Exporters who applied for industry funding to alleviate the costs of feeding and holding cattle stranded in export yards during the Indonesian market suspension have been told the assistance will have to be paid back.
At the height of the live export ban the board in charge of the $20m Cattle Disease Contingency Fund made $5 million available to help the owners of stranded cattle pay for their welfare.
At the time the move was seen as a way by industry to resolve a growing impasse between Agriculture minister Joe Ludwig and Meat and Livestock Australia over who should compensate the owners of livestock directly affected by the ban.
One week after the June 7 ban was announced, and with an estimated 11,000 cattle stranded in pre-export yards, Minister Ludwig ordered MLA to release $5m of levy reserves to assist with the costs of feeding, managing and moving the cattle.
MLA resisted the minister’s demands, arguing that its constitution precluded the payment of levy funds for that purpose.
Two weeks later the board of the Cattle Disease Contingency Fund Trust (CDCF) defused the stalemate by approving the release of up to $5 million to pay for the welfare of cattle held up in pre-export facilities as a result of the ban.
The CDCF is an emergency fund developed from producer levies to manage animal health, disease and welfare crises. The fund is managed by Animal Health Australia, Cattle Council of Australia and the Australian Lot Feeders Association.
In announcing the funding on June 29, the CDFC invited the owners of cattle stranded in pre-export yards to submit applications for assistance towards the costs of moving cattle to the nearest market, or for feed, animal health and biosecurity treatments.
Four months on, the contingency arrangements are starting to unravel, with eligible recipients now learning that any assistance they receive will have to be paid back.
Beef Central understands that the fund has received eight applications for assistance, five of which have come from live exporting companies which owned most of the estimated 11,000 cattle that were caught in limbo at the time of the ban. It is understood that at least one claim has been made by a producer.
Some of stranded cattle were returned to their property of origin or were exported to other markets in the weeks after the ban, while several thousand remained in export yards at the owners’ expense for more than two months until trade to Indonesia resumed.
The CDFC has approved the applications for funding assistance which are understood to amount to a collective total of $1.16 million.
While approved, the funds have not yet been paid out.
The Cattle Disease Contingency Fund last week wrote to the Australian Live Exporters Council advising that if the funds are paid, they will have to be reimbursed at some future point.
The initial CDFC announcement on June 29 did not indicate that assistance would have to be repaid.
It described the $5 million as a “welfare contingency fund” and said the money could be used towards the costs associated with transporting or feeding affected cattle to ensure their welfare.
“The welfare of cattle stranded is of significant concern,” CDCF chair and Cattle Council of Australia representative Paul Saward said when the funds were announced. “We see this decision to make funds available as the CDFC coming to the aid of the northern cattle industry. These are difficult times. It is now prudent for industry funds to be made available, assisting those industry stakeholders who now own cattle during these times of great uncertainty.”
However, it is understood that the fact that assistance has been claimed by live exporters who do not contribute to the fund, which is drawn from the 42c animal health component of the $5/head producer levy, has become a major sticking point, and has prompted the CDFC to ask for funds to be returned if they are paid out.
It is likely that the request to repay the funds will fall on the shoulders of an industry body such as the Australian Live Exporters Council if the claims are paid, not the actual claimants themselves.
ALEC chief executive officer Lack MacKinnon told Beef Central yesterday that the industry was currently negotiating the best approach.
“We have asked the CDFC to hold off paying the money out at the moment, and industry will have to see how it deals with this issue,” he said.
“To get the money and then to have to pay it back defeats the purpose.”
Paul Saward told Beef Central yesterday that it was always the intention that the CDFC would look to have the money recouped over time.
“That was always the intention,” Mr Saward said. “You would have been aware of the pressure the industry was under, it was a case of making money available now, and working out a mechanism to recoup any of those funds later on.”
Asked if the board was concerned that exporters were claiming funds raised by producer levies, he said it was “a complication”.
“It is a producer levy,” Mr Saward said. “The money comes from producers in the first place, grassfed producers, so that is a complication I suppose.”
He said the CDFC fund was one of the few sources of money available at the time of the ban that could meet the criteria required to satisfy Senator Ludwig’s demands for the industry to fund $5m of assistance to affected business.
“We were able to release money as long as it related to welfare type issues,” he said. “That is why it was fairly restricted in terms of what we could make that money available for.”
While it was well known at the time that many cattle held in export yards were owned by exporters at that point, Mr Saward said it was still difficultto know who would apply for funding.
“We had some possible numbers to go by, but who was going to claim, and whether everyone was going to claim we didn’t really know, and we didn’t know for sure who owned them at the time.”
He said there was no reluctance to pay the existing claims, but the CDFC was now seeking answers as to how the money would be repaid.
“We’re ready to pay the money if they want to accept it, bearing in mind we do expect some way of seeing some or most of that money repaid.”