Landmark International has spent $14.5 million securing Victorian weaners this year, as demand from global protein markets continue to outstrip Australian supply.
Sheepmeat exports grew 12 per cent in 2018, with a record 447,252 tonnes shipped weight heading off shore, according to Meat and Livestock Australia.
Beef exports continue to rise, increasing 11pc year-on-year, but not quite reaching the record levels of 2014 and 2015, while live cattle exports followed a similar trend, lifting 27pc for the year to November.
When it comes to live export in the south, a boat order from Landmark International has put a floor in the southern weaner sales this month that might have otherwise been missing.
According to Landmark International’s Andy Ingle, the upcoming voyage, destined for Russia, will be made up of 14,000 feeder steers and 12,000 breeding Dorper ewes.
And while the Russian market isn’t set to grow in 2019 because of high Australian domestic cattle prices and an unfavourable exchange rate, Mr Ingle said this order had played a big role in getting producers a profitable return in a bad season.
“Landmark International and its Russian business have contributed $12 million to the farm gate for producers in the back half of 2018 to heavily drought effected areas in NSW buying steers, and more recently a further $14.5m in the opening two weeks of the southern weaner sales and direct on farm transactions in 2019,” he said.
“There is no doubt our presence has been immense and a big positive for producers. Those who think live export has little bearing on southern Australia’s industry are naïve to the facts.
“We have for five years now put a significant floor in the weaner sales market from January through to late march operating from Tasmania, South Australia, Victoria, and NSW.”
However, Mr Ingle fears live exports in the south are at risk, supporting strong punishment for those operating outside of the regulations, but needing commercial viable reform to be able to continue operating.
“With the suggested changes put forward in the ASEL and HSRA reviews, if adopted as they are in draft form, will spell the end of the sheep trade from Australia,” he said.
“The likely flow-on contagion to the cattle industry will spell the end of southern Australia’s live cattle export industry.
“We cannot continue to plan and run our businesses in an environment whereby we are punished with mass unforeseen reform and changes as a result of the negligence of others.
“The biggest challenge I see is the fact that urban Australia I think now actually believes that every vessel that leaves Australia results in mass deaths at sea and the use of the industry as a political football continues to further distort the real and positive facts that no one seems to want to hear now.
“Australia’s southern livestock industries and producers without a healthy live export industry will suffer severely as a result.”
Strong export demand helped push the Eastern States Trade Lamb Indicator to an average of 683.47c/kg for the past year – smashing the previous record high annual average of 626.01c/kg, set in 2017.
Record amounts of lamb sold to the US, and increased volumes of both lamb and mutton purchased by China, pushed demand of sheepmeat to new highs, with a total of 7pc more lamb exported and 23pc more mutton sent overseas.
However, it is no surprise that for the year to November, 42pc less live sheep were exported.
MLA’s originally forecast at the beginning of 2018 that Australia would export less lamb year-on-year, at 241,000 tonnes shipped weight, before revising that to 257,000 tonnes in their September outlook. The actual volume ended at 267, 254 tonnes.
MLA international markets general manager, Michael Finucan, said drought conditions meant a higher than expected turn-off and therefore higher export volumes for both sheepmeat and beef.
“China was a bit of a standout for both products – they were up over 150,000 tonnes for beef, putting it just below Korea,” Mr Finucan said.
“The positive was the high-end products were up strongly, which shows Chinese consumers are looking for a premium product, and seeing as other countries such as Argentina and Brazil had a good year selling to China as well, we need to market to differentiate.”
He said this demand from China was likely to continue in 2018, while chilled grassfed beef was also still performing well into the US, despite strong competition in that market from Japan and Korea.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership came into force on December 30, and Mr Finucan said this would improve Australia’s market access in Japan in 2019.
“Tariffs will come down 10pc over eight years, which is a bigger impact then our original free trade agreement with Japan,” he said.
“US don’t have a FTA so it expands our tariff advantage with Japan.
“We are also seeing some interest in Mexico for Australian product, particular a premium chilled product. While Mexico already waived tariffs for the next couple of years, the CPTPP will put them into force for the long-term, so hopefully exporters will make use of those markets.”
Much like 2018, weather will be the biggest challenge this year, Mr Finucan said, with the significant destocking lowering the herd and flock base.
“It is an unknown supply base but global markets have been strong and resilient in some difficult conditions in the past 12 months, so the next 12 months will be similar,” he said.
“We are expecting export volumes to drop off from the highs of last year.”
Mr Finucan said global trade was always a watching brief, with the likes of Brexit events, but the main focus this year would be the US-China trade war.
“There are pros and cons – we do have a good supply into China currently but any major economic disruption in China could impact their ability to purchase,” he said.
“The same with the US; they are a big market, so any major disruptions always have potential to impact demand.”