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Live Exports - Meat and Livestock Australia

Estimates & Committees
Rachel Siewert 24 May 2011


Meat and Livestock Australia

Senator SIEWERT:  I would like to ask about live cattle export. I will clarify some numbers firstly. In terms of the work that the industry is doing, we heard this afternoon—and I am sure you are aware of what we were talking about this afternoon—that the minister has written to the industry.

 I am not sure whether that means he has also included you when he wrote to the industry. Perhaps he wrote to the individual bodies. Were you part of the response to the minister about what the industry is doing to address animal welfare issues and the issues that have been highlighted about export. As the minister pointed out, it was about both live sheep and cattle. Were you involved in that response?

Mr Palmer:  Yes, we are part of that correspondence and in having talks with the minister, the department and other agencies, along with LiveCorp, the Cattle Council and the Sheepmeat Council. We are all in unison and part of that dialogue and part of that debate. Also, we are pleased to be part of the recent strategy that has been put to the minister. It is one that I am quite convinced that the industry will back and deliver on.

Senator SIEWERT:  I realise that the minister has only just received the correspondence. I have not asked the minister to release it, but I wonder whether you are able to take us through where you are going with this strategy.

Senator Ludwig:  I think they made it public.

Senator SIEWERT:  Is that since Sunday?

Senator Ludwig:  That was a public release.

Mr Palmer:  I am not aware of this being confidential. What is critically important in this is establishing it. It depends on which market you are referring to, but there is this notion of benchmarking ourselves against international standards and the establishment of in-market animal welfare groups, given the ongoing investment
that the industry has a proud record of—and it is one that will continue. Some $4 million has been spent in the last decade on training slaughtermen and on training cattle handlers and sheep handlers—in the Middle East of course—and on the ongoing improvements in abattoirs and restraining. So today's strategy is really a part of a much longer program that has been going for years and years. It is just that from time to time the live export industry becomes quite topical so therefore there is renewed external interest. But the industry itself has been investing for decades in trying to preserve and enhance the standards to go into new and exciting markets. I do not think that there has been a market that we have gone into initially that has not come with great complexity. It is all after a series of investments and bilateral understanding, as it is a matter of culture and there are other things that motivate various markets. It is not a question of one being better than the other. We operate in different environments and the industry has a lot of government support. This government and previous governments have continually supported the industry in making those investments and nothing is going to detract from or deter us from continuing those investments.

Senator SIEWERT:  If we could move to the restraint boxes, and you are probably aware that we had a conversation earlier on—it was late this afternoon—in terms of restraint boxes mark 1 and mark 4. Could you tell us how many restraint boxes the MLA has supported as to mark 1 and mark 4 in Indonesia?

Mr Palmer:  Yes. Mark 1: about 109 boxes have been constructed, and I think they are spread across about 85 to 89 meat plants and they would represent about 85 per cent of the slaughter in Indonesia. Mark 4: these boxes are relatively new and more sophisticated and perhaps more complex and it depends on the circumstances of where they are going as to whether a plant is capable of taking them on. But I think there are about four at the moment although there may be more; I am not too sure. Don't hold me to that. We could take that on notice. Mark 4 is a recent innovation. Mark 1, in the circumstances that it finds itself in the nature of the plants, has achieved a lot and we will continue to work with the mark 1 as we will work with successive models. But it depends a bit on the plant and it depends on what are their circumstances and what is available. We are looking at some stunning trials at the moment as well, but again it depends very much on the level of sophistication and the level of infrastructure and logistics that might operate in a plant.

Senator SIEWERT:  This is in terms of where Australian cattle go to. We heard earlier this afternoon there are about 800-odd abattoirs in Indonesia.

Mr Palmer:  I am sorry, Senator, but how many?

Senator SIEWERT:  About 800, as we heard this afternoon. From what you are saying, it sounds to me that the bulk of the Australian cattle go into a certain number of abattoirs and not all those smaller ones. Is that so?

Mr Palmer:  That is my understanding. With the 109 mark 1 restraining boxes that I mentioned that are scattered through 80 to 90-odd plants, they represent, I am told, about 85 per cent of slaughterings.

Senator SIEWERT:  Okay, thank you.

Mr Palmer:  Remember that there is a very large domestic industry which operates in its own sphere which we are not necessarily privy to. Our investments, sensibly, are part of an integrated supply chain with the feedlots that are being supplied knowing that those feedlots, in turn, are selling to butchers who are processing in the main in known plants.

Senator SIEWERT:  Are all of them wet abattoirs?

Mr Palmer:  Wet market. Again, it is the culture and tradition in the marketplace. It is a market that has not previously relied on or had availability of refrigeration. There is a culture around eating meat fresh, and it is referred to as the wet market. An animal might be processed overnight and it will be in the wet market by dawn, purchased and consumed soon after.

Senator SIEWERT:  So the bulk of the abattoirs that the Australian cattle go to are wet markets as well?

Mr Palmer:  Cattle that are sent live to Indonesia?

Senator SIEWERT:  Yes; I beg your pardon.

Mr Palmer:  As I understand it, they go primarily to the wet market. There are western-style supermarkets, which are growing in number as logistics, infrastructure and so on change, and community style with them. They are supplied, again, by Australia but largely through processed and boxed beef out of Australia. Primarily, our live animals are fed and finished in Indonesian feedlots, processed and go through the wet market.

Senator SIEWERT:  In terms of the stunning trials, I was told this afternoon that there are only a limited number. I think there are three.

Mr Palmer:  I think we have five in trialling at the moment and another five to go online by the end of the year. If all 10 are up and running, I am advised that will represent about 16 per cent of slaughter. So this is a big breakthrough for us.

Senator SIEWERT:  So 16 per cent of slaughter in five or 10 sites—

Mr Palmer:  Ten.

Senator SIEWERT:  They must be handling a fairly large number of animals in that case.

Mr Palmer:  It would suggest that, yes. Correct.

Senator SIEWERT:  Are the 85 to 90 abattoirs that have the mark 1 boxes fairly large abattoirs?

Mr Palmer:  I do not have a lot of in-market knowledge and, yes, I have been to a couple. The times I have seen them, they would be killing 20 to 40 cattle a night. If that is large, that is a large one.

Senator SIEWERT:  What is the number of exports—780-000-odd beasts?

Mr Palmer:  It varies a bit. There are always issues in the trade about permits and how many get through. It will vary, depending on restrictions that might apply at that time to the market, between 500,000 and 700,000 cattle. About 60 per cent of Australia's live cattle exports go to Indonesia. It is an extremely important and very highly valued market.

Senator SIEWERT:  How closely have you been involved in the closed-loop process in Egypt?

Mr Palmer:  Quite closely. I have been to the plant at Ain Sokhna. It is in a free trade zone, a closed trade zone in the gulf. It is foreign owned. When I was there it was managed by a New Zealand group. It has state-of-the-art technology. It has a killing and processing facility which would stand any test here in Australia. The cattle are unloaded at port side. They have an 800-metre run through a laneway into a, I think, 20,000- to 25,000-head cattle feedlot. They remain there, are fed and finished and then processed through the plant. That has an EU licence. I can assure you that being registered for the European Union brings high standards. It is a very polished plant.

Senator SIEWERT:  I asked this afternoon about the investment Australia had made. I think the investment was around the ear tagging. Did that come through MLA investment? Did MLA invest in that site or was it just—

Mr Palmer:  In bricks and mortar? No.

Senator SIEWERT:  No, in anything to get it up and running. Australia invested, as I understand it, in the technology for the ear tags.

Mr Palmer:  We have a national livestock identification system, which was not set up for the Egyptian trade. It was set up for all our trade and it just happens to be a really efficient vehicle for satisfying the Egyptian protocol, as it does for a whole bunch of markets we work in. That has been a longstanding investment. The industry has put tens of millions into the livestock identification program, as has the Australian government. I think back in about 2005-06 about $20 million was invested by the Australian government to help us with that. The protocols around the Egyptian project—the Sokhna project, as we call it—has been a combination of training here and across there. At the same time meeting, the requirements of the protocols to satisfy ourselves and the Australian government that the closed operations were going to meet our standards. There is a combination of training, working with government, having trade missions go there to see it all and see how it worked and giving us all confidence and comfort that the closed operations at Sokhna were going to meet our needs.

Senator SIEWERT:  I understand all Australian cattle that are exported to Egypt now go through there?

Mr Palmer:  That is correct. There is another one, but the name escapes me. There is another closed operation that is under consideration at the moment. It will also go through the same protocols and standards in order to satisfy all the parties.

Senator SIEWERT:  Is Australia investing in that at all?

Mr Palmer:  I suspect we will be doing the same investment as we did with Sokhna, which is a combination of training, site inspection, and confidence to industry and the government that what we said we would embark on is being delivered.

Senator SIEWERT:  Does that meant that we will be exporting further cattle to that particular plant as well?

Mr Palmer:  That would be the ambition, correct.

Senator SIEWERT:  From now on, do the cattle that go to Egypt solely go through either of those two plants?

Mr Palmer:  Correct.

Senator SIEWERT:  Is there any other market that you are aware of where the closed loop system is being considered?

Mr Palmer:  No, I am not familiar with any. I know it has been talked about and there has been consideration, but it also has to be weighed up against the logistics and infrastructure of what can be delivered. The Sokhna project was enormously beneficial, but it came with some unintended consequences. One was that it was in a free trade zone and the other was that it had a European Union registration. It made a lot of sense. The Sokhna investment made a lot of sense for the ongoing trade or trading out of that port into the European market. There was a lot of inbuilt business sense that, therefore, made the closed system operate for our purposes. Do you understand what I am saying?

Senator SIEWERT:  Yes. There were added benefits.

Mr Palmer:  Yes. Added benefits and added incentives to all parties to make it work.

Senator SIEWERT:  Did that feedback then flow back to the producers over here?

Mr Palmer:  I am not equipped, and I do not think anyone is equipped, to tell you how many cents. But we have some independent studies now that are telling us that it is something like eight cents a kilo in the cattle price that you could attribute to live exports. But I could not tell you that Egypt delivered this and Indonesia delivered that, that is too precise and I would be misleading you. Studies do indicate there is about eight cents a kilo that is thereby influenced by the live export market.

Senator SIEWERT:  I want to quickly go back to the number of cattle exported. What has been the highest number that we have exported to Indonesia?

Mr Palmer:  I had better take that on notice. I was going to say 700 or 750, but I would prefer to take it on notice.

Senator SIEWERT:  That is fine. I understand what you are saying and that you cannot tell me precisely but it is around what we exported last year and that was around 780 or something like that.

Mr Palmer:  Yes, but we would be down on that.

Senator SIEWERT:  That is about the highest.

Mr Palmer:  That would be the highest. I think in a big year we would have moved nearly 900 or one million, but that is to all destinations, and 60 or 70 per cent was going to Indonesia. The figures you are quoting would be pretty close to the mark. I would be happy to give you the actual figure and we will do that on notice.

Senator SIEWERT:  The million was a total number?

Mr Palmer:  Total. Just under one million.

Senator SIEWERT:  What is our next biggest market for live cattle?

Mr Palmer:  The Middle East. I cannot break it down, I am sorry, but Egypt, Jordan and Israel would be the three major ones.

Senator SIEWERT:  It you would take it on notice to give me that breakdown, that would be great.

Mr Palmer:  Yes.

Senator SIEWERT:  Thank you. Regarding the stunning trials, what evaluation process do you have in place to see if it is delivering benefits? You say you have five stunning trials already established with five planned by the end of the year. How much is MLA investing in those trials?

Mr Palmer:  I cannot answer that question tonight; I will have to take that on notice. The first five are under trial now, so there will be an evaluation process going on as we speak, but I am not across it. The other five have not come on; they will be later. There are five under trial at the moment, but, as to the actual cost related to those five and what preliminary evaluation has occurred, I will have to take that on notice.

Senator SIEWERT:  If you could take on notice the cost of the first set and the second set, what the evaluation process is and when you expect to release those results, that would be appreciated.

Mr Palmer:  Yes, definitely.

Senator SIEWERT:  Thank you.

Mr Palmer:  I think that working with the Indonesians around the stunning trial is no small feat. This is brand new territory and, I think, a very significant breakthrough, in a sense. We are dealing with age-old culture and tradition that we cannot take lightly. This has to be stepped through carefully. Getting the agreement that we could go to a stunning trial was a significant breakthrough and it is one that we are very keen to make work. But I am afraid I do not have at my fingertips the details around evaluation and the costs.

Senator SIEWERT:  That would be appreciated, thanks. One of the issues we talked about this afternoon was the lack of electricity in some of these abattoirs, which restricts the ability to use the stunning technology and the move to the mark IV boxes. Do you know how many abattoirs that have the boxes, which are 85 per cent of the trade, have access to electricity? They are obviously bigger operations if they have feedlots.

Mr Palmer:  I cannot answer that; I do not know. In terms of expenditure, I can tell you that a government-industry match of funding of about $2.7 million has been available over the years. There is a recent animal welfare partnership between the government and industry and about $3.2 million has gone through that. So it would be from those funds that this work will be done. As to the breakdown of electricity and the availability of trained labour and staff in these places for stunning trials, I do not have that information. That is why we persevered trying to make mark I work, taking the complexity out of these things, because the fear is that, if some of these things break down or are malfunctioning, there is a potential for them to be ignored and just left in the corner. So we just have to take this thing gently. That is why mark I is being persevered with—just to keep it simple and keep it working and have satisfactorily trained slaughtermen operating these boxes.

Just to finish on this, this is a long evolutionary process. Where we are today is a lot better than where we were 12 months ago. Where we are going to be in 12 months time will be a lot better than where we are today. I do not want to be corny, but this is not a destination; this is a never-ending journey.

Senator SIEWERT:  Thank you.

Mr Palmer:  This trade into Indonesia and other parts of the world in live cattle will always continue. Our view is that, if we care about animals, we should encourage Australia to be in these markets because we are the only country investing. There are plenty of people who will take our place if we bail out. We have a long record and a proud record of investment in these markets and there is no suggestion on the part of industry that we are going to pull out of them or pull out that investment. It is a long journey and there is a proud record which we will continue to work on and continue to invest in. But it is about changing tradition; it is about changing culture; it is about changing a whole lot of stuff which we, in our society, need to delicately pursue.

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