australian trade, however.
Mr Edwards said the costs of implementing ESCAS had added around $30 per head to the price of Australian cattle landed in the Middle East, and $10 per head for sheep.
“They are all now casting the net far and wide looking for alternative livestock supplies that come without a regulatory impost, because ESCAS has a cost attached to it,” Mr Edwards recently explained to Beef Central.
“We are the only industry and country in the world that invests in bettering animal welfare practices abroad, and the basic arithmetic is that in some respects we are seeing ourselves forced out of the market.”
Another exporter, who asked not to be named out of concern about affecting his dealings with Government, said that with Indonesia turning its back on Australian cattle, demand from the Middle East could go a long way towards filling the gap for northern type cattle if ESCAS did not pose such a significant barrier to trade in the region.
“Growers in the Top End shouldn’t feel vulnerable because the Egyptian market and the Saudi market would take everything,” he said.
“However because of these new arrangements that have been dictated to them, they are not in the position to comply.
“There are other ways to achieve the same outcome without the mountain of paperwork and requirements and hoops the industry has to go through, what they’re creating is barriers to trade.”
Alison Penfold said that while the industry was committed to delivering ESCAS, it also did not want to see any markets lost.
“We want to add to our list of countries and there are markets there that need Government assistance in opening up, and that needs to be done in advance of any discussions around ESCAS.”