MINISTER for Agriculture Murray Watt’s touting of Brazil re-opening to Australian sheep meat imports as demonstrating why the Albanese Government is banning live sheep exports has been described as a “red herring.”

On Tuesday, Mr Watt announced that Brazil has restored market access for Australian sheep meat, sheep meat products and edible offal.

The trade was suspended in 2020, due to changes in Brazilian requirements, but the resumption gives access for Australian sheep meat producers to the 217 million people who live in Brazil, his office said.

Mr Watt said this was a positive step forward for Australia’s growth in agricultural trade with Brazil and restored market access for sheep products opened news opportunities for the Australian sheep meat industry.

At the end of a Victorian Country Hour interview discussing the passing of a law on Monday night to ban live sheep exports by sea from May 2028, Mr Watt said the Brazil development was “breaking news” and demonstrated why the government had decided to phase out the live sheep trade.

“We have to phase out live sheep exports and try to reorient the industry to where all the growth is.

“All the growth in this industry has been towards sheep meat,” he said.

“At the same time, as we’ve seen live sheep exports fall by 90 percent, we’ve seen sheep meat exports quadruple in that time and there’s more demand still.

“So, I’m confident that we’ll continue to have a really strong sheep industry in the future, including in WA, but it’ll be more about exporting sheep meat rather than live sheep,” Mr Watt said.

However, Episode 3 analyst Matt Dalgleish said in the year before Brazil was closed to Australian sheep meat, the only imports from Australia in 2019-20 totaled 12 tonnes of frozen lamb (shipped weight) or about 14 tonnes cwt, equivalent to about 585 24kg cwt lambs. The peak level of Australian sheep meat exports to Brazil in the last decade was about 28 tonnes in 2016-17.

“So to put this in context, Australia’s total sheep meat exports last year were about 530,000 tonnes, so Brazil’s imports at their peak were about 0.005 percent.”

Mr Dalgleish said Brazil is a big consumer of chicken, beef and pork. According to Statista, in 2023 Brazilian per capita meat consumption by category was forecast to be poultry 43.1kgs, beef and veal 22.7kgs, pork 12.92kgs and lamb 0.6kgs. Per capita lamb consumption is forecast to increase to 0.61kgs by 2028. According to the OECD-FAO, Brazilian beef consumption totalled 147,250 tonnes cwe in 2023, or 670 grams per person.

Meat & Livestock Australia’s general manager for international markets Andrew Cox said Brazil is not a huge market for sheep meat, but it is a net importer.

“More open markets are always a good thing for the Australian sheep meat industry.”

WA sheep turn-off rate a bigger issue

Mr Dalgleish said he wouldn’t describe Brazil as a first, second or third tier market for Australian sheep meat. America is Australia’s second biggest sheep meat market (lamb and mutton combined) by volume behind China and the nation’s primary sheep meat market by value.

“We’ve got countries and regions like the United Kingdom and the EU where we could grow our presence in,” Mr Dalgleish said.

Mr Dalgleish said Mr Watt’s statement of the Brazil market re-opening as underpinning the banning of live sheep exports and the reorientation of the Western Australian sheep industry “is an absolute red herring,” especially in the context of an expected decline in the WA flock.

“Talking about Brazil is ridiculous.”

Mr Dalgleish said real and anecdotal data on WA sheep sales and movement indicates the state’s flock is set to reduce significantly.

“And that says to me that people in WA have elected to get out of the sector rather transition into the meat trade (sheep meat production).”

His national sheep turn-off ratio based on east coast, processor and live export sales is a very good indicator of what the flock is doing nationally and by state.

When the national sheep turn-off ratio peaked in 2008 at about 6 percent the WA flock went down 15pc in that year, Mr Dalgleish said.

“We’ve now seen in the last year-and-a-half that sheep turn-off has been gradually climbing and it is now sitting at nearly 11pc, so nearly double its previous peak, although we don’t know what it will do to the flock until the ABS runs its numbers.

“But that would suggest to me, if it is a similar type ratio (to the WA flock) that a reduction in the WA flock of 30-40pc over the next two years is not out of the question,” he said.

He said the surveying that Episode 3 did as part of its report from the Federal Government independent trade phaseout panel indicated that 44pc would exit sheep if the live exports were banned.

“We’re also hearing from one of the sheep drench manufacturers that orders for this year are down by 30 percent.

Mr Dalgleish said the wool forecasting committee is predicting less wool from WA, the sheep producer intentions survey has shown the lowest confidence levels on record in WA and there are suggestions the level of ewe joinings in the state this year are down significantly.

“So all of those figures indicate to me that there will be a big drop in the Western Australian flock over the next two years and it will probably go below 10 million head, maybe towards 8.5-9 million head.”

“The WA flock was 12.4 million in the most recent 2021-22 ABS data.

“That WA sheep turn-off figures has actually been demonstrating that there has been some significant turn-off and liquidation for the last year-and-a-half in WA,” he said.

“It is really really worrying.”

Mr Dalgleish said the turn-off data indicates that “absolutely” the government’s claims of encouraging meat processing developments in WA have come too late.

“There were some concerns around capacity in WA at the current flock level, but if the state flock is 7-9 million head then the turn-off is going to be lower and there may be processors that can’t get enough sheep through the year.”

Mr Dalgleish said he obviously did not agree with the live sheep trade’s closure.

“But we wrote a whole report that shows if you are going to phase it out this is what is needed in terms of timeframes to give the industry confidence and a pathway that is going to work.

“The cruelest irony is that if it was done right Western Australia could come out of it with a much stronger, viable and stable sheep industry without livex,” he said.

“The industry needs more than four years to transition properly into boxed meat.”

He said additional sheep meat opportunities needed to be realized now or the phaseout period should be longer to allow producers to transition.

Mr Dalgleish said America was Australia’s biggest market for lamb consuming about 80,000 tonnes annually, about 1pc of per capita meat consumption.

“If you increase the American consumers’ diet to 2pc lamb consumption or sheep meat that would be another 80,000, instead he is worrying about somewhere that we sent 28 tonnes to.”

Mr Dalgleish said his report was largely ignored by the independent phaseout panel. Mr Watt also admitted in Senate Estimates that he hadn’t read the Episode 3 report.

Mr Dalgleish said he agreed the prospects for the boxed meat trade were excellent, but he did not agree with the transition timeframe allowed for the WA industry.

“There is going to be no benefit if WA farmers get out of the industry.”

Click here to read the Episode 3 report.