MERINO wether producers across Australia are facing depressed pricing as a series of factors conspire to drive values down, with those in south-eastern Australia especially hard hit.
Wool prices are one factor. While they remain at historically good levels, since the winter recess, wool values have fallen 15-20pc, meaning wool producers are less likely to buy in wethers to boost their wool clip.
However, it is issues with boat numbers and compliance with the federal government’s Export Supply Chain Assurance System (ESCAS) regulations in key export markets that are providing the major headaches.
There are still wethers leaving Australia for key Middle Eastern markets, however, exporters are looking to operate almost exclusively out of Western Australia, where freight costs are lower and turnaround times quicker to the Middle East.
Viv Burton, of SA-based SAMEX, said there was little business being done of major wether exporting ports at Adelaide and Portland.
“From our point of view, we only have one vessel running at the moment on wethers, and that’s out of WA.”
“We have one boat being updated to comply with maritime standards, and another scrapped, and in the wider live exporting sector there are ships being switched over to cattle rather than sheep, so there’s limited capacity there.”
“When there’s less ships operating, it makes sense to export out of WA, you save yourself ten days on the water, and at $30,000 a day, that is a serious saving.”
Mr Burton also said the ESCAS compliance in markets was an issue.
“Jordan is compliant already, but big players like Saudi Arabia are not.”
Saudi Arabia is in the second tranche of ESCAS compliance, with the Australian government requiring compliance by September 1.
“It’s going to create problems in terms of market access, especially in the short term, as all destinations for all animals for slaughter have to be compliant.”
“It is right through the supply chain from farmgate to slaughter, so it’s a huge task.”
He said there had been some ships filled out of the south-eastern ports, but it had been nothing like the normal steady flow.
“There has just been the odd one here or there.”
Mr Burton said live exporters, operating on tight margins, d
id not necessarily have a huge appetite for trade at present, although demand in the Middle East remains solid.
“It’s a difficult operating environment, with the high Australian dollar so we’re not seeing anyone rushing in to do business.”
Port of Portland chief executive Jim Cooper said there were shipping slots available, and that there was the availability of general vessels, but cautioned this may not translate into specific live export ships.
Victorian stock agent Gary Driscoll, Driscoll McIlree and Dickinson, Nhill, in the state’s Wimmera region, said he believed most orders for exports out of the Middle East were being satisfied out of WA.
“There’s plenty of supply there and its cheaper freight into the Middle East.”
Chairman of the Western Australian Livestock Exporters Association John Edwards agreed.
“Last year was the first year the WA flock actually went up, so the numbers are there.
“Combined with the fact it has come in a bit dry this year and some farmers are looking to move the wethers on to ensure there is enough feed for the ewes and lambs, it means buyers have the supply there.
He said there were consignments of wethers leaving WA, but added that some ships were being used for live cattle exports instead, into places such as Russia and Turkey.
Mr Driscoll said Victorian wether producers were hoping the live export trade resumed in south-eastern Australia to provide competition for processors for wethers.
“It’s another outlet, and it provides competition.”
He said the domestic market had slowed off at present.
“There isn’t a lot of kill space at the abattoirs and many of them have stopped processing or are on restricted runs at present.”
Live export will be crucial in terms of demand for wethers Mr Driscoll said.
“The abattoirs have enough trouble dealing with the kill they have now, let alone finding more space.
“We need live shipping to create the capacity.”
Along with the live export and processing factors, Mr Driscoll said the south-eastern Australian season was not favouring restockers.
“No one has any feed anywhere, barring Gippsland.”
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