Hip pockets hurt as supply chain stalls

The effects of the Federal Government's Export Supply Chain Regulation (ESCAS) continue to roll on, as a backlog of sheep ready for export begins to build up in farmers' paddocks.

Some growers have been left holding on to sale-ready sheep for months as the export supply chain grapples with the new system.

The situation is hurting not only growers' pockets, but exporters as well.

Emanuel Exports managing director Graham Daws said demand for Australian sheep had dropped over the last year and he's pointing the finger at the difficulties in implementing the new ESCAS system.

He said although exporters supported ESCAS's principles, it was proving to be hard to implement in such a rigid timeframe.

Even with all Tranche 1 countries now signed up to the system, Emanuel export boats are departing Australian shores with their lowest-ever sheep numbers - just one third of their normal volume.

"It's just a difficult job to get an ESCAS with every company - we're changing thousands of years of culture," he said.

"It's simply supply and demand… but we do expect it will be picking up probably end of May onwards when we get the supply chains in order.

"Stakeholders are wearing the cost of this, which goes down to producers as well.

"Since this started, sheep have dropped $15 a head and cattle 20c a kilo and this is a time of the year when the prices normally escalate.

"Growers are suffering - they've got sheep they want to get rid of and they've got to feed them and hold them for the next shipment."

But what is more worrying is that markets traditionally supplied by Australian sheep are now looking elsewhere.

"Every market is looking wherever they can to source from the most economical country that they can," Mr Daws said.

"The cost of ESCAS is huge and that's obviously going onto the cost of everything.

"Therefore they're being forced to look at anywhere else for supply for their fresh meat."

Narembeen Damara producer John Hall would normally supply 200 to 400 sheep a month to the export market, but despite those sheep being ready for sale they've been held back for four to five months.

For the past few years John has been sending his Damaras to the same client, but that client is now going to source sheep elsewhere because of the difficulties the new system is presenting. He said he would now have to accept a lower price for his sheep simply to sell them on.

"If anyone wants to export sheep to any market, he or she is restricted and has to go through the shipping company's protocols that the Government has laid down," he said.

"What it's doing is taking competition out of the market and allowing a few to dominate.

"I'm not saying there is anything wrong with the shippers, but it's not allowing everyone to move livestock to destinations."

There are reports of many growers still waiting to export Damaras and Dorpers, but the issue doesn't just stop with exotic breeds.

Pastoralist and Graziers Association representative to the Sheepmeat Council of Australia David Boyle said there was also a backlog when trying to get rid of lambs.

"It's not an ideal situation, but it is a better situation than the trade stopping completely," he said.

"It's imperative that we keep these markets open with the shortage of kill space in abattoirs (in Australia)."

What would improve the flow of export sheep is the successful transition of Tranche 2 markets to ESCAS, but as the September deadline approaches Mr Daws admitted progress was hard fought.

Whether ESCAS agreements with Tranche 2 countries are successful will largely depend on negotiations with destination governments.

"All abattoirs are basically owned by government - we can't go along and simply tell an abattoir what to do," Mr Daws said.

"The biggest market we have potentially is Saudi Arabia, which will take huge numbers of sheep and absorb any surplus cattle, is going to be the most difficult to overcome.

"Our Government is putting all the responsibility on an exporter but it's difficult for an exporter to control everything at the other end unless we get the government of that particular country on board."