Australia plans to ban the export of live sheep. What will this mean for the industry?

This month, the federal government announced the plan ban on the export of live sheep, which is to enter into force on May 1, 2028.

The announcement coincided with the release of the long-awaited film report by an independent panel appointed to investigate this issue.

Animal welfare advocates immediately embraced the news, after long campaigning for a ban.

But agricultural organizations expressed their opinion deep concerns about its potential impact on the sector. They too he argued a four-year transition window will not be enough time to adapt.

Australia just isn’t the first country to introduce a ban on the export of live animals, even though it reacted quite early.

Neighboring New Zealand has imposed approx Together on the export of live animals, which entered into force in April last 12 months.

In December, the UK also presented regulations banning the export of live animals intended for slaughter and fattening. The case is gaining momentum across the European Union.

So are such bans really the death knell for the sheep industry, as is usually argued, or are they simply an inevitable part of the needed transformation?

The deepening division between the city and the countryside

One of the earliest effects of this proposal was: increase tensions in Australia between state and federal governments, and between urban and rural communities.

Western Australia alone accounts for 99% of Australia’s live sheep exports. Groups opposing the ban do he framed it as one other example of the east coast of “inner city” Australia dictating terms to rural Western Australians.

However, the “West vs. the rest” narrative can itself be misleading. Questionnaire commissioned by the RSPCA, it was found that over 70% of Western Australians were in favor of a ban.

Will it really crush the sheep industry?

The extent of the impact of the ban will, of course, rely on the broader importance of live animal exports to the sheep sector and the ability of the industry to adapt. Adaptation could mean transferring this supply to the domestic processing market or the expansion of other enterprises.

Supporters of the ban argue that livestock exports are only a small part of the sheep industry. According to government data, Australia’s lamb and mutton export industry was value AUD 4.5 billion in 2023.

However, live sheep exports by sea accounted for lower than 2% of this trade and price roughly $77 million. To further emphasize the point, supporters of the ban identified that this trade only means 0.1% of Australia’s total agricultural exports.

Opponents of the ban, meanwhile, would say that these aggregated Australian figures significantly understate the economic importance of live animal exports to WA.

Despite a marked decline over the last decade, this sector still represents an estimated value 5.4% the state’s total sheep industry exports.

The livestock export market also offers other advantages to producers. The possibility of selling sheep to an alternate market may increase farmers’ bargaining power in contacts with domestic processors.

In Ireland, where processing capability is extremely concentrated, this is the case in the agricultural sector he fought vigorously to keep export trade alive.

Exporting live sheep can be an answer for farmers in dry periods when feed is scarce.

How much compensation should the industry receive?

The potential economic impact of the ban has been highly disputed, but most estimates confirm that there will be financial losses.

The independent panel gave particular weight estimates generated for the WA government. They estimate the cost at about $123 million a 12 months if there isn’t any substitution with other corporations, or $22 million a 12 months if farmers switch to crop production.

When spread across the farm, losses estimated in some studies may appear relatively small.

However, the current financial and climate challenges in the region are intense, and even a small reduction in revenue could push some corporations and their owners to breaking point.

The government has proposed a $107 million package to help with the transition, which incorporates $64.6 million to help sheep producers make the most of existing and emerging opportunities and $27 million to support the marketing of sheep products at home and abroad.

The support just isn’t only addressed to farmers. The government admits that the ban will affect all corporations throughout the supply chain – carriers, commodity traders, feed producers.

The effectiveness of this support is determined by the way it is implemented, the extent of its use and the effectiveness it may well mitigate the transformation.

The planned marketing support will have a way more indirect impact, with high uncertainty as to the extent to which the projected losses will actually be offset by increased demand.

Given the uncertainty about the actual costs that will be incurred, it’s difficult to assess the adequacy of payments. Federal Minister of Agriculture Murray Watt he sees them as generousindicating that $107 million is five times the lower end of the estimated range for annual losses.

The WA government, nevertheless, argued that the transition payments were completely insufficient.

However, there have been no export ban transition payments in New Zealand and it seems that none have been proposed in the UK either.

The situation in Australia reflects the historical importance of the livestock export sector to the sheep supply chain.

What’s next?

As part of the sheep industry’s social license to operate, it seems prudent for businesses to plan for a future without livestock exports. At the same time, policymakers should work to increase the sector’s resilience to the significant financial and climate challenges it faces.

But politics is a fickle beast. In New Zealand, a recently elected coalition announced plans to reverse the country’s ban under Art sustained pressure from industry.

The Australian National Party has already made it clear that it too will push for a change in the situation.

While it is obvious that a majority of the population is opposed to the export of live animals, this majority could also be thinner than you may think. AND last survey in New Zealand support for a ban was just 51%.

Ultimately, this type of political uncertainty can only reduce incentives for businesses to adapt.