Phil Edmonds

The Government’s decision to review New Zealand’s trade in live cattle exports is based on de-risking the threat to our economic wellbeing, Agriculture Minister Damien O’Connor says, and the prospect of a ban has been welcomed by animal rights advocates and brand NZ devotees.

The review also appears to be acting on the Government’s stated goal of continually improving NZ’s animal welfare system in order to maintain international standing. But those with skin in the game say our international status is not at risk and the move will further undermine the ability of farmers to diversify their income.

At the beginning of June O’Connor announced the Government was reviewing live cattle exports, suggesting it may be a risk to NZ’s brand. The time had come to rethink the area and consider whether it’s something that fits within our values as a country, he said.

The apparent justification for the review has been based on what O’Connor says are “incidents over the last few years that highlight the fact that once animals leave New Zealand we have very limited ability to ensure their wellbeing when they reach their destination”.

‘That oversupply of stock needs to go somewhere, and the Chinese live export market has been a major outlet for surplus stock.’

It is likely that one particular incident forced this revision which involved an Australian-organised shipment of 5000 dairy cows, including 2000 from NZ, to Sri Lanka in 2017 as part of a scheme to improve the supply of fresh milk and reduce the country’s reliance on imported powdered milk. After complaints by farmers and animal rights groups, a report by the Sri Lanka auditor-general called the scheme inhumane, with about 10% of the imported cattle having died and many having diseases.

For NZ’s live cattle export industry this was more than unfortunate, given it was a one-off ‘experiment’, outside the almost exclusive trade with China.

The outcome was particularly frustrating for exporters who had nothing to do with it and are proud of the treatment of live cattle they export to China, both during the shipment and when they reach their destination.

“We could take any reporter or MPI to the people we supply in China impromptu, and they would be seriously impressed with the standard of animal welfare,” Wairoa-based independent live cattle exporter Wayne Doran says.

“The mortality rates from the time the cattle are picked up, to the time they are  delivered into China is less than the national average standard. Cattle gain weight on the ships, which are like passenger liners. The cattle are stood up and moved every day, flushed clean every day, there are vets on board, every animal inspected daily, it’s all conducive to animal welfare.”

Low mortality acceptable

MPI reporting shows there doesn’t appear to be a mortality problem in the shipping process. In 2018 of the 14,459 live cattle shipped, only eight (0.06%) died. In 2017 the rate was almost identical (0.07%).

Even SAFE, which had been vocal in its opposition to live exports, has not drawn attention to the treatment on board. Rather, its campaign is based on the inability of NZ to have any control of the environment the cattle experience once at their destination. Indeed, this was given as an additional reason for the review by the minister.

However this has also been challenged by exporters, based on practical rather than legislative context.

“My experience of China is that they have paid so much money for the cattle by the time they get there, they can’t afford to mistreat them,” Doran says.

Progressive Livestock agent Greg Collins agrees.

“Some of the animals that go on those boats are worth about US$2500 by the time they get there. As a result they’re looked after better than New Zealand animals.”

Initial reaction to the Government’s announcement focused almost exclusively on those welcoming the decision, or at least those acknowledging it was a step in the right direction.

Green Party Animal Welfare spokesperson Gareth Hughes quoted the Sri Lanka experience and said he would be pushing for the strongest possible outcome in the review. SAFE’s response featured prominently in the headlines, arguing the move did not go far enough. This implied it already believes a ban on live cattle exports is a given and is looking to stop all exports of live animals.

But little consideration was given to those whose livelihoods depend on the trade – despite the minister suggesting Cabinet would need to “consider the impacts on rural New Zealand.”

Doran pointed to a significant proportion of NZ farmers who benefit from live exports, and rely on the income, particularly in low dairy payout years.

“We sent four shipments last year and an average shipment had 200 farmers supplying it, so that’s 800 farmers across the year. By and large they are dairy farmers. Fonterra has around 10,400 suppliers, so those shipments represented 8% of those farmers, and we are not the only exporters. If there were another four or six shipments, it could become 15%-20% of the farmers in the country.”

Collins says many farmers are now set up for live exports.

“Since the slowdown in dairy conversions and more recently some farms going out of dairy and into viticulture, horticulture and urban growth, dairy farmers have ended up with surplus cattle, of which the domestic market is not requiring. That oversupply of stock needs to go somewhere, and the Chinese live export market has been a major outlet for surplus stock.

“It will have a huge impact. Half the cattle on any one boat would be from farmers who farm specifically for export and breed extra cattle for export. If these cattle don’t go on a boat to China, they will end up being slaughtered.”

This is a negative outcome Doran sees as particularly ironic, given the focus of those advocating animal rights.

“If you want to talk about animal welfare as a reason to stop live exports, you are talking about condemning an animal to death at two years old when they could live quite merrily until eight or 10 in China.”

The incentives for farmers to supply the trade are clear, given the prices received are well in excess of those offered locally.

“Farmers are making money out of this trade. We pay over and above the domestic price for the export cattle. And China does not require our highest-class animals,” Collins says. “Farmers are able to sell lower-class animals and still get paid more for them.”

Doran says: “We have a shipment going into quarantine with cattle at $1075 for 190kg. At the moment the market in NZ, if you are in any sort of beef is $3.20kg, which is $600.”

And according to proponents of the trade, it is not only farmers that are set to lose out financially if a ban comes in.

“I would expect a huge part of AsureQuality’s business is generated by work on live exports, with the official inspection, testing, treatment and certification,” Doran says. “For transport firms, there is always a need to move cattle and that wouldn’t change, but with live exports you have freight into quarantine, freight out of quarantine. Then there is feed requirements in quarantine, involving staff for a 30-day period. So live cattle exporting is a driver of employment, as against the requirements for slaughtering.”

No groundswell of opposition

Why has there not been a bigger groundswell of opposition?

Several factors point to reasons for a lack of discontent against what appears to be a cursory disarming of farmers ability to continue diversifying their farm income.

First, the numbers of live cattle being exported has fallen considerably over the past couple of years. The latest quarterly MPI Situation and Outlook report says live cattle exports are expected to decline to about 18,000 animals for 2019, down from 23,493 in 2018. These numbers are significantly down on previous activity – in 2016 more than 40,000 live cattle were exported, and in 2014 more than 86,000 when Fonterra was focused on stocking its Chinese farms.

Second, some industry representatives have suggested a ban would have little impact on farmers. PGG Wrightson livestock manager Peter Moore was quoted following the Government’s announcement remarking he wasn’t surprised the review was being undertaken. Without saying it was insignificant, he suggested the $30 million in export receipts was a pretty small part of NZ’s total agricultural exports, expected to be $45 billion this year.

ANZ rural economist Susan Kilsby did not dismiss the importance of the live cattle trade, but said it will have a minimal impact on the industry overall.

“Obviously the domestic works price won’t be as good as the live export price, but it won’t mean farmers are left struggling with cows they don’t want.” Kilsby said there will be some farmers who may lose out, but in terms of it being a financial hit on the industry, “there are a lot of other reasons that farmers might not be making money and I don’t think banning live cattle exports is going to make or break the industry”.

Third, some dairy farmers have indicated they’ve “moved on” from being set up for the cattle export business. One Waikato dairy farmer spoken to said he no longer viewed it as a reliable income earner, and believed it was too risky to raise extra stock, particularly when you get cattle rejected in the inspection process.

“There was a time when we were rearing a few extra and it was quite lucrative to sell stock six months old before the winter – earning between $1500 and $1700 for a nine-month-old heifer, but that was three or four years ago when the demand was stronger.”

While there may not be the same appetite among dairy farmers to raise extra calves to service the export trade as there was, that does not mean farmers are happy to see it banned. “It’s just another thing being chipped away from farmers’ potential income. It doesn’t help and I wouldn’t want it banned for that reason,” another dairy farmer said.

Despite an atmosphere where a ban is now widely anticipated, O’Connor noted a ban is not a forgone conclusion. “The options presented in the review will range from tightening up the existing standards to absolute or conditional prohibition on some or all parts of this trade.”

Australian stance

Australia, which continues to export live cattle and sheep, completed a review of its standards for exporting livestock by sea earlier this year, with recommended changes accepted by the government. These included reducing stocking densities for sheep, and for specific breeds of cattle, a block on live exports between May 1 and August 31 for voyages that cross the equator to mitigate heat stress. Interestingly, the RSPCA’s concern with the findings was with a lack of change to stocking density for cattle, rather than failure to implement a ban.

Collins says if a ban is implemented here then China will simply source its stock from Australia and that will be a lost opportunity for NZ.

Best-in-class on animal welfare

So why would the Government be so keen to make changes to rules that could eliminate live cattle exports where the likes of Australia and the European Union (albeit with refined rules) continue to allow it?

The answer appears to be a reduced appetite for risk.

There’s plenty of indicators suggesting the Government is looking to strengthen NZ’s position as ‘best-in-class’ on animal welfare, particularly with growing public awareness and an escalation in the number of complaints received by MPI year-on-year.

In MPI’s five-year ‘Strategic Intentions 2015-2020’ document published four years ago there were just five references to animal welfare. In the subsequent refreshed ‘Strategic intentions 2018-2023’ released late last year, there were 46 references.

In the latest strategy guideline, one of the core responsibilities of MPI is ‘Protection’, and within this alongside managing biological risks is NZ’s reputation on animal welfare.

No one will dispute the importance of enhancing consumer trust in NZ’s animal welfare standards, but there is no obvious evidence that a connection can be made between this and allowing live cattle exports.

Director of the Agribusiness and Economics Research Unit (AERU) Caroline Saunders, who has been responsible for the most comprehensive NZ research into consumer insights in export markets around credence attributes, says there has been no reported concern over live cattle exports in the unit’s research.

“I’m not sure why the Government has been spooked by this. The research shows consumers overseas recognise animal welfare, but I’m not sure many would think of live cattle exports as part of their thinking on animal welfare.”

The opportunities for farmers to capitalise on the demand for live cattle exports looks like they could then be rubbed out for the greater good of ‘brand New Zealand’. Doran has a familiar and sobering concern with deference to brand risk, however. “As far as the brand issue is concerned, at what price do we say we have to do this for the brand, when the cost of the brand outweighs the return.”