Darwin live cattle export

Hay & Fodder Suppliers to Live animal export.

For every $1M the NT beef industry generated in 2012/13 it created another $510,000 within the NT economy.

For every 100 jobs held in the NT beef industry another 36 are created in the NT economy alone.

(NT DPIF Outlook 2013)

I began writing this blog about service providers to the Live export industry but then realised I couldn’t really do that without showing the fluctuations in the live export markets and how that impact affected producers and thus the flow on to service providers.

Therefore I have broken the post into 2 sections.
1. NT Live cattle export – Darwin
2. Hay & Fodder Suppliers to Live animal export.

.
I have not addressed animal welfare issues in these posts as I am working on some other blogs to address that.

Some service providers are paid arranged set prices for the goods they may supply such as hay or retail goods. Others  rely on commissions in the form of percentages of the gross dollars earned or rates of pay in regards to volumes of animals handled. e.g stock agents. Transporters are paid on a basis of volume carried and the distances they transport the stock on a kilometre rate travelled. Hay producers can be paid either per tonnage or rate of pay per bale supplied.

This post mainly focus’ on the fodder service providers to the NT live animal export industry.

The NT fodder industry has grown steadily in the last 18 years in line with the export of live cattle from the NT

Darwin LE v's Fodder_edited-1Chart 1. Live export of cattle from the Darwin port and the tonnage production of hay and fodder in the NT.

Fodder production_edited-1Chart 2. Production of hay, fodder and Silage in the NT and their combined value.

The most common pastures grown for hay production in the north of the NT are Jarra  and Cavalcade. Some forage sorghum’s that are suited to the tropics are also used to produce hay, these being Sudan and Sweet Sorghum.

Fodder production in the NT main problems are climate, weed management and nitrogen deficiency in the soils but also experience similar issues to any other cropping enterprise, poor rain seasons, insects, fire and costs of plant and equipment.

Many hay producers were impacted by the ban in June 2011, yet most didn’t produce cattle. Like us, the cattle producers, many hay growers wondered if their business’s were finished in 2011, as some of us thought ours may be. Now in 2014 they simply can’t supply enough hay for the movement of cattle that is now occurring through the NT’s only port Darwin.
Like us fodder suppliers faced difficulties in holding supply and stock in 2011. Now having unexpected market increases and demand for their product due to significant market improvement and influx of other states cattle, 2014 sees NT suppliers purchasing fodder from other states to ensure demands are met.

14.09.2014 055_edited-1Pic 3. Hay production, round bale production on natural pasture. South of Katherine. These are the bales we prefer to use simply for ability to lift and use with the smaller machinery we have, and our requirement to feed different small yardings of animals at any one time.

Hay growers produce round or large square bales. Cattle breeders feed these on their properties when handling weaners, working cattle and also to feed cattle intended for sale prior to transport.
On the one hand producers generally give an indication of how many bales they would like to purchase in pre-set agreements. On the other you can never be really sure how many bales you will go through. With the wet occurring late this year (time of writing November 2014) we were feeding hay for much longer period to young cattle than we had originally intended at the end of the dry season. This is a necessary cost we are willing to wear as these weaners could lose too much condition and possibly die without extra feeding. How much longer we will need to feed it is anyone’s guess and depends on the weather gods. We use round bales that weigh about 200kg and are convenient for us to handle.(Early December 2014 we have received some good early wet season storms). Square bales are much larger and heavier and are preferred by many producers. Economically the square bales are more cost-effective to transport and handle but they can weigh up to 500kg each.

06.06.13 012_weaners _edited-1

Pic 4. Weaners being fed hay. A round bale rolled out. An important practice to teach them handling ability and to learn that hay is food. Feeding hay to animals quietens them and desensitizes them to people.

The NT had a short history of silage production. I haven’t been able to find why this was discontinued.

Hay growers also supply hay to pre-export yards, which process the hay and mix it with other foodstuffs to process into pellets and fed in bunkers similar to feedlots, the cattle also eat the bales directly. Supply numbers to pre-export yards would be very difficult to estimate as some markets and cattle to be processed simply couldn’t be forecast with accuracy more than a few months from when orders are actually realised.
While export yards may have contracts and some degree of idea of numbers they work on, like us they can only store and handle so much hay at any one time, and like us are not likely to know forward export requirements by more than 6 months at best. There is no set pattern of which port a ship or country may obtain cattle from and exporters may rely on regional supply of cattle and the type of animal they require at the time, prior to announcing schedules of shipping.

To illustrate the variance from which port cattle may be exported to the same country I have used Indonesia as the common destination in the 2 following charts.

Northern ports exports._edited-1Chart 5. Cattle exported from the main north Australian ports to Indonesia.

Untitled_edited-1Chart 6. Cattle exported from other Australian ports to Indonesia.

27.11.2013 136_edited-1

Pic.7 Large Square bales being fed to export cattle in a pre-export yard south of Darwin. Square bales are approximately 3 times the weight of round bales. These cattle are also fed shipping pellets to prepare for export transport.

Fodder companies utilise hay to process into pellets, which is transported and used in the pre-export yards and on the ships as the animals’ transverse the sea. Supply to the export yards and shipping facilities is a 100% of their business for some fodder suppliers.

Livestock fodder currently loaded onto 5 carriers berthing at the Darwin port through December 2014 are estimated to be worth $1.3M on its own.

27.11.2013 153_edited-1

Pic. 8. Shipper pellets. Pulverized hay with other grain and fodder supplements, mixed with molasses to form pellets are transported in large ton sized bulk bags to ports for loading to ships. These are fed to cattle pre-export and while on the ships in transit.

Those who specialise in hay production have invested often many years in clearing and developing paddocks to suit their crop types, irrigation, machinery and general soil condition to optimise their cropping harvest abilities.
Most cropping for hay production relies on the wet season rainfall. Planting generally happens about November/December, with the pastures growing through the summer wet months, cutting and baling happening from March on wards through the dry season. Natural pasture production areas may be baled later in the year July through to September.
Peak demand for hay is through the dry with the mustering of cattle and the highest activity of the ships loading at the port.
At times hay producers are left with surplus supplies from the dry season of bales for which they still have on property and need to protect over the wet seasons. To maintain the integrity of the nutritional value of the fodder it is important that it is covered to protect it from water logging. Bales kept dry will be suitable for sale at a later date and therefore valuable to the grower as future income. Wet bales are worthless for fodder, In fact even dampness in bales can cause mould which can then be extremely dangerous for animals to consume.

Rainfall averages of Katherine’s 2.4m and Darwin 3.2m combined with high humidity and temperatures of the top end through the wet would soon turn large uncovered haystacks into soggy, hot and rotting piles of worthless gunk. I have left a hay bale in my garden for mulch as a full bale over one wet and actually seen it was fly blown due to it being perfect conditions for the maggots to survive moisture and temperature.

hay 001

Pic 9. Source. NT DPI stacking and storing hay. An example of large square bales stack with a tarpaulin cover to protect the hay from water logging through the wet season.

2008 had been a very low fodder production year, with below average rainfalls and ownership of some properties deciding to discontinue hay production.
2009 saw increased production of fodder but with a surplus of supply, some had to store hay over the 09/10 wet.
09/10 wet was a late finish for rains received which enabled record production, but the following wet 10/11 set in early meaning again some producers had surplus hay to demands and had to store it over the wet. The Indonesian imposed import quotas were also having a negative effect on demand due to the fact that the numbers of cattle being exported were in decline.
The 2010/2011 wet season had been a very good season for hay growers as it was a consistent rainfall event allowing for large tonnage of hay to be produced at 83,230t and valued at $19M. Some producers of natural pastures chose not to bale due to reduced demand because of the live export ban.
When the ban of live export to Indonesia occurred, June 2011. The export yards and ships stopped, many hay producers were left holding thousands of tonnes of bales that had been pre-ordered but suddenly those orders were cancelled or had been post-phoned. 2011/12 values of fodder dropped to $13.9M. Many growers had been left with excess bales from 2011 and didn’t want to bale more hay which they possibly couldn’t sell due to the uncertainty of markets at the time, therefore some pastures were left standing in paddocks.

A cubing plant located in Katherine, who had just finished substantial multimillion dollar upgrades, had operational and commitment costs to purchase hay of $500,000 per month when the ban occurred in 2011. They had two full road trains loaded and ready to leave the facility to transport the fodder to ships waiting to load cattle the very day the ban was invoked. Those truck orders were immediately cancelled and the fodder never even left the cubing plant. They had over 8,000 tonnes of hay on site ready to be processed for the coming season’s activity and yet they then had no orders.
The plant had to prepare for what they would do with the hay over the wet if it wasn’t processed. They didn’t have enough tarps to cover the stacks if it wasn’t utilised. Therefore to be prepared for the wet and allow manufacture time they had to order tarps in June, at a cost of over $8,000 each, they needed 10 of them. Some growers didn’t have the cash funds for tarps and simply left the bales to rot.
The cubing plant estimated it lost 90% of its sales within days of the ban being invoked, including subsequent price drops. Then they had to endure undercutting from interstate fodder suppliers when the cattle started to move in late 2011, everyone was desperate to shift their produce!
The plant had expected to use 2,000 tonnes of hay a month to process, but actually only processed 300 tonnes a month for several months following the ban. After the ban was lifted they supplied 3-4 boats a month, prior to the ban they had budgeted supplying 4 a week.
A contract hay baler who would travel with his equipment to properties around Katherine went from producing 30,000 large square bales in the 2010 season to only 10,000 in 2011 due to cancelled work. This cost his business, immediately! Over half a million dollars in lost income. People didn’t want to go to the expense of baling hay which probably couldn’t be sold, if they didn’t have tarp coverage for the hay it would deteriorate over the wet season and be of little value the following year.
Many hay producers immediately felt the financial strain of lost income when the ban occurred; they now had few outlets to sell too. This was increased when the 2011/12 wet season approached and large stands of hay stacks remained uncovered in paddocks or yards. Most didn’t have tarps.
As producers, like ourselves we were extremely wary of market improvements in the coming 2012 and 2013 years. We had been abandoned by the government when they had implemented the ban and the mood in general of market improvement was one of scepticism and wariness. Add to that the phone tapping scandals and poor intergovernmental relations between Indonesia and Australia. It appeared the Australian government wasn’t too concerned about re-establishment of good trade relations. It was hoped markets would improve but it wasn’t going to be quick, relationships were being rebuilt but it was a slow process, Cattle producers realised ESCAS would take time to develop and implement. So we waited. When Indonesia and other markets did open up late in 2011 and throughout 2012 the specifications of requirements for cattle were stringent and this also limited export numbers.
We slashed our budgets accordingly, which meant we curtailed any spending to only what was absolutely necessary. Hay orders were kept to the minimum as we simply didn’t handle many selling animals and they were returned to paddocks if markets weren’t available. We simply didn’t buy our normal levels of orders for steel, animal health, fencing equipment and machinery repairs.
The hay producers followed suit, they didn’t plant much when the planting period of November / December came and went over the 12/13 wet. and they knew if we were not going to shift cattle then they also would have limited markets to sell too and thus income. A few years previously the 12/13 year had been forecast to have fodder value at $14.8M, in reality it achieved only $12.4M.
We were all highly stressed and we were in self-preservation mode.
If we were going to go broke, we were taking a lot of others with us, not intentionally, but we were all linked. The thing was, we had to hold off going broke as best we could because we couldn’t sell our property on a sliding property market with poor prospects of live export for trade. So we did hope that markets come back because there’s really nothing else we could do but simply ride it out.
The hay producers in 12/13 wet again limited the planted areas to hay production. The wet season was below average with rainfall occurring in deluges then with long periods of dry spells in between. This caused poor germination and affected plant viability, some crops failed all together. Production was down for the coming 2013 dry season as the fodder was simply not as dense as usual and proteins levels had been affected. Fodder shortages did occur late in the dry season of 2013.
Cattle markets steadily improved in 2013 for live export cattle producers and there were murmurs of easing of the import quotas from Indonesia and substantial orders to Vietnam, but they hadn’t come on-line at that stage and prices while increasing were still only at break even. People were optimistically cautious.
2013 saw Indonesia presidency elections in full swing, with quiet acknowledgement that their self-efficiency would not be attainable in the short-term. In fact people were demanding meat and the governments needed to increase imports to meet their people’s demands. They implemented quotas based on the pricing of secondary cuts on their own wet meat markets late 2013 and into 2014. Vietnam was giving strong indications of not only surpassing their previous year’s cattle purchases but tripling them in 2014. We were optimistic, but the proof is only when the orders are called.
Hay producers again held back extensive planting for the 13/14 period. Cattle producers viewed reports of massive market number requirements with healthy scepticism, the growers wanted to actually see numbers shipped before they would commit themselves to large plantings.
2014 was a turnaround for live export for the cattle producers. The majority of Australia was in severe drought, cattle turnoff, including females was exceeding previous records dating back many years, cattle producers weren’t only selling normal stock they were selling breeders because of feed shortages. QLD and northern NSW was processing 11% higher than in 2013, southern states processing 23% higher(Weekly times 29/10/2014). The Australian processors were flooded with cattle and dropped their prices accordingly.

We finally had some serious competition in markets for cattle, Vietnam orders had materialised and Indonesia was importing near record numbers. Prices were above $2.00/kg and remaining stable. Other states producers were sending cattle to live export who had never live exported in their lives, the ability to sell feeder animals in a light weight of less than 350kg was a god send to some for income, otherwise they had no where else to sell. some meat processors were taking bookings months ahead with no quotation of prices. Live export was enabling many producers an income that was paramount to their financial survival, half of the 415,000 exported from the Darwin port at the end of October 2014 were from QLD.

This has placed un-prepared for demand for hay and fodder in the areas that supply the export yards, ships and general spelling of cattle, No only Darwin but spelling yards such as Cloncurry where animals were transited all needed hay.
2014 has seen such a massive demand for fodder that the hay producers in the north have been cleaned out and have received good prices. This is good for them and hopefully means many of them can regain some serious income going into 2015 as they conduct plantings now with the live export markets positive for the coming year.
The interesting things is, that Katherine cubing plant has had to truck in so much hay from down south to keep up with demand, they have dedicated 3-4 full road trains a week only for hay cartage. This has meant the cost of production has actually kept their profit margins down. They have seen producers leave the industry and the whole landscape and changed since the ban. After the ban the plant had so much hay in storage they didn’t buy any fodder off local suppliers in 2011 or 2012. This affected locals badly whose income was hay production, some sold up and left the industry entirely.
Recent articles concerning hay  looks positive for good market supply of hay for the coming year. Ironically I hope the increased demand for hay doesn’t mean that cattle producers can’t afford to buy it. Quiet simply we can’t operate without hay. As my husband would say “ hay is worth a couple of good men”. We need to have market accessibility and competition to achieve sustainable beef production. We also need our service providers.

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Categories: Beef Industry, Cattle station, Darwin live cattle export, Dry Season, Hay and fodder production, Live Exports, Northern Territory., Uncategorized | Tags: , , , , , , | Leave a comment

Northern Territory Live Cattle export – Darwin

For every $1M the NT beef industry generated in 2012/13 it created another $510,000 within the NT economy.

For every 100 jobs held in the NT beef industry another 36 are created in the NT economy alone.

(NT DPIF Outlook 2013)

I began writing this blog about service providers to the Live export industry but then realised I couldn’t really do that without showing the fluctuations in the live export markets and how that impact affected producers and thus the flow on to service providers.

Therefore I have broken this topic into 2.
1. NT Live cattle export – Darwin
2. Hay & Fodder Suppliers to Live animal export.

.
I have not addressed animal welfare issues in these posts as I am working on some other blogs to address that.

.
Service providers to the Northern Territory live cattle export industry may not directly own cattle, but they fulfil a very important role to enable cattle production. They are many and varied, including fodder producers who grow and provide hay. Transporters , fuel providers or they supply goods and direct services, like stock agents or veterinarians. Without these service providers direct cattle producers simply wouldn’t have the capabilities to operate and conduct, our business of cattle breeding.

Ripple effect June 2011_edited-1

Chart 1. Ripple map illustrating the effects that the income of a live export producer has on the service industries and suppliers, in turn the cattle producers heavily rely on these other industries.

 As livestock numbers and the value of cattle fluctuate by direct income to producers, that in turn affects the direct supply and demand requirements of supplies.

Within the Northern Territory cattle industry there were, according to ABARES at the end of 2013, approximately 2 million cattle located in the NT. This is about 15% of the total Australian Beef herd.

NT Herd_edited-1

Chart 2. The NT Beef herd showing the long-term increase of the Mature female component and the total beef herd in the NT. Gradual increases have occurred since the mid 90’s due to better management and productivity practices and stronger influence of the Bos Indicus breeds.

600,000 sale animals are turned off annually from the NT; on average half go to live export and the other half to slaughter processors, or other producers in Australia.

NT Cattle Production_edited-2Chart 3. Source DPI & F overview Outlook 2013
Northern Territory Cattle – Value of production 2000-01 to 2017-18

2012 /13 Output cattle value of production for only NT origin cattle was $307.4M , including live exports and slaughter. For every $1M the NT beef industry generated in 2012/13 it created another $510,000 within the NT economy. For every 100 jobs held in the NT beef industry another 36 are created in the NT economy alone. (NT DPIF Outlook 2013). The beef industry dominates agricultural and fisheries production in the NT.

NT beef production operates on mostly natural open rangeland land systems dependent on natural rainfall occurrences. The Simpson and Great Sandy Deserts are located in the south, with very hot and dry climates and rainfall averages of 150mm per annum but very fertile soils. Contrastively the northern high rainfall tropics experience a distinctive high rainfall period and dry season with rainfall measurements of over 3m per annum with generally lower fertility soils.

Nt rainfall_edited-1Chart 4. The rainfall averages for the NT

NT map_edited-1Chart 5. NT map of Agriculture land uses.

 To illustrate how live export markets have fluctuated over the last several years the following statistics are based on predominantly the live export of cattle from the Northern Territories only port, Darwin.

Darwin total cattle_edited-1Chart 5. The tally of only cattle that have been exported through the Darwin Port 2009 – 2014 (Nov) to all destinations.

Darwin exports 09_11_edited-1Darwin exports 12_14_edited-1

Charts 6 & 7. All cattle exported from Darwin. This is the exact same data as chart 5

Darwin other animals._edited-1Chart 8. Other animals live exported from the Darwin Port. 2009-2014

High cattle numbers exported don’t necessarily mean more money earned per individual animal, producers are paid on a kilogram live basis on delivery of the animals, the price is dependent on current market situations.

Livelink 001Chart 9. Source LiveCorp. Livelink November 2014. Australian saleyard and live cattle prices. At $1.50/kg in 2013 a 330kg animal was gross value of $495, in 2014 at $2.60 that same weighted animal is now worth $858, 73% more than just 12 months previously.

In reference to the above chart  NT DPI quoted no prices for records for live animals. In May of 2011 the market was approximately $1.65/kg. When the Indonesian live export ban was implemented June 6, 2011 only the cattle already on the water (2713 hd) were recorded, nil export occurred to Indonesia in July 2011. Prior to June 2011 at least 21,000 head were transported to Indonesia every single month for the previous 4 years. Many of the cattle exported immediately after the lifting of the ban in July 2011 were already pre-contracted prior to June and therefore not relevant to pricing after.. Personally, with difficulty to even find space on ships. ABARES predicted at July 2011 there were 365,000 unsold export cattle unsold (QLD CL 28/07/2011). we were able to sell some cattle to Indonesian markets in late 2011 and the price was again $1.65/kg late in the year. It  was near impossible to sell cattle during the period of July to September. So many cattle were already in the ports supply region that stock agents weren’t even able to give producers prices because the exporters were simply not requiring more cattle to fill orders.

High livestock numbers does mean an increase in demand of goods such as hay and transport from service providers. These numbers have to be moving though. Many producers simply didn’t sell cattle and some didn’t even muster if they knew they couldn’t find markets.

Fluctuations, stoppages, increases and decreases in live cattle market demand has been impacted by many factors, some in conjunction and others significant in their own right. The following are not in any particular order and should not be considered as stand alone pressures that work independently to affect markets.

Import and live weight quotas by Indonesia were introduced in 2010 to attempt to obtain self sufficiency in beef production and consumption in that country. By the end of 2013  local Indonesian wet market prices increases had resulted in the significant easing of the policies as their government realised that 100% beef self sufficiency wasn’t possible in the short-term. A different quota system was introduced in 2014 dependent on pricing of secondary meat cuts in the wet markets. The trigger price is 76,000 Rp/kg ($7.43 AUS). If the local wet markets fall below this price, reductions will be made to limit import cattle and beef  into Indonesia. This is hoped to protect their own beef producers from oversupply by Australia and yet enable surety of beef supply for their nation’s consumption.

Indonesia. Import quotas_edited-1Chart 10. All  cattle exported to Indonesia from all Australian ports. Indonesian import quotas for live cattle were predominantly for feeder types >350kg. In 2014 part of the allocation was for heavier slaughter  and breeder cattle.

The Darwin port has handled approximately 40% of all Australian cattle exports for the last several years and exported 60% of those destined for South east Asia in 2013. While some say the export quotas were the most restrictive of live export numbers, at least in 2011 a quota is still a quota and some degree of market. The ban was a complete stoppage. On going effects of the Australian decisions did untold damage to relations at the time and are only now being significantly rebuilt. Prior to 2011 market analysts have assessed that the Indonesian self sufficiency targets were unobtainable for years, proven by the fact that the target dates themselves were often extended. Report opinions were that it was a matter of time before demand from local Indonesians would pressure their government to allow increased imports of beef and live animals.

Following the Indonesian live export ban it was significant that other markets were able to be increased to Vietnam that accepted heavier types of cattle than what Indonesia preferred.

Darwin major destinations._edited-1Chart 11. Major Destinations for Cattle from the Darwin Port.

Other factors impacting on markets are currency fluctuations, weather patterns, economies within Australia and other countries, currency exchange rates, animal type requirement in breed, weight and sex, animal values, ESCAS implementation and cost, competition from other countries and the Australian meat processing sector, health protocols and change in requirements of the importing countries for both type and volume of animals.

Darwin is the only live animal export facility for the NT, some of the service providers in the NT may service other states like QLD and WA.

2014 cattle that have been moved through the Darwin port have regularly been double of the average for the combined preceding 5 years. This is significant because previously most cattle from Darwin were NT sourced, in 2014 that was not the case.

Darwin 5 yr averages_edited-1
Chart 12. Darwin live cattle export numbers for 2014 compared to averages of the previous 5 years.

What I’m trying to show in these charts is that live cattle exports have been highly variable through the years with 2014 exploding.

A very broad estimate of about 80-90% of all Darwin cattle exported for the previous 5 years (Not including 2014) were sourced from  NT properties. 2014 has seen the NT supply portion drop to about 65%, as the Darwin port has received significant influx of cattle transported from SA, NSW and QLD. A news article in regarding October exports stated that of the previous few months cattle exports over half had been supplied from QLD.

The flow of cattle coming from other states will be assisting service providers to the industry but it takes time to grow and produce fodder and meet the demand requirements.

How predictable are future live cattle export markets? Goodness, how long is a piece of string!
Indonesia’s issuing of import permits will depend on the new system which they have developed with the base price of 76,000Rp. At the moment Indonesian import permits for 2015 have not been released and meat prices are trading over Rp 100,000 per kg. It is expected that Indonesia will increase its cattle and beef imports above 2014 figures.
In the MLA Beef Industry forecasts, Cattle industry projections mid year 2014 the live export markets are expected to remain relatively stable in overall numbers as to what was then forecast to be exported in 2014. Markets in Vietnam, Israel and now possibly Thailand and China are looking promising for requiring significant numbers of live cattle.

Forecasts 2015_edited-2

The main restriction on the numbers to export may will sourcing cattle, given the huge turnoff in Australian slaughter and live export for 2013 and throughout 2014.
For cattle producers this gives us some degree of confidence that markets will be relatively good in 2015, with forecasts of good prices to go with it. Production wise we don’t change quickly as it takes time to build up numbers to take advantage of market access. What it does mean is that we focus on making sure the cattle we do have, meet the required specifications of what the markets demand.
If the cattle producers have confidence that markets are going to be consistent and improve then we will also be buying up on the goods and services that we need to place our animals in the best health production and presentation wise to ensure we can receive the optimum prices we can for the immediate future and going into the coming years.
So where has this led our service providers such as the hay and fodder production people?

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Categories: Beef Industry, Cattle station, Darwin live cattle export, Live Exports, Northern Territory. | Tags: , , , , , , , | Leave a comment

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