Episode 3 aren’t in favour of a live sheep export phaseout as the science and the data doesn’t support the decision. However, if it is to proceed how long should the process take? A 2023 survey undertaken for an Episode 3 (EP3) report to the Live Sheep Export Phaseout Panel highlighted that around 95% of respondents involved in the live sheep export supply chain believed the phaseout should take five years or more.
Indeed, 71% of participants outlined that the phaseout should take at least ten years to complete, putting the phaseout end date sometime into or beyond 2035. Despite this, the Australian Labor Party, following the recommendation of the Live Sheep Export phaseout panel, has set May 2028 as the completion date for the phaseout.
Introducing new genetics into a flock via a new ram source takes about seven years for nearly 60% of the flock to carry the new genes. By the seventh year, the Gross Margin/DSE of the new flock will be halfway between the old and new genetics. If the case for changing sheep genetics is strong, profitability by the seventh year should be sufficient.
Setting up trials to provide evidence and proof of concept takes about two years, with at least three more years needed to account for seasonal variation (five years would be preferable). An additional two years for extension programmes and another seven years for genetic improvements means the phaseout might need to be 14 years long.
Industry consultation undertaken by EP3 on lamb feedlot expansion, processor capacity development, and logistics could take between three to six years, assuming no significant delays. Furthermore, developing and expanding offshore markets for boxed sheep meat could take five to ten years to mature.
The phaseout of live sheep trade impacts the supply chain, with many participants’ transition requirements depending on key supply chain adjustments. For example, ensuring a consistent supply of sheep and lambs meeting processor specifications is essential before expanding processing plant capacity or accommodating additional workers in regional towns.
The chart below sourced from the EP3 report to the phaseout panel outlines a proposed long-term phaseout process, starting from the estimated year zero in 2025.
Immediate actions include funding for change consultancy, farm enterprise change trials, lamb feedlot trials, redevelopment of sheep meat airfreight capacity (focusing on the MENA region), and introducing an intermittent west to east freight equalisation scheme.
Change consultancy services would assist with enterprise change trials, provide extension staff for small-scale lamb feedlot trials, offer financial counselling, recruitment specialists, and mental health counselling as needed.
Farm enterprise change trials, requiring formal approvals from an animal ethics committee, would ideally run for several years to account for seasonal variations.
Lamb feedlot trials would focus on producers unfamiliar with feedlot design, animal welfare, and management practices. This programme aims to prove the viability of lamb finishing via intensive systems for WA sheep producers, helping them manage risks associated with the shorter growing season.
Redeveloping sheep meat airfreight capacity involves increasing air traffic flows, particularly from the MENA region, to enhance market access for Middle Eastern light lamb carcasses. A subsidy programme could support cargo-only flights, similar to the International Freight Assistance Mechanism (IFAM) that was utilised during the Covid-19 trade disruptions.
An intermittent freight equalisation scheme could subsidise transfers of sheep and lamb from WA to the east during the transition phase when price discounts between WA and eastern sheep and lamb are historically excessive.
Secondary elements, mainly spanning years two to eight, include transition packages for impacted workers, increased abattoir labour and plant capacity, commercial lamb feedlot expansion, and further development of boxed sheep meat access into the MENA market.
Initially, live sheep export volumes would be expected to remain stable or increase slightly. However, as the transition progresses, WA processing and feed lotting capacity grows, and alternative boxed product turnoff options increase, live export volumes would decline, necessitating targeted transition packages for impacted workers. These packages would include training and development programmes, relocation assistance, and support for mental health and financial difficulties.
Labour access is a primary obstacle for WA processors wishing to increase sheep and lamb throughput. Existing labour visa schemes for offshore workers are not entirely suitable, and accommodation for these workers in regional areas is limited. Increasing domestic labour or addressing training and development programme shortfalls for meat workers are potential solutions.
Plant infrastructure upgrades, delayed by regulatory requirements and access to power, are a medium to long-term barrier to expansion. WA processors are concerned about the ongoing continuity of sheep/lamb supply and market access for their products. Expanding the WA commercial lamb feedlot sector and developing offshore markets for boxed products could alleviate these concerns.
Assistance for commercial lamb feedlot expansion could include financial support such as grants, rebates, or interest-free CPI-indexed loan programmes. Non-financial assistance could fast-track regulatory processes.
Increasing airfreight capacity could alleviate immediate pressure on WA sheep and lamb turnoff, particularly for the “bag lamb” market to the MENA region. Developing the MENA boxed market mid-phaseout could expand higher value, processed cuts of WA lamb/sheep products.
Final elements of the transition include completing WA farm enterprise change, expanding sheep meat export market access to destinations like China, the USA, and South East Asia, and developing a sheep meat export market in India. This mirrors the adjustment in flock composition seen in the eastern states and ensures WA sheep and lamb turnoff matches export specifications for key destinations.
Funding for ongoing market development, consumer preference surveys, business development programmes, trade fairs, and market access expansion will ensure additional domestically processed products from increased feedlot and abattoir capacity find suitable offshore outlets at the right price.
Australia’s free trade agreement with India, including preferential tariffs for sheep meat exports, offers an opportunity to expand market presence. However, building this market will take time due to low current consumption levels, low per capita GDP, and a self-sufficient Indian sheep flock. With anticipated growth in population, income levels, and meat consumption in India, Australia can develop this market from the ground up but this will likely take much more time than the current May 2028 deadline allows.
This article is part of a series focusing on the live sheep export trade and the recent decision by the Australian Government to phase out the trade by May 2028.
This article originally appeared at Episode3. Republished with permission. Please note this article is one part of a six part series, read the other articles here.
