Phase-out of live exports would benefit the Australian economy - Report

12 October 2009

A report launched by WSPA on Friday reveals that there are potential value adding opportunities being lost in Australia due to trade distortions in the live sheep export trade.

The report, produced by ACIL Tasman, analyses the economics and policy settings of the live sheep export trade from Western Australia and shows that a sheep processed domestically is worth 20% more to the Australian economy than one exported live. This is due to the capacity to add value in Australia. 

For every $100 of output created by the Western Australian live export industry the State’s Gross State Product (GSP) is $81 higher, but for every $100 created by the Western Australian meat processing industry it is $101.50 higher.

However, the research illustrates that trade distortions benefit the live export trade over the domestic meat processing industry. The import of live Australian sheep is heavily subsidised by some Middle East governments, whilst frozen sheep meat attracts a 5% tariff in most major Australian live sheep importing countries.

The research shows that a cessation of the live sheep trade could benefit the Australian economy – through an increase in the level of substitution between Australian live sheep and Australian processed sheep meat in the major importing countries.

An increase in substitution would prevent importing countries seeking live imports from elsewhere and ensure that full value adding opportunities can be captured by the WA economy. In particular, this approach could benefit WA towns where sheep meat processing plants are already located, such as Australind, Bunbury, Coolgardie, Esperance, Geraldton, Gingin, Hyden, Katanning, Kellerberrin, Narrikup, Narrogin, Tammin, Waroona and Woodanilling.

A number of strategies could be used to achieve this substitution, including: lobbying to reducing the subsidies applied to live sheep or applying them to processed products too; removing the 5% tariff on frozen sheep meat; greater dedicated marketing by the Government and industry to promote Australian processed sheep meat products; and/or vertical integration between the WA sheep meat industry and the Middle East.

The meat processing industry has backed the report’s findings. Grant Courtney of the Meatworkers Union comments: “Our members are experiencing the negative impact of the live sheep export trade firsthand. Over the last 30 years the meat processing industry has suffered the loss of 40,000 jobs and 150 processing plants. We know that many plants are currently working at only 50% capacity and that many workers are only able to work three days a week. We urge the Australian Government to take the findings of this report on board.”

The ACIL Tasman report was commissioned by the World Society for the Protection of Animals (WSPA). Emily Reeves, Programs Manager, comments: “This research demonstrates that, with a practical and rational approach, it is possible to create benefits for both the Australian economy and Australian animals through the phasing out of the live export trade.”

“It demonstrates that lobbying to reduce the distortions of import subsidies is in the interests of the WA economy, if live sheep are substituted with sheep meat processed in WA. Meat processors, unions, animal welfare groups and WA farmers could work together to improve value adding opportunities in the WA sheep meat industry and achieve sustainable animal welfare improvements.

The full report can be downloaded at: www.wspa.org.au/report

For information about how you can take action to help end live sheep exports from Australia click here