Live Export

Strong recovery for live exports

Jon Condon, 09/12/2011

Wellards managing director, Steve MeerwaldAustralia’s 2011 live export trading year had recovered far better than many stakeholders had anticipated, the managing director of the world’s largest live export shipping operation has told a producer audience.

Steve Meerwald, who heads Wellard Agribusiness operations out of Australia, was speaking at a recent Westpac Agribusiness Know-How forum in Rockhampton.

While 2011 had been a tough year for the industry and one that’s been a watershed in terms of beef animal welfare issues and their direct impact on the live export trade, circumstances had worked out a lot better than earlier feared.

“Putting it into context, in 2009, Australia exported 772,868 cattle to Indonesia,” Mr Meerwald told the Rockhampton gathering.

In 2010, the year when weight limits and export/import quotas were first imposed, Australia exported 521,002 cattle to Indonesia, against a stated Indonesian quota ‘limit’ of 500,000.

With two weeks to go in the current 2011 shipment year, it looked like Australia would export about 410,000 cattle to Indonesia, he said.

Of that figure, about 220,000 head went before the ban at the end of May, and 135,000 exported since the ban was lifted and the end of November, with another 60,000 either on the water now or about to depart.

“Putting that result into context, if the demand from Indonesia this year had been for 500,000 or 600,000 cattle, I don’t know where the cattle would have come from,” Mr Meerwald said.

Despite all the turmoil with the global economic crisis and live export trade closure, people around the world still had to eat, and were choosing to eat differently today than they had in the past.

“We certainly don’t see live export as a sunset industry, as some do. We believe the trade has a very strong future. It’s not all doom and gloom – there’s still a lot happening, but the trade is also changing,” he said.

Wellard was working with parties around the world to diversify its live export operations in different ways.

“There will always be a slaughter trade, but in our view, slaughter cattle and sheep will increasingly become a less significant proportion of total live exports out of Australia.”

“Over time, we think the industry will go increasingly into high value – meaning breeding and feeding cattle, as opposed to slaughter stock, adding value for the importers.’’

“The opportunities as we see them are continuation of a strong feeder trade into markets like Indonesia, Turkey, Egypt, Israel and Russia, and potentially China; but also in beef breeder cattle with growing demand in Turkey and Russia (Bos Taurus) and Indonesia (Indicus); and dairy cattle into various markets.”

“There is demand everywhere. It has been suppressed for a long time by Government regulation and other reasons, but is changing. Turkey is a classic example, being closed for trade for 15 years, during which they ate their way through their domestic herd, but was now a very significant importer of feeder cattle.”

Broadening demand

Project development effort was taking place in a basket of countries aiming to broaden the demand away from slaughter cattle.

In Saudi Arabia, for example, Wellard is working with local interests to develop an integrated sheep feedlot, slaughter-house and food processing operation for the upper end of the market.
In Indonesia, a pilot program had been established to breed Brahman cattle in oil-palm plantations, based on quality Australian imported breeder cattle. Some 300 imported heifers are currently calving-down.

“Such projects have been tried before, but nobody has really pushed the button on it. But we think it can work, and has huge potential, in the region’s vast oil-palm plantations,” Mr Meerwald said.

Wellard has also established a pilot breeding project in the Philippines, numbering about 1200 imported Australian heifers, plus a pilot feedlot and processing trial near Manilla.

“This project, again, has enormous potential for out-of-spec Indonesian cattle out of Northern Australia, that otherwise struggle to find a market,” Mr Meerwald said.

Evaluations are also taking place in the Punjab province in Pakistan, using more productive broadacre farming and animal production principles – as distinct from smallholder-scale production – and similar activity is occurring in Turkey.

Underpinning all this activity was growing global demand for beef that current suppliers would struggle to meet.

“The strong growth in protein consumption is being driven by consumers in developing countries in parts of southeast Asia and the Middle East than now have more money to spend.

Inevitably that means more demand for beef,” he said. “Up to annual income of about US$2500, protein intake grows absolutely proportionately.”

Every year, the world needed to find another seven million sheep and 1.7 million cattle just to look after the growth through population demand at current per capita consumption, Mr Meerwald said.

At the same time, on the supply side, there were very few countries in the world with surplus meat protein, with examples like the US cattle herd reaching 50-year lows. The US would have enormous challenges ever restoring it back to levels seen earlier, for a range of reasons.

Wellards had its origins in 1979 exporting sheep to Libya, operating through Italy’s Siba Shipping. The company today is the largest livestock exporter by sea in the world, owning and operating a livestock transport fleet in the world, encompassing 77,000 square metres of Australian Maritime Safety Authority-approved deck-space.

In 2013, when Wellard completes its fleet rebuild, the average age of its fleet will be four years, old, and will carry a high ‘green’ rating. The shipping division, Wellard Ships is based on Singapore, currently operating four vessels, and has on order two new vessels being constructed in China.

New world record shipment

Just last week, Wellard’s vessel the MV Ocean Shearer has set a new world record for the largest shipment of live cattle.

The vessel sailed on December 4 from Darwin with 25,817 cattle on board, easily beating the ship’s previous record of 24,683 head set in September.

The vessel loaded in both Broome and Darwin, carrying stock from three different exporters, including Wellard. Wellard’s consignment of cattle was sourced from a range of individual producers and the company’s own floodplain blocks east of Darwin.

About 9000 steers and heifers were loaded in Broome and 15,500 cattle in Darwin. The vessel unloaded in the Indonesian ports of Jakarta and Panjang.

Wellard Trading Chief Executive Officer Fred Troncone said the ability to assemble the large shipment wasn’t just a reflection of supply, it also reflected strong demand from Indonesian importers and consumers.

Although the onset of the northern Australian wet season is starting to restrict cattle supply, Wellard expects to continue to export cattle throughout the wet season.

“The size and make-up of the Wellard shipping fleet, which is the most modern livestock fleet in the world, enables Wellard to tailor its export and shipping programs to match supply and demand,” Mr Troncone said.

“So we can be flexible whether we continue to use a larger vessel, or switch to one of our newer, smaller vessels. Previously exports have ground to a halt during the wet season, but the production and transport systems have evolved to ensure it is a year-round trade.”

The MV Ocean Shearer, which is the largest livestock vessel in the world, was again loaded at about 80 percent of her capacity when she sailed, allowing the on-board stockmen and crew to allocate each animal significantly more space than the Australian regulatory standards prescribe.

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