Background live 0340 live export market reporting service.

Final Report B.LIV.0304 Page 4 of 6 1 Background

1.1 Background

1.1.1 Industry Overview and Outlook Australia is the world’s number one exporter of livestock. Livestock exports are a valuable component of Australian livestock industries accounting for 7-10 of cattle turn-off, 15-20 of sheep and lamb turn-off and in excess of 50 of goat turn-off. The current annual value of the trade is estimated at around 700 million. A big jump in exports to Indonesia up by 133,000 head, to 520,000 head to a new record propelled cattle exports to above 722,000 head in 2007 from 634,000 head in 2006. Cameo appearances from Mexico and Russia helped to partly offset lower activity to Malaysia and the Middle East. In the medium-term cattle exports are set to rise further as the outlook for live cattle export markets looks significantly better than the outlook in southern cattle feeder markets. In 2008, cattle exports should rise again to 760,000 head and will play an important role in helping the industry to avoid a downturn in profitability stemming from US re-entry into north Asian beef markets. Live sheep exports fell 8, to just under 3.8m head in 2007, down from 4.2m head in 2006. The reasons for the decline included: tight supplies of suitable quality stock, significant price rises although Ahead rates have remained the same, UShead rates increased with the stronger A, lesser quality the sheep have been younger and lighter, increased competition from North Africa and tight shipping capacity. It is expected that ongoing supply tightness will restrict sheep export volumes to 3.6m head in 2008 – a fall of 5 on 2007 export levels. Over the next decade the live export industry faces a number of challenges from both internal and external factors ranging from animal health issues to the interplay between the processing sector and the live market. It is expected that the volatile nature of demand for livestock exports will continue. While the eastern states of Australia have particularly dominant processing sectors that can help to absorb the impact of fluctuations in demand for live exports, the WA and NT livestock sectors have become highly reliant on the live export sector. Access to accurate, independent and timely market intelligence is vitally important to assist producers in these areas to both maximise profitability in the short to medium term and to plan for the future. Final Report B.LIV.0304 Page 5 of 6 2 Project objectives The objectives for this project were: 1. Further develop the pilot outlook service to produce separate quarterly live export market outlook reports across all the major destinations for Australian cattle and sheepgoats, i.e. two reports each quarter. 2. Report on the strengths and weaknesses of the service such that MLA can determine the future of the outlook service. The key output has been the development and operation of a periodical livestock export market outlook report that analyses and forecasts supply and demand from key markets. The key objective was to gain industry acceptance of the report structure and content. As part of the service key influencing factors are analysed and forecast over the medium term. These include; exchange rate movements, capacity constraints, competition, government and trade policy and these forecasts form part of the assessment of future medium term changes in supply and demand. As part of the service key threats and opportunities are identified and investigated. For example, the service has quantified the impact that north African sheep exports are having on our key Middle Eastern export markets. In cattle we have identified that the expected increase in shipping capacity servicing these routes and access to greater number of QLD cattle should assist another rise in volumes in the medium term. 3 Methodology Project methodology involved forecasting key economic variables across major export markets and combining this with in-market intelligence and local supply forecasts to forecast export volumes and prices. Much of the forecast process is qualitative and involves discussion with various supply chain participants. 4 Results and discussion The project has successfully delivered four quarterly reports within targeted timelines for distribution across the live export industry. The reports have been well received by participants across the entire supply chain. 5 Conclusions and recommendations That the industry continues to fund the ongoing development of the live export market reporting service. Final Report B.LIV.0304 Page 6 of 6 6 Appendices

6.1 March Quarter 2008 Live Cattle Export Report 6.2 March Quarter 2008 Live Sheep Export Report