Tsunami could help Australian trade

By COURTNEY KEOGH:
The live export industry is a contentious part of Australia’s growing agriculture and livestock industry.
The Joint Standing Committee on Foreign Affairs, Defence and Trade began enquires about Australia’s trade and investment relationship with Japan (and the Republic of Korea) in 2011.

The committee is looking at the nature of Australia’s trade and investment relationships with Japan, emerging trends stemming from these relationships, barriers to trade for Australian businesses, as well as the role of the government in helping Australian companies to access and profit from trade opportunities in Japan.

Japan has been a valuable export market for agriculture, fisheries and forestry products, and is also a major investor in Australian agriculture.

Australia is Japan’s fifth largest source of imported agricultural products such as beef, sheep, goat, offal as well as live animals.

The Australian live export sector was estimated to be worth just under AUD$100 million in the period of 2010-11. Each year Australian animals are sent to countries where animal welfare laws do not adequately protect them.

Cattle, sheep, horses and goats are exported live to countries in the Middle East and South East Asia where they are transported, handled and then slaughtered inhumanely.

Most animals are fully conscious when they have their throats cut, and are left to bleed out, leading to an incredibly painful death, while some even have their eyes gouged out and the tendons in their legs slashed before slaughter.
Information contained in the Department of Agriculture, Fisheries and Forestry’s submission to the Joint Committee stated that in 2010 Australia supplied 70 percent of Japan’s chilled and frozen beef exports, netting over AUD$1.7 billion for the Australian agriculture industry.

Conversely, live export to Japan is only worth around AUD$18 million.

Department of Agriculture, Fisheries and Forestries Minister-Counsellor (Agriculture) Sally Standen said live animals are exported to Japan by air (as opposed to boat for the Middle East) for two reasons.
“Very few animals are exported to Japan, and because of that they are very valuable,” she said.

“Only about 20,000 cattle are exported to Japan per year, and these are used as breeding animals rather than animals for slaughter”.

The Japanese pay a much higher price for these animals because of their breeding purpose, and as such it is worth their while to pay for air transport.

Elders International is an Australian company and is the world’s largest exporter of feeder, slaughter and breeder cattle.

General Manager – Trading, Tony Dage, says that the majority of animals are exported by sea freight, and that less than two percent of animals are exported by air services per year.

Because Japan relies heavily on Australian exports of beef to meet consumer demands, and because they pay a higher price (predominantly for Wagyu cattle) it is in their economic interest to pay more to ensure the cattle that are being exported to Japan do not suffer the same fate as cattle in Egypt or Indonesia.
“Developing countries prefer live animals because it’s cheaper, culturally they have a preference for fresh meat, and they don’t have the refrigeration capacity to store meat,”,Ms Standen said.

“These countries simply would not be able to pay to have live animals exported by plane.”

It is obvious that chilled and frozen meat exports from Australia are already worth significantly more than the value of live exports annually, and could further increase if Australia did not provide the option of live animals to importing nations.

The strong trade relationship between Japan and Australia could be strengthened (even if a ban on live exports was enforced) because of the effects the 2011 tsunami has had on Japanese agriculture.
The affected regions make up only eight percent of Japan’s agricultural production, with AUD$22.4 billion in damage across the agriculture industry.

Reports in mid 2011 outlined that the combined effects of food safety concerns and supply shortages would contribute to a limit on Japanese exports and a rise in imports.

This would ultimately let the Australian agricultural industry profit from an increased reliance by Japan on Australian export products like beef.

A year on from the tragedy, and experts are still unclear about what effect, if any, Japan’s current food supply and demand situation will have on global farm commodity prices.

Another significant factor in the trade relationship between Australia and Japan is the Free Trade Agreement (FTA).

The FTA negotiations were entered into in 2006 and since then 12 rounds have been held, with government commitment to the FTA in Japan and Australia remaining strong despite the 2011 tsunami devastation.
Australian agriculture would benefit from a FTA that would reduce tariffs that affect Australia’s key exports, such as beef.

A reduction in tariffs could ultimately lead to Australia stopping live animal export to Japan. It would mean increased exports of chilled and frozen meat if demand from Japanese consumers increases.

The Joint Committee enquiry into the trade and investment relationship between Australia and Japan is necessary in order to provide insight to the Australian agriculture industry on a wide range of issues.
The difference in the treatment of live animals being exported to Japan, and why the differences exist, is integral in providing further analysis of whether the live export trade is beneficial to Australia.

The enquiry results may also indicate whether or not it is practical to preempt increased supply and demand issues from Japan due to the effects of the 2011 tsunami, leaving the future of Australian agriculture readily prepared.