The economic importance of Australia's livestock industries and the ...

The economic importance of Australia’s livestock industries and the

role of animal medicines and productivity-enhancing technologies.

A Report prepared by the

Australian Farm Institute

for

Animal Medicines Australia.

August, 2015.

© Australian Farm Institute, August, 2015

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Publication Data

Author/ title.

Keogh M., Henry M., and Clifton, L. (2015). The economic importance of Australia’s

livestock industries and the role of animal medicines and productivity-enhancing

technologies. Research Report. Australian Farm Institute, Sydney, Australia.

Design and Production: Australian Farm Institute

Page i

Foreword.

Livestock industries have played a fundamental role in the development of Australia over the

past 200 years, first as an essential source of food, then later as the principal source of exports

which triggered the economic growth of the nation and underpinned the development of its

land and water resources.

Australia’s livestock industries continue to play a critical role in the national economy, and

with the rapid growth of Asia and the resulting changes in consumer diets in those nations in

favour of animal protein consumption, are projected to experience a significant growth phase

over coming decades.

The challenge for the livestock sectors in Australia will be to take advantage of this

opportunity by finding ways to expand output and improve the quality of livestock products,

despite the constraints imposed by Australia’s limited natural resources and highly variable

climate.

In order to achieve these outcomes, livestock industries will need to continually innovate and

achieve productivity growth, and to do so will need access to the widest range of new

technologies and products to enhance productivity, maintain the highest biosecurity

standards, and to prevent and cure livestock diseases.

The role of providers of livestock medicines and productivity-enhancing technologies will be

of critical importance in the future in supporting the continued growth of the livestock

industries.

The research which is reported here has been commissioned by Animal Medicines Australia,

the industry group which represents companies supplying animal medicines and productivity-

enhancing technologies to Australia’s livestock industries.

The research aims to provide a comprehensive picture of the economic value of Australia’s

livestock industries, to better understand the value contributed to the sector by animal

medicines and productivity-enhancing technologies, and to develop insights into the potential

impacts of a range of different factors on the future growth of Australia’s livestock industries.

Page ii

Executive Summary

The farmed livestock industries of the Australian agriculture sector, including the beef cattle,

dairy, sheep, pig and poultry industries, account for 45% of the gross value of Australian

agricultural output, and in the most recent year for which statistics are available, generated

farmgate returns valued in excess of $22 billion. Some 78,000 Australian farms, out of a total

of 115,000, are involved in livestock production, with beef cattle farms being the most

numerous farm type nationally.

Livestock farming businesses provide direct employment for some 140,000 persons

nationally, although much of this employment is on farms that are also involved in the

production of non-livestock commodities. The livestock industries also generate significant

indirect employment and economic activity. Major inputs utilised by livestock farmers

include advisory and technical services, road transport, energy, veterinary and pharmaceutical

products, finance and insurance, and a wide range of manufactured goods.

Downstream from farms, the livestock and dairy processing sectors in Australia directly

employ some 72,000 persons, and contribute some $7.2 billion (Gross Value Added basis)

annually to the national economy from an annual turnover of $22 billion.

The livestock and livestock processing industries also generate approximately $11.2 billion in

export revenue annually, and the value of these exports has increased steadily over recent

years. Major export earners include beef, sheepmeats, wool, dairy and live sheep and cattle

exports.

A major factor is sustaining and expanding the economic value of the livestock industries in

Australia is the very high national biosecurity standards that are maintained, which mean that

many livestock diseases endemic in other parts of the world are not present in Australia.

Australia’s livestock industries also sustain relatively high rates of productivity growth,

which is made possible as a consequence of strong levels of research and development

investment, high management standards, and the availability of world leading animal health

products and technologies. In combination, these factor help support global market access

and high values for Australian livestock product exports.

Despite Australia’s livestock health and disease status, the livestock industries experience

significant annual economic costs associated with diseases and other animal health issues.

These costs are experienced in two ways – through reduced income due to productivity loss,

and through increased expenses for treatment and/or preventative measures. The extent of

these costs vary enormously by disease and by livestock species, and the best available

estimate is that the ‘normal’ total annual costs may be as high as $2 billion per year, almost

10% of the total value of annual production

There are a number of diseases that have the potential to impose significant costs on the

Australian livestock industries, if they became established in Australia. The maintenance of

biosecurity surveillance systems, and ensuring the continuing capacity of livestock industry

support services are critical to minimising this risk.

Page iii

Australian livestock industries have a greater degree of exposure to export markets that many

national livestock industries, and hence are both exposed to more competition, but also

operate in markets that are more sensitive to animal disease incidence or risk.

This reinforces the need for Australian livestock industries to have good access to new or

emerging animal production technologies or products, and to retain a strong focus on the

capacity of the livestock disease and health system to optimise the management of livestock

in Australia.

Page iv

Table of Contents

Foreword. ................................................................................................................................ i

Executive Summary ............................................................................................................... ii

Table of Contents .................................................................................................................. iv

Index of Figures ..................................................................................................................... v

Index of Tables .................................................................................................................... vii

1. Introduction ........................................................................................................................ 1

2. Livestock industry overview. ............................................................................................. 3

3. The beef industry. ............................................................................................................ 11

4. The sheep industry. .......................................................................................................... 18

5. The dairy industry. ........................................................................................................... 26

6. The pork industry. ............................................................................................................ 33

7. The poultry industry. ........................................................................................................ 35

8. The post-farm sectors associated with the livestock industries. ...................................... 40

9. Livestock diseases and industry costs. ............................................................................. 47

Cattle diseases and health .................................................................................................... 49

Goat diseases and health ...................................................................................................... 66

Pig diseases and health......................................................................................................... 68

Poultry diseases .................................................................................................................... 69

10. The potential cost of future foreseeable diseases .......................................................... 71

11. Current Australian expenditure on livestock health...................................................... 77

12. Discussion and conclusions .......................................................................................... 81

13. References ..................................................................................................................... 83

Appendix 1. .......................................................................................................................... 88

Page v

Index of Figures

Figure 1 Commodity share of gross value of farm production. ................................................. 3

Figure 2. Index of the volume of annual farm production. ........................................................ 4

Figure 3. Index of the value of annual farm production. ........................................................... 4

Figure 4. Gross value of Australian livestock slaughterings. .................................................... 5

Figure 5 Employment on Australian livestock farms. ............................................................. 10

Figure 6. Australian beef cattle numbers and annual production. ........................................... 11

Figure 7. Gross value of production of beef and veal, Australia. ............................................ 12

Figure 8 Value of Australian beef and live cattle exports. ...................................................... 12

Figure 9 . Export destinations for Australian beef and veal. ................................................... 13

Figure 10. Export destinations for Australian live cattle. ........................................................ 13

Figure 11. Gross value of cattle production by state. .............................................................. 14

Figure 12 Number of beef cattle farms by state. ...................................................................... 14

Figure 13. Distribution of beef cattle farms by value of output 2010-11. ............................... 15

Figure 14 Distribution of beef cattle businesses by land area managed 2010-11 .................... 15

Figure 15. Changes in the average value of land and fixed improvements for beef farms. .... 16

Figure 16. Changes in average debt levels of beef farm businesses. ....................................... 17

Figure 17. Changes in average farm cash income of beef farm businesses. ............................ 17

Figure 18. Australian lamb production and markets. .............................................................. 18

Figure 19. Australian sheepmeat production and markets. ...................................................... 19

Figure 20. Gross value of sheep and wool production. ............................................................ 19

Figure 21. Value of Australian sheep industry exports............................................................ 20

Figure 22. Destination of Australian lamb exports .................................................................. 20

Figure 23. Destination of Australian mutton exports............................................................... 21

Figure 24. Destination of Australian live sheep exports. ......................................................... 21

Figure 25. Value of sheep industry output, by state, 2012-13 ................................................. 22

Figure 26. Number of sheep farms by state. (2012-13) ........................................................... 22

Figure 27. Size distribution of sheep farms. (2010-11) ........................................................... 23

Figure 28. Distribution of livestock farm types by land area. ................................................. 23

Figure 29. Real value of land and fixed improvements – Australian sheep farms. ................. 24

Figure 30 Real level of farm business debt, Australian sheep farms. ...................................... 24

Figure 31 Real farm cash income, Australian sheep farms. .................................................... 25

Figure 32. Number of dairy farms in Australia by state. ......................................................... 26

Figure 33. Size of the Australian dairy herd and annual milk production. .............................. 27

Figure 34. Average milk yield per cow per annum. ................................................................ 27

Figure 35. Value of annual dairy production. .......................................................................... 28

Figure 36. Destination of Australian dairy exports. ................................................................. 28

Figure 37. Value of dairy production by state (2012-13). ....................................................... 29

Figure 38. Size distribution of Australian dairy farms. ........................................................... 29

Figure 39. Employment on dairy farms in Australia. .............................................................. 30

Figure 40 Real value of land and fixed improvements, Australian dairy farms. ..................... 31

Figure 41. Farm business debt, Australian dairy farms. .......................................................... 31

Figure 42. Real farm cash income – Australian dairy farms. .................................................. 32

Page vi

Figure 43. Australian pigmeat production and trade. .............................................................. 33

Figure 44. Australian pig numbers by state. ............................................................................ 33

Figure 45. Gross value of production, pigs. ............................................................................. 34

Figure 46. Value of Australian pigmeat exports. ..................................................................... 34

Figure 47. Distribution of pig farms by value of output. ......................................................... 35

Figure 48. Annual value of production of chicken meat and eggs. ......................................... 36

Figure 49. Chicken meat production in Australia. ................................................................... 37

Figure 50. Changes in efficiency of chicken meat production in Australia ............................. 37

Figure 51. Distribution of chicken meat and egg farms by state. (2012-13) ........................... 38

Figure 52. Gross value of chicken meat and egg production by state. (2012-13) ................... 38

Figure 53. Distribution of annual farm output, chicken meat and egg farms. ......................... 39

Figure 54. Employment on Australian poultry farms, 2012. ................................................... 39

Figure 55. Major inputs utilised by the meat processing sector. ............................................. 44

Figure 56. Major inputs utilised by the dairy processing sector. ............................................. 44

Figure 57. Value added by the Australian food manufacturing sector, 2012-13 ..................... 45

Figure 58: Total factory gate sales of animal health products in Australia ............................. 49

Figure 59: Annual costs of diseases and health in the Australian beef industry...................... 50

Figure 60: Areas infected by cattle tick in Australia ............................................................... 51

Figure 61: Annual costs of diseases and health in the Australian sheep industry ................... 58

Figure 62: Economic loss due to footrot in Australian sheep in 2006. .................................... 65

Figure 63: Economic impact of selected diseases in different regions of the world ............... 71

Figure 64: Economic impacts from a Foot and Mouth Disease outbreak................................ 73

Figure 65: US bovine-related export trends 2002 –2008 ......................................................... 74

Page vii

Index of Tables

Table 1. Volume and value of livestock production, Australia. ................................................ 6

Table 2. Number of livestock farms, by state, 2010-11. ............................................................ 7

Table 3. Source and value of inputs to the farm sector, 2012-13. ......................................... 9

Table 4. Livestock industry employment, 2011....................................................................... 10

Table 5 Methods of selling Australian livestock. .................................................................... 41

Table 6 Location of Australian livestock saleyards. ................................................................ 41

Table 7 Australian accredited meat processing facilities. ........................................................ 42

Table 8 Employment in food manufacturing, Australia, 2011-12. .......................................... 43

Table 9 Industry value-added, livestock processing sector. ................................................... 43

Table 10 Employment in food and grocery retailing in Australia. .......................................... 46

Table 11 Annual costs of major health issues in the cattle industry ........................................ 50

Table 12 Annual costs of the cattle tick in Australia by region ............................................... 51

Table 13: Annual costs of Bovine Ephemeral Fever for at-risk cattle herds in Australia ....... 53

Table 14: Annual costs of cattle bloat in the Australian beef industry – southern regions ..... 54

Table 15: Annual economic loss due to worms in beef cattle - southern regions ................... 55

Table 17: Annual costs of diseases and health issues in the Australian sheep industry .......... 58

Table 18: Annual cost of internal parasites in sheep ............................................................... 59

Table 19: Prevalence of resistant worm populations in sheep flocks ...................................... 60

Table 20: Annual costs of all forms of flystrike in sheep ........................................................ 61

Table 21: Insecticides and resistance development in Australian sheep blowfly populations 62

Table 22: Annual costs of lice in sheep ................................................................................... 63

Table 23: Chemicals registered to treat lice and flystrike ........................................................ 64

Table 24: Annual economic cost of footrot in sheep ............................................................... 65

Table 25: Annual costs for major animal health issues in the goat industry ........................... 67

Table 26: Annual economic cost of internal parasites in goats ............................................... 67

Table 27: Economic costs of potential disease outbreaks in Australian livestock industries .. 72

Table 28: Costs and duration of Foot and Mouth Disease outbreaks, UK. ............................. 72

Table 29: Total compensation costs for a Foot and Mouth Disease outbreak. ........................ 73

Table 30: Annual costs of major diseases, pests and health issues in Australia. ..................... 77

Table 31: Cattle disease where available technology would reduce annual costs ................... 78

1. Introduction

Australia’s farmed livestock industries generate annual production worth in excess of $20

billion, based on farmgate values. This is equivalent to approximately 45% of the gross value

of annual production of the Australian agriculture sector. However, the entire supply chain

associated with the Australian livestock industries has an economic value well in excess of

this, encompassing input suppliers, farm service providers, post-farm service providers, and

the meat processing, wholesaling, retail and exporting sector.

The exact extent of the value of the entire supply chain is unknown, but likely to be

considerably greater than the gross farmgate value generated by the sector. There is, however,

no comprehensive collection of data available that documents the economic significance of

the livestock industries and associated economic sectors in the Australian economy.

From a range of different perspectives, there is considerable value in developing a better

understanding of the role of the livestock industries in the Australian economy. As well as

being a major provider of food for domestic consumption, the livestock industries are also a

large and growing source of export earnings. The post-farm processing and exporting sub-

sectors are also very significant employers in regional Australia, as are the farm and farm

service sectors. The domestic meat wholesaling, retailing and food service sectors are also a

major source of employment throughout the entire nation. Australian meat and livestock

exports are also a very important and strategic component of the food supplies of major

regional nations, and are likely to become even more important in this regard in the future.

The livestock industries are also very important in the management of Australia’s natural

resources, with agriculture being the main landuse on approximately 60% of Australia’s land

mass, and livestock production being the main agricultural activity on much of that land.

Supporting the livestock industries are the suppliers of animal medicines and productivity-

enhancing technologies, with livestock farmers utilising more than $1.1 billion worth of these

products annually in their production systems. These products play a critical role in

maintaining livestock health, enhancing livestock productivity and protecting Australia’s

reputation as a safe and disease-free supplier of livestock products.

The research detailed in this report involved the collation of data and statistics in order to

develop a better understanding of the current economic value of the livestock industries to

Australia, and the role played by animal medicines and productivity-enhancing technologies

in securing and increasing the economic value of the sector.

Objective:

To quantify the economic importance of Australia’s livestock industries, and the role of

animal medicines and productivity-enhancing technologies in securing the future growth of

these industries.

Scope

The research was national in scope, and was focused primarily on farmed livestock,

including;

• Broadacre sheep and cattle production

• Dairy production

• Intensive pig and poultry production.

The research initially consisted of a desktop review of available literature and data detailing

the economic significance of the livestock industries in Australia. The research involved

accessing and collating relevant production and economic literature from the Australian

Bureau of Statistics (ABS) and the Australian Bureau of Agricultural and Resource

Economics and Sciences (ABARES) as well as other relevant data that had been compiled by

industry bodies.

Export data was sourced from databases maintained by the Australian Farm Institute, which

utilise information obtained from the Department of Foreign Affairs and Trade, and the UN

Comtrade database.

The research involved the collation of time-series statistics on livestock populations,

production levels and the value of production and exports. The analysis also included farm

level production, value-added through the meat processing sector (including employment and

service inputs) and some estimate of the value-added through to the point of either retail sale

or export embarkation.

The report which follows provides the results of initial research aimed at gaining a better

understanding of the economic value of Australia’s various farmed livestock industries.

Two measures of economic value are utilised to describe these industries. One is termed the

Gross Value of Production (GVP), which is a measure of the total value of output from an

industry or sector. The second is termed the Gross Value Added (GVA), which refers to the

difference between the value of inputs used by a particular industry sector, and the value of

outputs created by a particular sector.

The latter is of more relevance to an intermediate sector such as meat processing, which

purchases the inputs of livestock farms and converts then into a transformed product. In

assessing the sum value of a sector in the economy that involves both primary production and

subsequent product transformation, the use of GVA as a measure of the total value of the

sector in the economy would result in considerable double counting.

.

2. Livestock industry overview.

The livestock industries are projected to account for approximately 50% of the $51 billion

worth of the annual gross value (GVP) of farm output in Australia in 2013/14, with beef

accounting for 17% of the value of farm output, followed by dairy (8%), Sheep and lambs

(5%), wool (5%) poultry meat (5%), pigs (2%) and eggs (1%).

Figure 1 Commodity share of gross value of farm production.

(Source: ABS)

Australian livestock industries are spread geographically throughout the entire continent, with

sheep production mainly occurring in the southern states, beef production occurring in every

state and territory, and the more intensive livestock industries such as pork, dairy and poultry

tending to be concentrated in regions that are reasonably close to the major metropolitan

areas or along the coast.

As a general observation, the total volume of production from farm livestock in Australia has

been relatively static over recent decades, with increases in the volume of poultry meat and

beef production being offset by declines in volumes of production from the sheep, pig and

dairy sector. These trends reflect both the constraints that exist in relation to access to land

and water resources, but are also a reflection of the relative profitability of livestock

production compared to crop production.

Interestingly, while the volume of livestock production in Australia has remained relatively

static over recent years, the value of livestock production has continued to increase. Factors

contributing to the increased value of livestock production include higher global and

domestic prices, as well as Australian livestock farmers increasing the quality of their

products – especially in the case of the wool, lamb and beef sectors.

wheat16%

coarse grains7%

oilseeds 5%

cotton4%

rice1%pulses

2%sugar cane

2%grapes3%

Fruit and nuts (excl. grapes)

8%Vegetables

8%

Whole milk8%

Cattle and calves17%

Sheep and lambs (a)5%

Pigs…

Poultry5%

Eggs1%

wool5% Agricultural

commodities Grossvalue: $48,048 million

Figure 2. Index of the volume of annual farm production.

(Source: ABARES)

Figure 3. Index of the value of annual farm production.

(Source: ABARES)

The increase in the value of production that has occurred in relation to the total farm sector is

also evident in statistics specifically relating to the livestock industries, as displayed in figure

4.

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Figure 4. Gross value of Australian livestock slaughterings.

(Source: ABS)

A summary of the total volume and value of production of the Australian livestock industries

is shown in Table 1. The data highlight that beef cattle production is the largest sector by

value, with annual production of approximately $9.2 billion, followed by the sheep industry

($5.2 billion in total) then dairy ($4.5 billion) poultry ($2.9 billion) and pork (valued at

approximately $1 billion annually). The table also includes livestock sector forecast

production for 2014-15.

It is estimated that there are a total of 78,000 livestock farms in Australia, with the most

common being farms involved in beef cattle production. New South Wales is the state with

the greatest number of livestock farms, although in the case of both NSW and Victoria, many

of the livestock farms are quite small in scale and essentially operated on a part-time basis.

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Cattle Sheep Lambs Pigs Poultry

Table 1. Volume and value of livestock production, Australia.

Source: ABARES Australian Commodity Statistics, 2014

Volume of production unit 2009–10 2010–11 2011–12 2012–13 2013–14 f 2014–15 f

Slaughterings

Cattle and calves ’000 8,364 8,097 7,873 8,457 9,580 9,000

Lambs ’000 19,478 17,880 18,879 21,122 21,925 20,300

Sheep ’000 7,333 5,341 5,175 8,192 10,000 7,000

Pigs ’000 4,561 4,643 4,733 4,745 4,758 4,800

Live exports

Cattle exported live ’000 871 728 579 513 990 990

Sheep exported live ’000 3,060 2,916 2,562 2,000 2,080 2,200

Meat produced

Beef and veal kt 2,109 2,133 2,115 2,245 2,480 2,380

Lamb kt 413 391 419 457 471 440

Mutton kt 162 123 120 183 226 159

Pig meat kt 331 342 351 356 360 364

Chicken meat kt 834 1,015 1,030 1,046 1,080 1,110

Total kt 3,849 4,005 4,034 4,287 4,617 4,453

Livestock products

Wool kt 423 429 411 435 421 400

Milk ML 9,023 9,100 9,480 9,201 9,130 9,300

Butter kt 128 122 120 118 100 100

Cheese kt 350 339 347 338 303 310

Casein kt 8 5 5 5 4 4

Skim milk powder kt 190 222 230 224 215 220

Whole milk powder kt 126 151 140 109 125 130

Buttermilk powder kt 13 12 11 11 11 11

Gross value of production 2009–10 2010–11 2011–12 2012–13 2013–14 f 2014–15 f

Slaughterings

Cattle and calves $m 6,567 7,164 7,134 7,136 7,812 8,153

Sheep $m 499 484 419 329 584 476

Lambs $m 1,832 2,029 2,136 1,696 2,238 2,200

Pigs $m 965 919 934 934 1,011 1,012

Poultry $m 1,785 2,077 2,078 2,214 2,313 2,414

Live exports

Cattle exported live $m 701 660 651 589 1,041 1,075

Sheep exported live $m 298 348 345 194 186 230

Total livestock $m 12,722 13,795 13,797 13,207 15,305 15,686

Livestock products

Wool $m 1,928 2,673 2,734 2,472 2,453 2,458

Milk $m 3,371 3,932 3,986 3,687 4,565 4,418

Eggs $m 428 572 583 653 670 690

Total livestock products $m 5,726 7,177 7,304 6,812 7,688 7,566

Total $m 18,448 20,972 21,101 20,019 22,993 23,252

Table 2. Number of livestock farms, by state, 2010-11.

Source: ABS. Statistical publication No.7121.0

Australian livestock industries have experienced considerable change over the past two

decades, and are also subject to variations in seasonal conditions which can have a big effect

on production.

The sheep industry experienced a major disruption in early 1991 when the wool Reserve

Price Scheme was disbanded. The consequence of this event was a substantial reduction in

farm asset values and sheep profitability, from which the industry has taken a long while to

recover. Up until that time the sheep industry was predominantly focused on wool

production, however since that time there has been a growing focus on sheep meat

production, boosted by recent growth in lamb exports to the USA and Asia.

The beef industry experienced a period of strong growth in the early 1970s, but then cattle

producers experienced a major price crash in the mid-1970s which resulted in a large

reduction in cattle numbers. The size of the national herd has gradually increased since that

time, although record slaughter rates in 2013 and 2014 are likely to result in a reduction in

herd size over the next few years.

The pork industry has also been through several periods of major restructuring, with a

significant reduction in the number of farms and a large increase in average herd size over the

last twenty years. Unlike the cattle and sheep industries, pork production in Australia is

primarily focused on the domestic market. Australian pork producers have faced increasing

competition from imports over recent years, which have reduced the profitability of pig

production.

The chicken meat industry has grown substantially in Australia over recent years as per capita

domestic consumption has increased, in part due to price increases for beef and sheepmeats.

Like the pork industry the chicken-meat industry predominantly supplies the Australian

NSW Vic. Q ld SA WA Tas. NT ACT Aust.

Sheep Farming (Specialised) 4,266 3,173 258 1,624 1,393 497 0 9 11,221

Beef Cattle Farming (Specialised) 13,246 8,010 12,477 1,357 2,007 1,139 197 19 38,452

Beef Cattle Feedlots (Specialised) 103 50 195 18 95 6 4 0 470

Sheep-Beef Cattle Farming 3,234 1,643 440 713 330 250 0 14 6,624

Broadacre livestock 20,849 12,876 13,370 3,712 3,825 1,892 201 42 56,767

Grain-Sheep or Grain-Beef Cattle Farming 4,130 2,359 1,037 2,046 2,501 31 2 1 12,108

Total crop/livestock 4,130 2,359 1,037 2,046 2,501 31 2 1 12,108

Dairy Cattle Farming 1,049 4,835 664 320 223 471 0 0 7,562

Poultry Farming (Meat) 298 224 111 62 51 19 0 0 766

Poultry Farming (Eggs) 144 79 49 25 33 10 0 1 340

Pig Farming 159 135 177 103 72 17 0 0 663

Intensive livestock 1,650 5,273 1,001 510 379 517 0 1 9,331

Total livestock farms 26,629 20,508 15,408 6,268 6,705 2,440 203 44 78,206

domestic market and is not a major exporter, although unlike the pork industry the chicken-

meat industry is not currently subject to competition from imports.

The dairy industry experienced a major change in the early 2000s, when the domestic milk

market in Australia was deregulated. This resulted in a drop in milk prices, and widespread

industry restructuring of dairy farm and processing businesses. The number of dairy farms in

Australia has subsequently declined, although average herd sizes have increased significantly,

as has milk production per head. The sector has been further challenged by supermarket price

‘wars’ over recent years, although buoyant export demand and an increased focus on export

markets has resulted in some industry growth in recent years and an expansion of dairy

farming in Victoria and Tasmania.

Export markets for live animals are important for both the sheep and cattle industries,

although have declined in importance over recent years for a number of different reasons. In

the case of the sheep industry, prior to the demise of the wool reserve price scheme in 1991,

the Australian sheep flock was much larger and consisted primarily of merino (wool

producing sheep), which were suitable for export off-shears to Middle-East markets. Sheep

numbers have reduced considerably since that time (down from 170 million in 1990 to 74

million in 2013), reducing the supply available for live exports, and production of lambs for

domestic slaughter has become much more lucrative for farmers. In the case of the cattle

industry, live exports grew rapidly during the 1990s and 2000s, but have been subject to

several major disruptions. These include the suspension of live cattle exports to Indonesia in

2011, a disruption from which the live cattle export industry is only just starting to recover.

The Australian livestock industries also have important ‘upstream’ and ‘downstream’

economic sectors which are dependent on the livestock production sector. These include

machinery and equipment suppliers, veterinary medicine and chemical suppliers, transport

services, fuel and energy suppliers and a wide range of technical support services providing

inputs to farms, and a large transport, processing and marketing sector that services both

domestic and international markets.

Table 3 provides details of the source and value of inputs used by the farm sector in

Australia, noting that it is not possible to disaggregate the livestock sub-sectors from the

general farm sector in the available statistics.

Table 3. Source and value of inputs to the farm sector, 2012-13.

Source: ABS Input/Output tables, 2012-13.

The livestock industries are also directly responsible for a substantial amount of employment,

with many of the jobs located in regional Australia. Table 4 provides a summary of the

relevant industry employment statistics, noting that it is not possible to identify only those

involved in farm livestock production due to the mixed enterprises on many Australian farms.

Supplying sector.

Sheep,

Grains, Beef

and Dairy

Cattle

Poultry and

Other

Livestock

Other

Agriculture

Total

agriculture

Agriculture, Forestry and Fishing Support Services 2,844$ 180$ 1,983$ 5,007$

Non-Residential Property Operators and Real Estate Services 1,368$ 210$ 636$ 2,214$

Professional, Scientif ic and Technical Services 1,209$ 153$ 778$ 2,140$

Sheep, Grains, Beef and Dairy Cattle 1,440$ 210$ 40$ 1,690$

Wholesale Trade 1,125$ 152$ 390$ 1,667$

Other Agriculture 1,114$ 266$ 252$ 1,632$

Petroleum and Coal Product Manufacturing 731$ 99$ 670$ 1,500$

Basic Chemical Manufacturing 942$ 56$ 383$ 1,381$

Auxiliary Finance and Insurance Services 853$ 65$ 377$ 1,295$

Other Food Product Manufacturing 766$ 466$ 2$ 1,234$

Veterinary Pharmaceutical and Medicinal Product Manufacturing 1,056$ 90$ 34$ 1,180$

Finance 509$ 65$ 429$ 1,003$

Road Transport 632$ 174$ 137$ 943$

Construction Services 555$ 142$ 156$ 853$

Transport Support services and storage 696$ 16$ 117$ 829$

Water Supply, Sew erage and Drainage Services 280$ 94$ 226$ 600$

Other Repair and Maintenance 274$ 23$ 117$ 414$

Employment, Travel Agency and Other Administrative Services 254$ 10$ 46$ 310$

Poultry and Other Livestock 21$ 218$ 57$ 296$

Retail Trade 187$ 10$ 80$ 277$

Rental and Hiring Services (except Real Estate) 169$ 29$ 67$ 265$

Electricity Generation 116$ 19$ 102$ 237$

Electricity Transmission, Distribution, On Selling and Electricity Market Operation 115$ 19$ 101$ 235$

Specialised and other Machinery and Equipment Manufacturing 112$ 9$ 59$ 180$

Heavy and Civil Engineering Construction 116$ 4$ 48$ 168$

Meat and Meat product Manufacturing 98$ 51$ 1$ 150$

Insurance and Superannuation Funds 71$ 9$ 65$ 145$

Automotive Repair and Maintenance 80$ 5$ 54$ 139$

Food and Beverage Services 70$ 5$ 61$ 136$

Waste Collection, Treatment and Disposal Services 64$ 18$ 19$ 101$

Other 477$ 146$ 327$ 950$

Total 18,344$ 3,013$ 7,814$ 29,171$

Agriculture sector using

Table 4. Livestock industry employment, 2011.

Livestock industry occupations. Persons

employed

Livestock Farmers 75,112

Mixed Crop and Livestock Farmers 34,723

Livestock Farm Workers 24,126

Mixed Crop and Livestock Farm Workers 3,489

Skilled Animal and Horticultural Workers nfd 25

Shearers 3,203

Total 140,678 Source data: ABS Census 2011.

Some trend data is available concerning numbers employed directly in the farm sector,

although it is not possible to segregate employment specifically to livestock farms, due to the

mixed enterprise nature of many broadacre farm businesses in Australia. Nevertheless, Figure

2 below provides some perspective of trends in employment on livestock farms in Australia,

and makes evident the significant reduction in employment associated with the onset of

widespread drought conditions in 2002-03 and subsequent years.

Figure 5 Employment on Australian livestock farms.

(Source: ABARES)

The following sections of this report provide more information about specific sub-sectors of

the livestock industries in Australia, noting that available statistics do not always enable a full

separation of the livestock sectors from the farm sector more generally.

0

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3. The beef industry.

The Australian beef industry has a history that goes back to the very first days of European

settlement in Australia, although unlike northern hemisphere beef industries, the Australian

industry relies largely on pasture-based production systems. The national cattle herd reached

a maximum of almost 30 million head in the mid-1970s, but subsequently slumped to around

20 million in the mid-1980s before recovering to stabilise at around 25 million head for most

of the past decade. Despite relatively static cattle numbers, annual beef production levels

have gradually increased due to improved production systems, and now exceed 2.15 million

tonnes annually. As production has increased and domestic per capita consumption has

decreased, the industry has increased its reliance on export markets which now account for

66% of annual production on a volume basis. Australia is the world’s second largest beef

exporter behind Brazil, with India and the USA also being major exporters. Major markets

for Australian beef exports include Japan, the USA, Korea and China. Indonesia, Israel and

Malaysia are major markets for Australian live slaughter cattle exports, while China and

Russia are the major buyers of breeding cattle exported from Australia.

Figure 6. Australian beef cattle numbers and annual production.

(Source: ABARES)

While pasture fed production systems dominate the Australian beef industry, feedlots that

grain finish cattle prior to slaughter also play a significant role. The total number of cattle in

feedlots in Australia generally ranges from 700,000 to 800,000 head, although has been as

high as 900,000 head during periods of severe drought.

Queensland is the largest beef producing state, accounting for almost half of the national

cattle herd, followed by New South Wales and Victoria. The gross value of beef production

annually is currently approximately $8 billion, with an additional $500 million worth of live

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cattle exports. The annual value of production has ranged between $$7.3 billion and $8

billion over the past decade.

Figure 7. Gross value of production of beef and veal, Australia.

(Source: ABS)

Figure 8 Value of Australian beef and live cattle exports.

(Source: ABARES)

Major export destinations for processed beef and veal include Japan, the USA, Korea, China,

Taiwan and the EU. Changes over recent years have included some opening up of high-value

EU markets to Australian exports (the EU has previously restricted market access through

quotas) and the emergence of China as a growing market over recent years. Australia also

managed to retain access to both the Japanese and Korean markets continually over the past

$5,000

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decade, while most other beef exporting nations were excluded from those markets for at

least some of that time due to concerns about the risk of so-called ‘mad cow disease’.

Figure 9 . Export destinations for Australian beef and veal.

(Source: ABS)

Major export destinations for live cattle exports include Indonesia, China, Russia and Israel.

Figure 10. Export destinations for Australian live cattle.

(Source: ABARES)

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africa and middle east ASEAN Central and south asiaEurope North america (NAFTA) Nth AsiaOceania South and central america

Despite Queensland being the largest beef-producing state, New South Wales has the largest

number of beef farms. This is because there are large numbers of small-scale beef farms in

NSW coastal regions and also in areas close to major population centres. In many instances,

the owners of these small-scale farms work full-time off-farm, and manage their beef cattle

operations on a part time basis. Cattle production is particularly suited to this type of

arrangement, due to the low level of labour inputs required compared to sheep, and the

minimal capital and machinery requirements compared to crop production.

Figure 11. Gross value of cattle production by state.

(Source: ABS)

Figure 12 Number of beef cattle farms by state.

(Source: ABS)

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The large number of small-scale cattle farm businesses is evident from the data displayed in

Figure 7. It shows that there are almost 30,000 beef farm businesses in Australia which have

an annual value of output of less than $100,000 per annum.

Figure 13. Distribution of beef cattle farms by value of output 2010-11.

(Source:ABS)

Figure 14 Distribution of beef cattle businesses by land area managed 2010-11

(Source:ABS).

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Sheep-Beef Cattle Farming

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Area of land (ha)

Beef Cattle Farming (Specialised) Sheep-Beef Cattle Farming

Grain-Sheep or Grain-Beef Cattle Farming

The financial performance of Australian beef farms over the past decade has been impacted

by the extended drought that occurred in southern Australia from 2002-3 to 2009-10, the

interruption to the live cattle export trade that occurred in mid-2011, and more recently by

severe drought conditions in Western Queensland and North-Western NSW. Relatively high

returns in the early 2000s resulted in a rapid increase in land values in cattle producing

regions and especially in northern Australia in the mid-2000s, resulting in increased business

debt for large-scale operators as many purchased additional land.

Declining beef prices and the live export suspension have subsequently reduced beef

profitability, and there has been a related decline in land values in northern Australia since

2009. Recent data indicates that debt levels are falling in aggregate, although not in regions

that are currently drought-affected. Figures 9, 10 and 11 show relevant financial performance

indicators (in 2013 dollars) for beef farm businesses, categorised on the size of their annual

turnover. The large numbers of small scale beef farms with less than $100,000 in annual

turnover are not included in the date depicted in these figures.

Figure 15. Changes in the average value of land and fixed improvements for

beef farms.

Source: ABARES annual farm surveys

$0

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Figure 16. Changes in average debt levels of beef farm businesses.


Figure 17. Changes in average farm cash income of beef farm businesses.


(*Farm cash income is net farm cash income before paying an operators allowance or repaying debt.)

$0

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4. The sheep industry.

The sheep industry has in the past been an iconic sector of the Australian economy, and while

it has declined somewhat in significance from its former prominence, it remains a major

export earner and source of employment in regional Australia. The significance of the sheep

industry was initially based on the production of wool, rather than meat. The wool industry

reached its zenith in the 1950s during the Korean War boom when wool prices escalated

dramatically on the back of wartime demand.

The industry then went through a period of regulated wool prices during the 1980s, before the

Wool Reserve Price Scheme collapsed in 1991 leaving the sheep industry with a large debt to

repay and more than one year of production stockpiled at growers expense. The resulting low

wool prices resulted in significant numbers leaving the industry, and a rapid reduction in

sheep numbers.

At different stages there has been a substantial post-farm wool processing sector in Australia,

but this has largely closed down and been relocated to China, which is the dominant export

market for Australian wool.

Following an extended period of adjustment, the sheep industry has experienced growth in

recent years based on growing demand for lamb – especially in emerging markets in Asia.

Lamb has also almost totally displaced sheepmeats (mutton) from domestic markets, although

sheepmeat exports remain significant.

Figure 18. Australian lamb production and markets.

Source: ABARES

Significant and growing markets for Australian lamb exports include the Middle East, the

USA and China. China and the Middle East are also major markets for sheepmeat exports,

while the major markets for live sheep exports are also the Middle East region. China is the

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Domestic Export Slaughterings (RHS)

dominant market for Australian wool exports, accounting for more than three quarters of total

exports in recent years. Other significant export markets for wool include India and Italy.

Figure 19. Australian sheepmeat production and markets.

Source: ABARES

The annual gross value of farmgate production of the sheep industry during recent years has

been approximately $5.5 billion dollars, split evenly between sheepmeat and wool

production.

Figure 20. Gross value of sheep and wool production.

Source data: ABS catalogue 7503; issue 2006-2013.

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The vast bulk of wool produced in Australia is exported as unprocessed (greasy) wool, and

lamb exports are also growing rapidly, and now account for almost 50% of the annual value

of lamb production. The value of live sheep exports has remained relatively constant over

recent years.

Figure 21. Value of Australian sheep industry exports.

Source data: ABARES Australian Commodity Statistics 2013: Farm sector tables

Figure 22. Destination of Australian lamb exports

Source: ABARES Australian Commodity Statistics 2013

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Figure 23. Destination of Australian mutton exports.

Source: ABARES Australian Commodity Statistics 2013

Figure 24. Destination of Australian live sheep exports.

Source data: UN Comtrade HS96; 0104

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Australian exports of live sheep and goats

africa and middle east ASEAN

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Oceania South and central america

New South Wales and Victoria are the two states that account for the largest share of the total

value of sheep industry production in Australia, with South Australia and Western Australia

also accounting for a significant amount of production. Sheep production is largely confined

to the southern, temperate regions of Australia.

Figure 25. Value of sheep industry output, by state, 2012-13

Source data: ABS catalogue 7503; 2012-13

New South Wales is the state that has the largest number of sheep farms based on farm

categorisation used by the Australian Bureau of Statistics, although some caution is required

in relation to this statistic. Many Australian farms are mixed-enterprise businesses, operating

a combination of livestock and cropping operations. It is not always easy to categorise these

on an enterprise basis.

Figure 26. Number of sheep farms by state. (2012-13)

Source data: ABS catalogue 7121.0; 2012-13

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As is the case for the beef industry, there tends to be a large number of small-scale sheep

farms in states like NSW and Victoria. In some instances the sheep enterprise on these farms

is run as a secondary enterprise in conjunction with beef cattle or cropping, although small-

scale sheep farms tend to be more specialised, rather than mixed-enterprise.

Farm businesses which include a cropping enterprise tend to be larger in size, (either on the

basis of the value of turnover or farm area) due to the scale-efficiencies associated with large-

scale machinery used in these enterprises.

Figure 27. Size distribution of sheep farms. (2010-11)


Figure 28. Distribution of livestock farm types by land area.

ABS catalogue 7121.0; 2010-11

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The business environment for Australian sheep farm businesses has been more stable over the

past decade than it was during the 1990s, a period that was impacted by the aftermath of the

dismantling of the Wool Reserve Price Scheme in 1991. Overall sheep farm profitability was

quite subdued during the 1990s in comparison with the previous decade, and improved only

slowly until recovering strongly during 2000-01, which was one of the rare periods during

which commodity prices were high and seasons were favourable for farmers in southern

Australia. This appears to have encouraged sheep farmers to expand the scale of their

operations, especially those managing larger scale operations. This is reflected in the trends

evident in Figure 30, where there was strong growth in the asset value of sheep farm

businesses during the period from 2002 – 2006, as a result of both increases in land values

and due to farmers buying more land, and taking on more debt, as is evident from figure 30.

Figure 29. Real value of land and fixed improvements – Australian sheep farms.

ABARES annual farm surveys

Figure 30 Real level of farm business debt, Australian sheep farms.


$0

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Figure 31 Real farm cash income, Australian sheep farms.


The period of drought in southern Australia that extended in some areas from 2003 to 2009

had a significant negative impact on the farm cash income of sheep businesses, especially

over the period from 2005 to 2008. This undoubtedly contributed to the relatively high level

of average farm debt amongst larger-scale sheep businesses over the period from 2007 to

2009, before the recovery in farm cash incomes allowed farmers to reduce debt. The decline

in farm asset values post 2007 is probably a reflection of some reduction in farm land values

due to the extended drought period. It is noteworthy that smaller-scale sheep farm businesses

have experienced less business volatility over this period, which is probably related to the

fact that farms in these categories ($100-$200k and $200-$400k) are more likely to be located

in higher rainfall areas and are more likely to have the option of lamb production or other

enterprises, than is the case for larger-scale sheep farms located in lower-rainfall zones.

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5. The dairy industry.

The Australian dairy industry developed essentially as a domestic industry, predominately

based around major metropolitan and regional centres in order to regularly supply fresh milk.

As transport capacity developed early in the 1900s, dairying expanded in higher rainfall

zones such as southern Victoria, Tasmania and in many coastal regions. Dairy processing co-

operatives were also established, often owned by dairy farmers.

For a number of reasons, including food safety and a desire to secure reliable supplies of

dairy products for major cities, Australian dairy markets were regulated by state governments

for most of the second half of the twentieth century. These regulations include prices, and

supply quotas.

As part of a broader policy objective of deregulating the Australian economy in the latter half

of the 1990s, Australian dairy markets were also deregulated. This took effect on 1 July 2000,

and the result has been some acceleration in the rate of decline in the number of dairy farms

in Australia, and a decrease in the overall size of the Australian dairy herd, but an increase in

the average size of dairy herds on individual farms. There has also been some reduction in the

total volume of output, although to a lesser extent than the decline in cow numbers. A

significant factor in Australian dairy markets over recent years has been the pricing policies

of major supermarkets, which have introduced one dollar per litre milk pricing which has had

the effect of reducing farmgate prices. To some degree this has been offset by growing export

demand, which has led in the last few years to new, large scale dairy farms being established

in Tasmania, southern Victoria, and in major irrigation areas. It is estimated that

approximately 50% of Australian dairy production is now exported, and export demand is

projected to grow more rapidly than domestic demand for the foreseeable future.

Figure 32. Number of dairy farms in Australia by state.

Source: Dairy Australia.

0

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10,000

15,000

20,000

25,000

NSW VIC QLD SA WA TAS

Figure 33. Size of the Australian dairy herd and annual milk production.

Source data: ABARES Australian Commodity Statistics 2013

Figure 34. Average milk yield per cow per annum.


The gross farmgate value of milk production is Australia has ranged between $3.5 and $4

billion over recent years, while the value of dairy exports has been approximately $1.6 billion

per annum. Major dairy export markets include Japan, Singapore, Malaysia, China and

Indonesia, although Australia exports dairy products to a wide range of different international

locations.

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Figure 35. Value of annual dairy production.

Source data: ABS catalogue 7503; issue 2006-2013

Figure 36. Destination of Australian dairy exports.


Victoria is the most dominant dairy state, based on both the number of farms and the volume

of production. New South Wales and Tasmania also have significant dairy industries.

-$500

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China Indonesian Japan Korea, Rep. of Malaysia Philippines

Saudi Arabia Singapore Thailand United States Other

Figure 37. Value of dairy production by state (2012-13).


Unlike other livestock sectors, the large capital requirements associated with operating a

dairy farm means that there are relatively few small-scale dairy farms operating in Australia.

Over the period from 1980 to the present day, the average dairy herd size has increased from

90 cows to 258, although there has been some development of dairy farms running several

thousand cows. Dairy farms are generally quite small in terms of land area, with most dairy

farms being between 100 and 500 hectares in size.

Figure 38. Size distribution of Australian dairy farms.


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Estimated value of operations ($'000)

Total employment at the farm level in the dairy industry is estimated to be approximately

25,000 persons. There has been some fluctuation in the number over recent years, largely in

line with fluctuations in dairy farm returns. In periods of higher returns, it is likely that dairy

farmers are more inclined to employ additional labour, while in periods of lower returns they

reduce the level of hired labour and extend their own working hours. Dairy Australia

estimates there are an additional 20,000 persons employed in the dairy processing sector in

Australia, bringing total direct industry employment to around 43,000 persons.

Figure 39. Employment on dairy farms in Australia.

Source data: ABARES Commodity Statistics 2013

There are a number of important differences between dairy farms and other broadacre

livestock businesses. Firstly, dairy farming is a high cash-flow business, with much more

significant cash costs and revenue flows on a regular basis throughout a year, relative to a

similarly-sized beef or sheep farm. Dairy farms also experience lower revenue volatility than

other broadacre livestock farms, as a consequence of regular milk payments throughout the

year. Taken together, these two differences mean that dairy farm businesses often operate

with considerably more debt and a lower equity ratio than other livestock farms.

Since the time of dairy deregulation in 2000, Australian dairy farms have generally been

increasing in size, and decreasing in number. This is reflected in the growth in the average

per farm value of land and fixed improvements of dairy farms over the period from 2002 to

2007-08. Dairy farmers received dairy industry adjustment payments during this period, with

the money used for these payments generated via a levy on the price of milk. Those that

elected to remain in the industry therefore had some capital that could be used to scale up the

size of their operations, and increase the number of cows that they milked. The fall in global

dairy prices after 2008, which occurred due to the global financial crisis, dampened demand

for land suitable for dairy farming, as did the so-called ‘milk wars’ in Australia which

commenced with heavy discounting of the price of milk by Australian supermarkets in

January 2011.

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The financial performance of dairy farm businesses has been variable over recent years, due

to a number of factors. As was the case for broadacre livestock industries more generally

throughout southern Australia during the period from 2003 to 2008, the impact of the

extended drought – and the related reduction in the availability of irrigation water and

increases in feed grain prices

Figure 40 Real value of land and fixed improvements, Australian dairy farms.

Source: ABARES farm surveys.

Figure 41. Farm business debt, Australian dairy farms.


As Figure 41 highlights, Australian dairy farms have been taking on progressively more debt

over the past decade, although it needs to be remembered that this has occurred against a

$-

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backdrop of significant growth in the size of an average dairy farm, as highlighted in figure

40. It is likely, therefore, that average debt per cow or litre of milk produced has not

increased to the same extent.

Australian dairy farms have recorded significant fluctuations in farm cash income in the post

de-regulation era, as is highlighted in Figure 42. This has been caused by the extended

drought in southern Australia, which limited irrigation water availability and increased feed

grain prices, and more recently by declining average domestic milk prices. Farmgate milk

prices have recovered somewhat over the past twelve months due to growing export demand,

suggesting some recovery is likely from the low farm cash income figures recorded in 2013.

Figure 42. Real farm cash income – Australian dairy farms.


$-

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6. The pork industry.

The Australian pig industry transitioned from what was an industry based on what was

essentially a part time, second enterprise on Australian dairy and grain farms in the 1950s and

1960s to a sector composed of large-scale, highly productive piggeries by the end of the

1990s, with a significant reduction in the number of pig farms as part of that transition. In

1970-71, it was estimated there was 40,000 pig farms in Australia, a number which has

reduced to around 1,500 farms in 2014. The pork industry has encountered a number of

headwinds over the last two decades, with the extended 2000s drought (and associated high

feed grain prices) in combination with the relatively high value of the Australian dollar

resulting in Australian producers being rendered less competitive compared to imported

pigmeat products.

Figure 43. Australian pigmeat production and trade.


Figure 44. Australian pig numbers by state.


1,000

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The Australian pig industry is the livestock industry that is most exposed to import

competition, which has been growing since the mid-1990s. The pressure on the sector has

resulted in increased production, despite reduced pig numbers, through increased weaning

and growth rates. The industry has recently adopted changed pig welfare standards and

promotion of Australian pork, which it is anticipated will help to differentiate Australian

product from imported pigmeat products and increase sales.

Annual gross value of production has been approximately $900 million for most of the past

decade, of which approximately $100 million has been exported (14% of output by volume)

although exports have declined over recent years due to the persistently high Australian

dollar exchange rate.

Figure 45. Gross value of production, pigs.


Figure 46. Value of Australian pigmeat exports.


$600

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The competitive pressure arising from imported pigmeats over the past decade has resulted in

structural changes in the pork industry, with pig farmers either needing to expand the size of

their operations to capture economies of scale, or to operate what might be termed boutique

piggery operations focusing on specialised markets or managed on a part-time basis in

conjunction with other farm enterprises. As a result, the industry now has a group of very

large-scale operations, and also a collection of smaller operations, but relatively few mid-

sized farm operations.

Figure 47. Distribution of pig farms by value of output.


The relatively small size of the pig industry compared to other Australian livestock industries

means there is very limited data available of financial performance at the farm level.

7. The poultry industry.

The poultry industry in Australia consists of two distinctly different sub-sectors – the chicken

meat sub-sector and the egg sub-sector. The two are significantly different structurally, with

the egg industry consisting largely of independent farm businesses, while the chicken-meat

industry consists largely of vertically integrated production and processing supply chains,

dominated by a small number of major businesses. Both are essentially domestic focused,

with only a small proportion exported each year. Neither sub-sector faces substantial

competition from imports, with quarantine constraints limiting imports of either raw chicken

meats or unprocessed eggs.

0

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120

nu

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Estimated value of output ($'000)

Figure 48. Annual value of production of chicken meat and eggs.

Source data: ABS catalogue 7503; issue 2006-2013:

The egg sub-sector consists of approximately 300 egg producing farms, with NSW,

Queensland and Victoria accounting for about 85% of these. Total production in 2012 was

approximately 400 million dozen eggs, produced by approximately 17 million laying hens,

with a farmgate value of around $600 million.

Australian egg producers have been under a degree of pressure on animal welfare issues, and

that pressure has now increased with a pledge by major retailer Woolworths to phase out all

caged eggs from their shelves by 2018. Some Australian egg producers have already adopted

free-range and barn egg production systems, and pressure will continue to adopt these

systems more widely. In 2012, free-range, barn-laid and organic eggs accounted for 49% of

retail market volumes, and 61% of retail market value of egg sales in Australia.

Despite the mature status of the domestic egg market, the Australian Egg Corporation reports

that, over the past decade, Australian egg consumption has increased by 30% on a per capita

basis. This has triggered a 26% increase in the number of laying hens.

The chicken meat industry is largely vertically integrated, with two large integrated national

companies – Baiada and Inghams enterprises, accounting for more than 70% of total

production each year.

According to the Australian Chicken Meat Federation, growing broiler chickens, from day

old chicks to the day of processing, is generally contracted out by processing companies to

contract growers. Approximately 800 growers produce about 80% of Australia’s meat

chickens under these contracts. Other meat chickens are produced on large company farms,

or on farms owned and managed by ‘intermediary’ companies which own a number of farms,

each managed by a farm manager, and who enter into contracts with processing companies to

grow out chickens on a larger scale.

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year

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Contract growers own the farm and provide the management, shedding, equipment, labour,

bedding and other inputs to rear chickens. The processing company provides (and owns) the

chickens and provides feed, medication and technical advice.

The per capita consumption of chicken meat has steadily grown in Australia over the last

thirty to forty years, displacing the consumption of beef and lamb. Chicken meat obviously

has a significant cost advantage, and is also a protein of choice for many overseas immigrants

who have settled in Australia over this period.

Figure 49. Chicken meat production in Australia.

Source: Australian chicken meat Federation.

Figure 50. Changes in efficiency of chicken meat production in Australia

Source: Australian chicken meat Federation.

There is only very limited data available about individual farm businesses involved in the

chicken meat or egg industry, as these farm types are not included in farm survey programs

conducted by either the Australian or state governments. Some data is available on the state-

by-state distribution of farms, and the value of production. It highlights that farms and

production capacity are concentrated in states with larger populations.

Figure 51. Distribution of chicken meat and egg farms by state. (2012-13)


Figure 52. Gross value of chicken meat and egg production by state. (2012-13)

Source data: ABS catalogue 7503; 2012-13

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Victoria Queensland SouthAustralia

WesternAustralia

Tasmania NorthernTerritory

AustralianCapital

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Poultry - total disposals - value ($) Eggs - value ($)

The structural differences between the chicken meat and egg sectors are evident from the data

displayed in figure 53. It shown that while chicken meat farms are predominantly large scale

with annual output in excess of $0.5 million per annum, egg producing farms have a much

more even size distribution, ranging from small, part-time farms to much larger enterprises.

Figure 53. Distribution of annual farm output, chicken meat and egg farms.


Australian poultry farms employ approximately 8,000 workers, with total employment trends

showing some evidence of fluctuating with the profitability of poultry farms. Total

employment dropped, for example, during 2008 when grain prices were at extremely high

levels which would have imposed considerable pressure on farm profitability.

Figure 54. Employment on Australian poultry farms, 2012.

Source data: ABARES Commodity Statistics 2013.

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8. The post-farm sectors associated with the livestock industries.

There are a number of different industry sectors associated with the livestock industries in

Australia, although they are generally not consolidated as one sector for the purposes of

statistics. These include the livestock marketing and transport sectors, the livestock

processing sectors, the livestock-product manufacturing sectors, and the livestock product

wholesaling and retail sectors. A variety of different research reports have consolidated

statistics about these various sectors for a range of different purposes, although there is no

single authoritative report that provides a complete picture of the economic value of all of

these in combination.

The following is a summary of some of the main characteristics of each of the relevant

different parts of the post-farm livestock sectors.

Livestock transport.

Livestock transport services and general transport services are a significant input for the farm

sector, the meat processing sector, and for live exports. According to ABS input/output data,

the farm sector utilised road transport valued at $943 million in 2012/13, and transport

services and storage to the value of $829 million in the same year. With the livestock sector

accounting for 45% of gross farm output, it is reasonable to estimate that the transport and

storage services utilised by the livestock sectors were valued at approximately $800 million

in 2012-13.

Livestock marketing.

There are a number of different avenues that are used to market livestock. A summary of

these is provided in the following table. Available statistics do not provide a definitive

indication of the market share of each selling method, although ABARES surveys of beef

farms provide some indication. In southern Australia, saleyards have remained the primary

method for selling cattle, accounting for over 60% of transactions. Over-the-hook sales

account for approximately 15%, while paddock sales have ranged from 15 to 20% of sales. In

northern Australia, saleyards account for about 35-40% of cattle sales, approximately equal to

over-the-hook sales. Paddock sales account for the remaining 20-30%, with virtually all sales

for live export being paddock sales.

In the case of the sheep industry, approximately 70% of lamb sales are via saleyards, with the

balance of sale spread evenly between over-the-hook and paddock sales. For adult sheep,

saleyards account for around 70% of all sales, with virtually all other sales being paddock

sales.

Table 5 Methods of selling Australian livestock.

Market system Species Utilisation

Saleyards Cattle, sheep, pigs (store and

slaughter), goats

Significant for cattle and

sheep in southern Australia.

Limited use of saleyards by

pig producers, northern beef

producers.

Over-the-hooks Cattle, lambs (slaughter) –

livestock sold on a carcass-

weight basis.

Common for cattle in

northern Australia.

Direct sale (paddock sale) Cattle, Sheep, lambs (store

and fat), pigs, goats

Common for store stock

sales and for pigs, and for

cattle in northern Australia

Contract supply Cattle, sheep, lambs, pigs,

(slaughter, but also feeder

cattle for feedlots)

Common for beef feedlots,

sheep destined for live

exports, larger-scale lamb

production and pig

production.

Electronic sale Cattle, sheep, trade lambs

(store)

Growing in significance,

especially for store cattle,

sheep and lambs.

In most cases, but in particular for sales through saleyards, sales are transacted via a livestock

agent, who typically charges between 2% and 5% commission on the sale. The Australian

Livestock and Property Agents Association (ALPA) states there are 1,200 livestock agency

businesses Australia-wide, employing 8,500 staff. Today: Of these, approximately 800

agency businesses are owned by the major pastoral houses, while 400 are independent private

agency businesses.

Livestock saleyards represent a major avenue for the sale of all forms of livestock (except

poultry). There are a total of 124 saleyards in operation nationally, located as indicated in the

following table.

Table 6 Location of Australian livestock saleyards.

State Number

NSW 63

Vic 27

Qld 21

SA 5

WA 5

Tas 2

NT 1

National total 124

Meat and dairy processing.

The meat processing sector consists of some 120 facilities spread throughout Australia. These

include abattoirs (both export and domestic) and boning rooms (export and domestic) that are

involved in the slaughter, storage and processing of cattle, sheep, pigs and goats for domestic

and export sale.

Table 7 Australian accredited meat processing facilities.

Export

Abattoir

Export

Boning room

Domestic

Abattoir

Domestic

Boning room Total

VIC 19 8 5 2 34

QLD 18 6 4 1 29

NSW 16 5 0 5 26

WA 12 2 3 2 19

SA 5 0 0 2 7

TAS 3 0 1 0 4

NT 0 0 0 2 2

Australia 73 21 13 14 121

The dairy processing sector consists of some twenty large milk processing organisations,

which are a mix of farmer owned cooperatives, Australian-listed companies, and international

dairy processors. Many of these have multiple processing facilities located throughout

Australian dairy regions. There are also a large number of other companies involved in the

manufacture of consumer dairy products, utilising a range of different dairy products in that

manufacture.

Total employment in the meat processing sector is estimated to be approximately 25,000

persons. This includes employment in meat processing and boning facilities associated with

abattoirs. Total employment in meat and meat product manufacturing (including employment

in abattoirs) is estimated to be approximately 53,000 persons. In the dairy processing sector,

it is estimated that total employment is approximately 18,000 persons. In total, livestock

related processing is estimated to employ 71,000 persons nation-wide, and constitutes

approximately one third of the total employment in the food processing sector.

Table 8 Employment in food manufacturing, Australia, 2011-12.

Source: Australian Food Statistics, 2011-12. ABARES.

Total value added for the meat and dairy processing sectors for 2012-13 is estimated to be

$7.2 billion dollars, with meat processing and manufacturing accounting for $4.7 billion of

this total, and dairy processing $2.5 billion.

Table 9 Industry value-added, livestock processing sector.

Livestock Manufacturing Industry (2012-13) Industry Value Added

GVA ($m)

Meat processing 2,779

Poultry processing 1,366

Cured meat and smallgoods manufacturing 609

Milk and cream processing 335

Ice cream manufacturing 210

Cheese and other dairy product manufacturing 1,906

Total $7,205 Source: ABS catalogue 8155; 2012-13

Australian Bureau of Statistics Input/output tables provide an estimate of the inputs used by

both the meat and dairy processing sectors, in generating an annual of $7.2 billion of value

added for the national economy. These data are displayed in the following two tables. It

highlights that the beef and dairy processing sectors generate $7.7 billion per annum in

employment in the Australian economy, as well as being significant consumers of a broad

range of other goods and services. Many of these facilities are located in non-metropolitan

regions, and hence play a very significant role in regional economies.

NSW VIC Qld SA WA Tas NT Australia

Meat and meat products 15,750 11,750 14,500 5,250 5,000 500 na 52,750

Dairy products 4,250 11,000 1,250 na 750 1,000 na 18,250

Fruit and vegetable processing 1,750 2,000 750 750 250 1,000 na 6,500

Oil and fats 750 na na na na na na 750

Flour and cereals 1,500 1,250 250 750 na na na 3,750

Bakery products 18,750 19,250 13,250 5,000 4,250 2,000 na 62,500

Other food 5,750 6,250 5,500 2,250 750 500 na 21,000

Beverage and malt 6,500 12,000 3,000 7,500 2,500 500 na 32,000

Food, beverage and tobacco nec 10,750 na na na na na na 10,750

Total food and beverage 65,750 63,500 38,500 21,500 13,500 5,500 - 208,250

Livestock related 20,000 22,750 15,750 5,250 5,750 1,500 na 71,000

% Livestock-related 30.4% 35.8% 40.9% 24.4% 42.6% 27.3% 34.1%

Figure 55. Major inputs utilised by the meat processing sector.

Source: ABS Input/Output tables 2010-11

Figure 56. Major inputs utilised by the dairy processing sector.

Source: ABS Input/Output tables 2010-11

$-

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Finance

Polymer Product Manufacturing

Other Repair and Maintenance

Electricity Generation

Electricity Transmission, Distribution,…

Paper Stationery and Other Converted…

Non-Residential Property Operators and…

Professional, Scientific and Technical…

Employment, Travel Agency and Other…

Wholesale Trade

Meat and Meat product Manufacturing

Road Transport

Poultry and Other Livestock

Compensation of employees

Sheep, Grains, Beef and Dairy Cattle

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00

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0

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Other Repair and Maintenance

Poultry and Other Livestock

Internet Service Providers, Internet…

Transport Support services and storage

Other Food Product Manufacturing

Publishing (except Internet and Music…

Telecommunication Services

Paper Stationery and Other Converted…

Professional, Scientific and Technical…

Road Transport

Polymer Product Manufacturing

Wholesale Trade

Dairy Product Manufacturing

Compensation of employees

Sheep, Grains, Beef and Dairy Cattle

Food processing and manufacturing makes up approximately 18% of the value added by the

manufacturing sector, with those processing facilities associated with livestock products

making up more than a third of the total value-added contributed to the economy by the food

manufacturing sector.

Collectively, the livestock and dairy processing sectors account for approximately one third

of the value generated by the food and beverage processing sectors in Australia each year.

Figure 57. Value added by the Australian food manufacturing sector, 2012-13

Source: ABS

Food retailing.

The total value of retail food sales (including supermarkets, takeaway foods and cafes and

restaurants) in 2011-12 was estimated to be $126 billion. It is not possible to separately

identify the share of this expenditure attributable to livestock-related products, because of the

complexity of value-added elements and service costs associated with different food

categories, although some indication is available from ABS statistics which indicate that

approximately 20% of average weekly household expenditure on food and grocery items

(excluding liquor) is spent on livestock-related products.

Nationally, there are approximately 1.1 million people employed in food retailing in

Australia, with approximately half of these employed in cafes, restaurants and takeaway food

outlets, and 270,000 employed in the supermarket sector. Available statistics do not enable

Meat processing

Poultry processing

Cured meat and smallgoods

manufacturing

Milk and cream processing

Ice cream manufacturing

Cheese and other dairy product manufacturing

Seafood processing

Fruit & vegetable processing

Oil & fat manufacturing

Grain mill and cereal product

manufacturing

Bakery product manufacturing

Sugar and confectionery manufacturing

Other food product manufacturing

any of these to be specifically identified as being associated with the livestock-related sectors,

although meat and dairy products obviously form a very significant part of the total turnover

of this sector.

Table 10 Employment in food and grocery retailing in Australia.

Source: Australian Food Statistics, 2011-12. ABARES.

Other sectors.

There is a wide range of other sectors that provide a range of different products and services

to the livestock industries and associated downstream sectors. These range from transport and

energy, to services such as administration, finance, export facilitation and shipping. It is not

possible to specifically identify the value of these (beyond the information in ABS

input/output tables) to regional economies, or the impact of changes in the livestock and

associated industries on these sectors.

NSW Vic Qld SA WA Tas NT Australia

Wholesale,grocery,liquor,tobacco 21,750 16,750 12,500 5,000 7,500 2,000 750 66,250

Supermarket and grocery 76,750 67,000 60,500 23,500 29,250 7,500 3,500 268,000

Specialised food retail 39,000 26,000 21,250 9,750 9,750 2,000 750 108,500

Food retailing, other 1,250 250 1,000 500 500 3,500

Café, restaurant,takeaway 159,250 139,000 96,500 34,250 52,250 11,000 4,000 496,250

Pub,tavern,bar 33,500 17,500 18,750 11,750 9,500 3,000 1,000 95,000

Club 32,250 6,500 15,000 1,500 1,750 250 250 57,500

Food and beverage other. 250

Total 364,000 273,000 225,500 86,250 110,500 25,750 10,250 1,095,000

9. Livestock diseases and industry costs.

This section of the report includes a review of the available literature on the current costs of

livestock diseases in Australian livestock industries. This review provides some important

baseline information for a larger research project that aims to quantify the economic

importance of Australia’s livestock industries, and the role of animal medicines and

productivity-enhancing technologies in securing the future growth of these industries.

This review involved analysing major diseases and other animal health issues (such as those

caused by specific insect pests) that impact on Australian livestock industries, with specific

reference to beef cattle, dairy cattle, sheep, goats, pigs and poultry. In some circumstances,

there was a narrow range of information available. This meant that the analysis conducted in

these situations was based on relatively old information published in the 1990s and early

2000s, but still considered relevant. The information was largely sourced from industry

research bodies such as Meat and Livestock Australia (MLA). This review also analysed the

potential cost of future foreseeable diseases which involved sourcing information from both

domestic and international research bodies such as the Australian Bureau of Agricultural and

Resources Economics and Sciences (ABARES) and the United States Department of

Agriculture (USDA).

The final part of this review involved analysing the current Australian expenditure on

livestock health. This part of the literature review also includes analysis on animal health

products that are currently restricted for use in Australia, but could potentially impact on

current expenditure if regulations were to change.

Background

A significant factor of farm profitability for Australian livestock producers is the cost of

livestock diseases and other animal health issues such as those caused by specific insect

pests. There have been several studies that have attempted to quantify the prevalence and

severity of common livestock diseases and animal health issues in Australia, and

responsibility for continually updating this information rests with Animal Health Australia.

Generating projections of the national economic cost of animal diseases and animal health

issues is a difficult exercise. There are a range of different costs associated with livestock

disease, which include the cost of surveillance systems, the direct costs of preventative

treatment, the cost of curative treatment for diseased animals, the cost of lost production of

diseased animals, and the possible cost of loss of markets or international market access as a

consequence of the disease. The relative significance of each of these can vary by disease,

and by livestock species.

There have been two research projects carried out over recent years in Australia to estimate

the economic cost of animal diseases in the sheep, cattle and goat industries. (Sackett et. al.

2006, Lane et. al. 2015). These two research projects resulted in differing estimates of the

costs of various diseases, in part because they were based on sheep, cattle and goat

population numbers that were current at the time each report was prepared but that changed

over the nine years between these reports. A second reason the two estimates differ is that the

researchers involved in each of the two research projects used either published or their own

estimates of possible disease incidence and prevalence both within and between flocks or

herds, and these differed for a number of reasons. For reference, both sets of estimates have

been reported here, noting that the latter estimates (Lane et. al. 2015) are more contemporary.

Available evidence indicates that reduced income for livestock producers due to diseases and

animal health issues can be much higher than the cost of treatment and/or prevention in most

circumstances.

There is no single overall estimate available of the annual cost of livestock diseases in

Australia. Some research available for the sheep and beef cattle industries estimates that the

annual economic cost in these two livestock industries may average between $1 and $2

billion per year (including both direct treatment costs and economic costs), although this

obviously varies greatly year-by-year due to varying seasons and disease incidence and

prevalence. Similar estimates are not available for the dairy, pork and poultry industries,

although the more intensive production systems utilised in those livestock sectors are likely

to mean that the economic cost of disease may be relatively less. Nevertheless, even based on

these broad estimates, this suggests that up to 10% of the annual $20 billion in value

generated by Australian livestock industries may be lost due to the costs associated with

livestock disease.

These estimates are based on the costs associated with livestock diseases that are currently

endemic in Australia. Australia is relatively fortunate in that there are many livestock

diseases that are endemic in many overseas locations that are not present in Australia.

Appendix 1 provides the current disease status of the Australian livestock industries, as

reported by Animal Health Australia. (Animal Health Australia, 2014)

The potential cost of the emergence of an exotic disease such as foot and mouth disease or

avian influenza are estimated to be much greater. For example, a recent estimate of the cost

of a widespread outbreak of foot and mouth disease was that it would cost in excess of $50

billion over ten years (Buetre et al, 2013), an average of $5 billion per year.

Even the direct cost of livestock disease prevention and treatment are substantial, and appear

to be increasing. The Australian Bureau of Agricultural and Resource Economics and

Sciences (ABARES) publishes annual statistics on factory sales for animal health products

(see Figure 2). These data are gathered from members of the National Association from Crop

Protection and Animal Health (AVCARE) and are likely to represent about 90% of actual

total sales nationally.

Between 2006 and 2013, the total sales of animal health products in Australia experienced an

annual average nominal growth rate of 5%. In 2013, the Australian market for animal health

products was estimated to be over $938 million.

Figure 58: Total factory gate sales of animal health products in Australia

Source: ABARES (2014)

The following review examines the major diseases present for different livestock species in

Australia, with a focus on those considered to impose the greatest cost.

Cattle diseases and health

The beef and dairy cattle industries are Australia’s largest livestock industries by value, and

are also the livestock industries that have the greatest geographical spread across the

continent. Beef production occurs throughout the entire nation, while dairy production is

confined to southern areas and coastal regions, excluding the tropical coasts.

Beef and dairy cattle are bovine livestock susceptible to many of the same diseases, although

mastitis and Bovine Johne’s Disease (BJD) are relatively more prevalent and economically

important in Australian dairy herds. The prevalence of each major disease varies depending

on a number of factors such as geographic location, climate and management practices. These

variations add to the complexity of developing models that estimate national economic costs

of diseases and animal health issues.

Figure 1 and Table 1 provide a ranking and a cost estimate for the major diseases and animal

health issues that impact on the Australian beef cattle industry in the northern and southern

regions of the country. The costs include the estimated treatment costs, costs due to loss of

production, and the costs associated with curative or preventative treatment of the disease.

The data used in the modelling that was the basis of this analysis was derived from Australian

agricultural census data collected by the Australian Bureau of Statistics (Lane et al, 2015).

Figure 59: Annual costs of diseases and health in the Australian beef industry

Source: Lane et al (2015)

Table 11 Annual costs of major health issues in the cattle industry

Source: Sackett et al (2006), Lane et al (2015)

A description of the major cattle diseases and other animal health issues, along with further

information on the national economic costs, is provided below.

Disease National economic cost ($ millions)

2006 (Sackett et al) 2015 (Lane et. al.)

Cattle tick $147 $161

Bovine Ephemeral Fever $101 $59.8

Buffalo Fly $78 $98.7

Bloat $49 $76.8

Mastitis $40 N/A

Vibriosis N/A $21

Bovine Respiratory Disease

(Feedlots) $40

Internal parasites (e.g. worms) $39 $93.6

Grass tetany $12 $24.3

Cattle tick

Cattle tick is an external parasite that is a serious pest to the northern regions of Australia for

cattle producers (see Figure 3). The costs associated with cattle tick are estimated to be the

largest economic cost of a pest or disease incurred by the national beef cattle industry.

Including both direct and indirect costs, these costs are estimated to be $161 million per year

(Lane et al, 2015). A large share of this national cost of cattle tick occurs in the northern

cattle zone (see Table 2).

Figure 60: Areas infected by cattle tick in Australia

Source: Sackett et al (2006)

Table 12 Annual costs of the cattle tick in Australia by region

Zone Total cost (million)

Northern $156

Southern $5

Total $161


Direct costs include reduced productivity, veterinary costs, chemical treatment and regulatory

costs. The government-controlled ‘tick line’ inspection points from New South Wales to

Queensland are also relatively expensive, with annual costs of between $2 million and $7

million (Sackett et al, 2006). Additionally, the research concluded that maintenance of the

tick line within Queensland costs a further $3.3 million per year.

Indirect costs for diseases and animal health issues include labour costs during mustering and

treatment, capital cost of facilities for treatment (e.g. the cost of installing a livestock plunge

dipping facility is approximately $20,000) and costs of research and policy. Ticks have a

direct effect on cattle production through increasing mortality and morbidity rates, weight

loss, decreased immunity and fertility decline. The production effects of cattle tick include:

Reduced market accessibility with discrimination against Brahman cattle and loss of

potential to produce ‘organic beef’

Reduced value of hides (by 25–30%)

Residues in meat requiring withholding periods and extended export quarantine

Occupational health and safety issues (Sackett et al, 2006).

Bovine Viral Diarrhoea Virus (BVDV or pestivirus)

There are various strains of Type 1 BVDV that are present in Australian grazing beef cattle

herds. The major implication of the virus are conception failure, early-pregnancy abortion,

and mortality of persistently-infected (IP) calves. Although there is no effective treatment

once the disease is present, there are effective preventative vaccines available that generally

cost over $4/dose. The total cost of BVDV in cattle across Australia at the current prevalence

of disease is estimated at $114.4 million a year. However this estimate is an average and does

not recognise the episodic patterns in which BVDV often impact individual herds (Lane et al,

2015).

Bovine Ephemeral Fever (BEF)

The economic impact of BEF (also referred to as three day sickness) to the cattle industry is

estimated to be $101 million per year (see Table 3). The disease is widespread in Queensland

with common symptoms including short fever, shivering, lameness and muscular stiffness of

the animal. Typical productivity effects of BEF involve up to 20% weight loss, temporary

sterility of bulls, milk loss, abortion, calf mortality (from milk loss), veterinary costs and

disruption to management procedures. There is a commercial vaccine which is widely used

by beef and dairy producers. The cost of this treatment is estimated to have increased animal

health expenses by $2.40 per head per year therefore contributing heavily to the increase in

costs of animal health issues for Australian cattle producers (Sackett et al, 2006).

Table 13: Annual costs of Bovine Ephemeral Fever for at-risk cattle herds in Australia

Zone Number of cattle at

risk (million)

Increased

expenses (million)

Total cost

(million)

Northern 53.4 $26.7 $83.1

Southern 11.5 $6.4 $17.9

Total 65 $36.1 $101


Buffalo fly

Buffalo fly has a similar geographic distribution to that of the cattle tick, occurring mainly

along the coast and northern regions of Australia. It is a small biting fly that feeds off the

cattle and causes irritation which can result in reduced production if cattle are heavily

infested. It is the third most costly disease to cattle producers with the average loss of

production around $30 per head per year. The total national economic impact is estimated to

be over $98.7 million a year (Lane et al, 2015). Control methods rely primarily on chemical

insecticides, but unfortunately fly resistance to some treatments has become an issue, as well

as some chemicals known to leave residues in the meat. Consequently, a variety of non-

chemical control options are being favoured by producers. For example, Buffalo fly traps can

reduce fly numbers on cattle by 60-70%, costing between $1,000 and $1,500 per trapping

system. However, economic surveys of cattle producers have found that the savings in labour

and chemical expenses should make the trap economically worthwhile over a five-year

lifespan (MLA, 2011).

Cattle bloat

Cattle bloat is a common animal health issue in both beef and dairy cattle sectors, with a

national annual cost estimated to be $76.8 million per year (Lane et al, 2015). Previously,

Sackett (2006) reported the total annual cost of cattle bloat to sum $47.5 million indicating an

increasing trend of the animal health issue. It is caused by the consumption of young, rapidly

growing legume pasture species (such as white clover and lucerne) that are low in fibre.

Subsequently, the low fibre pasture source results in excess gas production in the rumen

during digestion, and the inability of the animal to burp this gas quickly enough results in a

build-up of pressure and distention of the rumen, which can quickly suffocate the animal

(Dairy Australia, 2015). Although bloat can occur anywhere and at any time, it is generally

confined to high-rainfall regions where white clover is an important part of the pasture base

or regions where lucerne dominates the pasture.

The incidence of this animal health issue and the number of deaths associated with it are

highly variable, leading to a relatively broad range of cost estimates. Table 4 indicates it is

more economical for cattle producers in high risk areas to use prevention practices against

cattle bloat compared to risking the incidence of the illness. An important point to note about

this disease is that one of the preferred treatments, the anti-bloat capsule, has a growth

promotant effect. Previous studies have found that this treatment resulted in an additional

live-weight gain of 8kg in sale steers, thus explaining why some treated herds have negative

costs (Sackett, 2004).

Table 14: Annual costs of cattle bloat in the Australian beef industry – southern regions

Category Total cost

(million)

Treatment $3.1

Prevention $24.9

Production $48.8

Total $76.8


Mastitis

Mastitis, a bacterial infection of a cow's udder, costs Australia's dairy industry more than $40

million in lost production every year (ABC Landline, 2013). It is the most costly animal

health issue for the dairy industry, with clinical cases costing individual dairy farmers an

estimated $270 per case (Dairy Australia, 2014). In the past, it was difficult for farmers to

recognise mastitis problems in herds until an outbreak occurred. Dairy Australia’s

Countdown Mastitis Focus report released in 2013, allows farmers to effectively track the

udder health of a herd helping identify problem areas and potential risks by tracking progress

in the herd after changes are made (Dairy Australia, 2014).

Mastitis can also be a health issue for beef cattle producers, however it is less common. There

are studies currently being undertaken in the United States with the testing of antibiotics for

treatment against the disease, however the likelihood that such treatments would gain

approval and be available for use in Australia is unclear.

Bovine Respiratory Disease

Bovine Respiratory Disease (BRD) is a common disease associated with cattle in feedlots,

and is estimated to account for between 50% and 90% of all cattle deaths in feedlots. In some

cases, up to 5% mortality has occurred due to the disease (Sackett et al, 2006). The disease

arises due to a combination of stress factors and exposure to infectious agents during the first

three to four weeks that cattle are introduced into a feedlot. The stress associated with

movement from farm to saleyards and transport, combined with the stress of socialising with

cattle from diverse sources and associated exposure to infectious agents can result in the

development of respiratory disease which can be fatal in serious cases. It is estimated the

disease results in an annual cost of some $59.7 million for the industry, with around $56.6

million of this being the cost of lost production (Lane et al, 2015).

A range of management strategies are available to minimise the risks of BRD, which include

pen weaning of cattle and backgrounding prior to feedlotting to accustom cattle to handling

and socialising in pens. Treatments for the disease include antimicrobials, and vaccines are

now becoming available to protect against the most common infectious agents.

Internal parasites

The most common internal parasites of cattle in Australia include worms, flukes and

protozoa. The prevalence of worms is mainly a function of rainfall, with high risk areas

considered to be those receiving more than 600mm of annual rainfall. Table 5 indicates that

87% (or $82 million) of the national economic loss of internal parasites is concentrated in

southern regions. Overall, it is estimated that internal parasites cost the cattle industry over

$93.6 million annually. A large component contributing to this economic impact are the costs

associated with prevention practices. These products, generally drenches, are estimated to

involve annual costs of $50-60 million (Lane et al, 2015).

A challenge faced by cattle farmers is the increasing consumer demand for ‘organic’ beef. As

organically produced livestock cannot be treated with chemicals to control internal parasites,

farmers are left with very limited treatment options (Neeson and Love, 2014). There have

been some ‘organic drenches’ developed which have shown measurable effects, but their

effectiveness is generally much lower than conventional parasiticides. Trials indicate that

while conventional drenches achieve a 95% reduction in internal parasite numbers, ‘organic

drenches’ have only achieved less than 50% reduction (James, 2009). The question of

treatment options is therefore problematic for farmers, not only due to the significant cost of

drenches and other treatments but also due to restriction on their ability to sell their products

into high-end markets.

Table 15: Annual economic loss due to worms in beef cattle - southern regions

Category Prevention Production loss Total cost (million)

High Medium Low High Medium Low High Medium Low

Per head $6.84 $5.40 $0.66 $5.10 $3.88 $3.37 $11.94 $9.28 $4.03

Per herd $1,286 $1,016 $124 $959 $729 $634 $2,245 $1,744 $758

Total $42.4m $39.6m $82m


Hypomagnesaemia (grass tetany)

Grass tetany is predominately confined to medium and high-rainfall regions in south-eastern

parts of Australia and has been a common cause of death for beef and dairy cows over the

past 40 years. The disease is associated with low levels of magnesium in the blood and

cerebrospinal fluid around the brain. Incidence varies between seasons and location however

most clinically affected cows die (DEPI VIC, 2007). It is estimated grass tetany costs the beef

industry $24.3 million a year, with costs arising due to prevention methods that are labour

intensive and the cost of treatment products. It has also been noted this can often lead to

inflation in supplementary feed costs with the addition of magnesium oxide (Sackett et al,

2006).

Due to the prevalence of this animal health issue in Victoria, most surveys of the cost of this

cattle health problem have been done in that state where, in bad years, up to 42% of herds can

be affected. There has also been research indicating that there is a relationship between the

use of potassium and nitrogen fertiliser and the incidence of grass tetany (DEPI VIC, 2015).

This means that some farmers may have to compromise on potassium and nitrogen fertiliser

application, which can constrain cattle productivity and therefore farm profitability.

Bovine Johne’s Disease

Bovine Johne’s Disease (BJD) is caused by a bacterium (Mycobacterium paratuberculosis)

that lives mainly in the intestines of infected animals. It causes the intestinal wall to thicken

and reduces the normal absorption of nutrients from grazing, so the animal can eventually

starve to death. BJD is more common in dairy herds in Australia than beef herds, but the

disease is also of significance to the beef industry.

The total cost of BJD to the cattle industry is estimated at $2.8 million a year, with $2.5

million of this cost concentrated in southern areas (Lane et al, 2015). This estimate was based

on the assumption of only 5% herd infection rates in southern cattle enterprises, and 1% in

northern cattle herds. The generally low prevalence of BJD in Australian beef herds is

internationally recognised, however potential outbreaks have been estimated to be extremely

costly for the sector. In 2014, the Department of Agriculture, Forestry and Fisheries (DAFF

Qld) assessed the impact of BJD in Queensland and estimated the cost of maintaining the

Protected Zone status to be over $6 million for the original single infection node,

approximately split between industry ($2.7 million) and DAFF Qld ($3.6 million).

The estimated costs for destocking of infected properties were $1.5 million per commercial

beef property, with a stud likely to incur substantially higher costs. In the scenario of an

outbreak, the economic impact on live cattle exporters was estimated to be between $10 and

$15 million per annum; not considering annual costs of vaccination of between $2 and $2.4

million and reduction in farm gate price across the industry which would reduce annual

returns by around $16 million (DAFF Qld, 2014).

Australian beef exports generally do not have to meet any importing country requirements

regarding BJD, with the exception of Japan. This is an important and valuable market for

Australian beef, and it has been estimated that a 10% redirection of beef exports away from

Japan could cost the industry $9 million per annum based on current prices and estimated

values (Department of Agriculture, 2014). Research by ABARES (2013) found that assuming

a disease spread rate of 2 per cent per year between properties, the cost of BJD could be up to

$260 million over the next 20 years. This is made up of $106 million loss in productivity and

live cattle export sector losses and $155 million in losses associated with livestock selling

restrictions.

Bovine Genital Campylobacteriosis (Vibriosis)

Vibriosis is a leading cause of cattle abortion and infertility, costing the industry $21 million

a year (Lane et al, 2015). The condition is spread by mating infected bulls to susceptible cows

and is found in all states of Australia. It was particularly widespread in NSW in the 1990s

with research revealing 46% of beef cattle with infertility had vibriosis (Hum, 2007).

For an infected female herd, abortion rates are around 12%, conception rates can drop by

50% and permanent infertility can increase by 11%. There is a large financial loss for

farmers, particularly in the first year of infection where gross margins can be reduced by as

much as 65% (Hum, 2007). Once the disease becomes established in a herd, gross margins

have been estimated to be 36% below those of uninfected herds. There are limited

preventative methods against vibriosis in cattle herds. Vaccination of bulls costs on average

$12.50/year including labour to administer, however its efficacy is not clear. McGowan et al

(2014) reported that 68% of north Australian cattle enterprises vaccinated bulls against

vibriosis.

Clostridial diseases

Clostridial diseases are caused by bacteria of the genus Clostridium. Clostridia are

widespread in the environment and are normally found in soil and faeces. The main

clostridial diseases of relevance to cattle in Australia include Tetanus, Malignant Oedema,

Blackleg, Enterotoxaemia and Black disease (MLA, 2015). Routine vaccination of young and

susceptible cattle with a ‘5-in-1’ vaccine is the main measure adopted to control these

diseases in cattle. It is also recommended that the dosage and administration of the 5-in-1

vaccine involves an initial dose followed by a second dose four to six weeks later along with

annual boosters being required to maintain immunity against black disease and malignant

oedema (Zoetis, 2015). The disease is primarily distributed in southern farming regions of the

country and is an inherent risk to all cattle enterprises. Cost estimates of the economic impact

of clostridial diseases are concentrated on southern regions at $6.7 million a year, with $2

million due to prevention costs and $4.7 million due to production losses (Lane et al, 2015).

Sheep diseases and health

There have been various estimates of annual economic costs of sheep diseases over recent

decades. Most studies have concluded that the largest cost for a disease or animal health issue

in the Australian sheep industry is the cost associated with internal parasites (see Table 6 and

Figure 4).

Table 16: Annual costs of diseases and health issues in the Australian sheep industry

Disease National economic cost (million)

2006 (Sackett et al) 2015 (GHD Pty Ltd)

Internal parasites (e.g. worms) $369 $436

Flystrike $280 $173

Lice $123 $81*

Footrot $18 $32.3

Ovine Johne’s Disease $4 $35

*the reduction in cost of lice is consistent with reduced sheep numbers in Australia.


Figure 61: Annual costs of diseases and health in the Australian sheep industry

Source: Sacket el al (2006)

Internal parasites

Internal parasites are considered to be the most important livestock disease of the Australian

sheep industry. The value of lost production due to common internal parasites such as

Barber's pole worm (Haemonchus contortus), Black scour worm (Trichostrongylus

colubriformas), Small brown stomach worm (Ostertagia spp) and Liver fluke (Fasciola

hepatica) has been estimated to be over $341 million per year, while the cost of drenches and

other prevention methods are estimated to exceed $93 million per year (see Table 7).

Table 17: Annual cost of internal parasites in sheep


Over time, there has been a range of estimates of the economic impact of internal parasites

(McLeod 1995 and Sackett et al 2006). All studies ranked gastro-intestinal parasites as the

most costly animal health disease to the Australian sheep industry, and agreed the largest

costs were attributed to loss of production rather than prevention or treatment costs. Another

threat in high rainfall areas is the accumulation of ‘dag’ on breech wool. In addition to direct

costs associated with crutching, dag is also a major risk factor for breech strike in these

regions (Tyrell et al, 2014). However, modelling the impact of internal parasites is

problematic as the prevalence of many of the parasites is correlated with annual rainfall

patterns, which results in large variations of incidences from year-to-year.

A major challenge associated with internal parasite control in sheep is the increasing

resistance of worm populations to available treatment products (see Table 8). A research

report by the NSW Department of Agriculture (2011) identified that for some of the more

common sheep drenches, more than 90% of surveyed sheep farms had resistant worm

populations present. Research concluded that the lack of availability of effective new

drenches was a major factor contributing to increases in the prevalence of resistant internal

parasite populations. However, in recent years there have been two new drenches developed

for treating internal parasites; (1) monepantel which was introduced in 2010 and (2) the

active ingredient derquantel combined with abamectin which was submitted for chemical

registration in Australia in 2013 (Playford et al 2014). Notwithstanding, Playford et al (2014)

argued that Australian sheep producers were likely to continue to rely heavily on the older

classes of drench for some years to come.

Category National economic cost

(million)

Treatment $0

Prevention $93.77

Production losses $341.89

Total $435.92

Table 18: Prevalence of resistant worm populations in sheep flocks

Drench or drench group Prevalence of resistance

Benzimidazole

(BZ, ‘white’)

Approximately 90% of properties.

Levamisole

(LEV, ‘clear’)

Approximately 80% of properties (resistant ‘scour’

worms); resistance no longer rare in Haemonchus.

BZ + LEV combination Approximately 60% of properties (resistant ‘scour’

worms).

Macrocyclic lactone

(ML, ‘-ectin); Avermectins

(ivermectin, abamectin)

and milbemycins

(moxidectin)

No common. 70% of sheep farms in WA have ML

(ivermectin)-resistant Teladorsagia (Ostertagia). ML

(ivermectin)-resistant Haemonchus in northern NSW and

southern Queensland are common (70+% of farms;

possibly 30+% of farms in parts of southern NSW and

other non-seasonal to winter rainfall areas of south-eastern

Australia.

Napthalophos Confirmed resistance rare. Two recorded cases in Australia

(goats, Queensland) – Green et al (1981) (Haemonchus), Le

Jambre et al (2005) (Trichostrongylus).

Closantel Resistance in Haemonchus is common (80+% of farms in

some areas) in northern NSW and south east Queensland.

Many isolates are also ML-resistant. Small number of

closantel-resistant strains of liver fluke in Australia.

Triclabendazole Small number of resistant strains of liver fluke in Australia.

Source: NSW Department of Agriculture, (2011)

Flystrike

Flystrike is a major problem for the Australian sheep industry, with wool producing flocks

commonly being most affected. A flystrike incidence can be a result of integrated effects of

fly abundance, weather variables and sheep susceptibility. However, these effects can be

reduced through management practices such as shearing, crutching and jetting (Wardhaugh et

al 2001). Weather conditions associated with moisture and warmth with prolonged wet

conditions with susceptible sheep often results in a flystrike wave across the sheep flock.

Recent assessments estimate that all forms of flystrike result in an economic loss of $173

million to the Australian sheep industry each year (see Table 10). This consisted of $105

million in production losses and $57 million in prevention costs. Sackett et al (2006) found

the most costly flystrike to be breech strike representing the greatest loss followed by body

strike and then pizzle strike.

Table 19: Annual costs of all forms of flystrike in sheep


In the late 1980s, it was estimated that around three million sheep per year died as a result of

flystrike in Australia (Wardhaugh and Morton, 1990) while many more were affected by non-

fatal strikes, and suffered some loss of production as a consequence. Wardhaugh et al (2001)

discussed the results of a study at Inverell during 1990/91 which estimated 0.34% of a sheep

flock surveyed was effected by flystrike, but the level of incidence increased to 0.59% of the

flock when comparing the actual number of sheep that were considered susceptible. The

variation in some estimates is also due to the correlation between climatic conditions in

individual years and the diseases prevalence.

The main preventative measure for flystrike is the use of chemical treatments applied to the

wool. These chemicals are routinely used in conjunction with specific animal husbandry

practices (such as lamb marking and shearing), and also applied to sheep during periods when

the risk of flystrike is high. As is the case for internal parasites, the increase in the resistance

of fly populations to commonly used chemicals is a growing challenge. Table 9 lists the

insecticide classes where resistance has been detected in Australian sheep blowfly

populations.

Category National economic cost (million)

Treatment $11.34

Prevention $57.30


Total $173.17

Table 20: Insecticides and resistance development in Australian sheep blowfly populations

Insecticide class Examples of

insecticides in

this class

Year

introduced

for use on

sheep

Year

resistance

detected

in blowfly

Practical effect of resistance

Organochlorine

(OCs)

Aldrin, Dieldrin,

BHC, DDT

1946-1958 1957 Flystrike protection completely

lost. OCs were banned because

of residues in meat.

Carbamate Butacarb 1966-1967 1967 Product withdrawn in 1967.

Cross resistance to Ops and

probably benzoyl phenyl ureas.

Organophosphate

(OPs)

Diazinon,

Chlorfenvinphos,

Fenthionethyl,

Fenchlorvos,

Carbophenothion,

Malathion,

Trichlorfon

1957-some

still

available

1965 Flystrike protection reduced

from approximately 18 weeks

to only 2-4 weeks.

Effectiveness of ‘fly oil’ type

flystrike dressings greatly

diminished.

Benzoylphenyl

ureas

Diflubenzuron,

Triflumuron

1993 2001 Flystrike protection completely

lost. Products withdrawn from

use as flystrike preventatives. Source: Sheep CRC, 2010

A range of different management options are also effective in reducing the risk of flystrike,

including internal parasite control to reduce scouring, and strategic timing of crutching and

shearing. There has also been an increased focus on genetic selection of sheep that are less

susceptible to flystrike as well as careful selection of rams with low wrinkle and low dag

scores in the Australian Sheep Breeding Values (Sheep CRC, 2014).

One commonly used measure to reduce flystrike risk is the practice of cutting away wool

bearing skin from the breech areas of sheep – referred to as mulesing. The mulesing

operation, predominantly carried out at lamb marking, results in wound sites on lambs that

rapidly heal and result in bare skin which minimises the retention of fly-attracting faeces in

the sheep’s wool.

There has been increased criticism of mulesing in Australia since the early 2000’s, largely

because the operation initially results in a bloody and unsightly wound site on the breech of

treated lambs. Despite animal rights organisations campaigning against the practice, the

industry still advocates that mulesing remains the most effective practical way to reduce the

risk of flystrike in sheep. Even with the widespread use of this practice, there is still a

significant loss of wool and meat production each year due to flystrike.

Research is continuing into alternatives for preventing flystrike including vaccines, clips that

mimic the effect of the mules operation, needleless intradermal injections and the use of

genetically resistant sheep (RSPCA 2011). Integrated Pest Management (IPM) is also an

approach to controlling flystrike which includes four main elements. These elements include

selective and effective use of chemicals, management options such as matching

shearing/crutching with increased fly activity, genetic improvement by selecting sheep for

resistance of fleece rot and less wrinkle and utilising the blowfly life cycle such as

monitoring blowfly populations with fly traps (Joshua & Turnbull 2012).

Lice

Lice are estimated to cost the Australian sheep industry $81 million yearly (see Table12). A

recent survey (Reeve et al, 2006) indicated that since 2011, 23% of sheep producers reported

seeing live lice in their flocks, while 27% reported some sheep rubbing and 54% reported no

evidence of lice in their flock. Compared to current conditions, the estimated cost of lice to

the Australian sheep industry was relatively higher at $123 million a year (Sackett et al,

2006). The reduction in annual costs to $81 million is consistent with the decrease in sheep

numbers in Australia and does not necessarily indicate a marked improvement in lice control.

Table 21: Annual costs of lice in sheep


Lice have been controlled for most of the last century almost exclusively by the use of

chemicals and regulatory controls over the movement of sheep from infected flocks.

However in response to emerging concerns about chemical residues in wool and meat,

occupational health and safety concerns associated with chemical use, the development of

resistance and continuing cost of production pressures many woolgrowers are modifying their

lice control programs. Two changes have been noted; (1) a move away from routine annual

treatment to a treatment on detection regime and (2) the use of chemicals which constitute a

lower residue risk (James et al, 2001). Table 11 lists the different chemical groups used for

lice control and the level of risk for raw wool residues.


Treatment $3.77

Prevention $41.19


Total $81.08

Table 22: Chemicals registered to treat lice and flystrike

Chemical group Raw wool residue risk level

Organophosphate Low

Synthetic Pyrethroids High in long wool (>6 weeks after shearing)

Diflubenzuron, Triflumuron Medium in long wool (>6 weeks after

shearing)

Dicyclanil, Cyromazine Medium in long wool (>6 weeks after

shearing)

Spinosyn Low

Macrocyclic Lactones Low

Magnesium Fluorosilicate Low

Neonicotinoid Low

Source: Joshua & Turnbull (2012)

The common range of treatment methods used in cost estimations vary from off-shears back

lining, short wool dip and long wool back lining (Lane et al 2015). The average treatment

cost is approximately $1.42/adult, while average prevention costs are approximately

$0.85/adult (Liceboss, 2014).

Footrot

Footrot is a contagious bacterial disease caused by the organism Dichelobacter nodosus in

association with a number of other bacteria. Infection can cause varying degrees of damage to

the horn of the foot leading to lameness and significant loss of body weight and wool

production in affected animals.

There have been limited recent studies that have assessed the economic impact of footrot on

the Australian sheep industry. Modelling and accurate information about the incidence of

infected flocks is difficult to obtain as the disease is under-reported due to potential

regulatory restrictions, and the correlation between the incidence of this disease and annual

rainfall means that incidence varies annually. The extended droughts of the first decade of the

2000s undoubtedly reduced the incidence of footrot, but this has likely reverted over recent

years, and especially years with wetter-than-normal summers in southern Australia. A

common treatment for footrot is to stand sheep in footbaths containing zinc sulfate or

formalin, although severe case require foot paring and topical treatment (DEPI 2009).

It has long been recognised that the presence of footrot can have a significant effect on sheep

bodyweight, wool quality, fleece weight, and reproduction performance (Gregory 1939,

Beveridge 1941, Marshall et al 1991). Allworth (1990) estimated the cost of footrot in an

infected merino flock, exercising control over the infection and vaccinating all sheep twice,

to be $9.90 per head. Sackett et al (2006) calculated live to cost the Australian sheep industry

$123 million yearly, with around 68% ($84 million) due to increased costs associated with

chemicals and labour for treatment. More recently however, the national economic cost has

been estimated to be just over $44.38 million per year (see Table 13). This consisted of

virulent footrot in sheep estimated to be $32.28 million and benign footrot cases, which

estimated to cost the industry $12.1 million a year.

Table 23: Annual economic cost of footrot in sheep


Sackett et al (2006) estimated that economic costs differ between flocks in which the disease

is endemic, and flocks in which the disease is newly introduced. In disease-free flocks where

the disease is newly introduced, the spread of disease can be very rapid and the impact on the

sheep flock can be quite high. Alternatively, in flocks where the disease is endemic and

regular treatment is implemented, the costs can be quite low (see Figure 5). Commercial

footrot vaccines are no longer available in NSW, however MLA is currently funding a

research project to develop a new vaccine that will protect against all Australian strains of

virulent footrot (Allan, 2014).

Figure 62: Economic loss due to footrot in Australian sheep in 2006.


Category National economic cost

(million)

Virulent $32.28

Benign $12.10

Total cost $44.38

Ovine Johne’s Disease (OJD)

OJD is an incurable, infectious wasting disease of sheep caused by the sheep strain of the

Mycobacterium paratuberculosis bacterium which leads to the intestinal wall thickening,

resulting in reduced ability to absorb nutrients.

OJD infection has been estimated to result in an average 6.4% reduction in expected farm

gross margin, for affected sheep farms (MLA, 2005). Research concluded that the average

annual economic loss due to OJD infection on farms was $7.68 per DSE (dry sheep

equivalent) or $65.92 per hectare. These figures represent the cost of premature sheep deaths,

and lost wool and lamb production. There was substantial variation between farms, with

some properties losing as much as $244.80 per hectare (MLA, 2005).

These estimations do not account for variable input costs and trading restrictions so the real

cost of the disease may be considerably higher, depending on the enterprise. It is not only

sheep farmers that experience this financial burden; the Australian Meat Processor

Corporation (AMPC) estimated that the total cost of OJD to the processing industry as a

whole is $4.41 million a year.

The management of OJD in the sheep industry has been a controversial issue for some time.

Initial control strategies involved zoning and movement restrictions for affected flocks,

although these resulted in significant financial impacts for stud and breeding flocks, which

many considered out of proportion to the overall impact of the disease. The approach has now

been modified in some states. In particular, the availability of the Gudair vaccine has

provided the owners of affected flocks with improved management options (although it does

not result in the elimination of the disease). However, the Gudair vaccine does involve some

occupational health and safety issues for sheep farm businesses. In humans, accidental self-

injection with Gudair vaccine may result in a severe, intense and persistent granulomatous

reaction at the site of the injury, and therefore the vaccine should be used with caution to

avoid accidental self-injection (Zoetis, 2015).

On-field trials of the Gudair vaccination proved to reduce sheep mortalities due to OJD by

90% and delayed faecal shedding for the first year post-vaccination (Reddacliff et al, 2006).

This research underpins the important role Gudair has played in the adoption of OJD

management strategies.

Goat diseases and health

The Australian goat industry is continuing to grow and evolve to meet increasing global

demand for goat meat, dairy products and fibre (GICA, 2015). Many farmers co-graze their

sheep and goats which is often a risk factor with diseases as they can be easily transmitted

between animals.

Table 24: Annual costs for major animal health issues in the goat industry


Internal parasites

The most economically important internal parasites in high summer rainfall zones are

predominately barber’s pole worm and the nodule worm. In areas that typically receive

winter rainfall, the most common internal parasites for goats include the brown stomach

worm and the scour worm. The economic impact of internal parasites for the goat industry is

estimated to be $2.54 million annually (see Table 15). A majority of the economic cost

associated with internal parasites is due to the impacts related to production losses ($1.83

million), although prevention costs are also substantial (Lane et al, 2015). Goats are often co-

grazed with sheep but tend to carry heavier worm burdens and suffer more pathology than

sheep (Sangster 1990). Prevention methods involve annual drenching at $1.50 per head a

year, including cost of drench and labour.

Table 25: Annual economic cost of internal parasites in goats


Enterotoxaemia

Enterotoxaemia is a clostridial disease manifesting as diarrhoea and/or rapid death. The

economic cost of enterotoxaemia in goats in Australia is estimated to be $0.35 million, with

97% ($0.34 million) of these costs due to prevention methods. Vaccinations for goats are

required more frequently than sheep, and some vaccine site reactions develop into abscesses.

Disease National economic cost

(million)

Internal parasites (e.g. barber’s pole worm) $2.54

Enterotoxaemia $0.35

Lice $0.34

Pregnancy toxaemia $0.10

Caseous lymphadenitis $0.11


Treatment $0

Prevention $0.71

Production $1.83

Total $2.54

However, these abscesses rarely affect carcase trim or causes hide damage. It is estimated

that 95% of herds are vaccinated using ‘5-in-1’ costing around $0.30 per head (Lane et al

2015).

Lice

The most common external parasite for goats are lice, causing the animal to itch and rub.

These actions can be particularly damaging in goats that produce fibre with a significant

reduction in mohair and cashmere reducing the quality and market value of the fibre (MLA,

2007). Lice causes an estimated $0.34 million a year to the goat industry, however there is

little data on the prevalence or robust economic impact of lice in goats (Lane et al 2015).

Similar to sheep prevention methods, goat farmers use a wide range of chemicals such as

backline pour-ons, injection, spray, dip and dusting. There may be other additional costs

associated with these treatments to meet live export, interstate movement or show entry

protocols even if goats are free of lice (Lyndal-Murphy et al, 2007). The average prevention

costs are estimated to be $1 per goat, which is slightly higher than sheep.

Pig diseases and health

Pig meat is one of the most important protein sources for the Asian region, where 65% of the

world pig population is located (OIE, 2012). By contrast, pig meat has not traditionally been

as important in the average Australian diet, although its consumption is growing relative to

red meats such as beef and sheepmeats.

The pig industry in Australia is relatively small compared to other livestock industries and

has traditionally had a domestic rather than an export focus, although this is beginning to

change. One of the great strengths of the Australian pig industry is the relatively disease-free

status of the national herd, which enables Australia to export high-quality and disease-free

pork directly into high value markets.

Swine dysentery

Swine dysentery has long been recognised as a major cause of production loss for pig

industries around the world. Swine dysentery is the most costly disease to pig producers and

the industry (APL, 2012). Swine dysentery (SD), is caused by a spirochaetal bacterium called

Brachyspira hyodysenteriae. This organism causes a severe inflammation of the large

intestine with a bloody mucous diarrhoea (i.e. dysentery).

The disease is estimated to reduce net revenue by more than $50 per sow per year. These

losses are the result of decreased growth, decreased feed conversion efficiency, increased

variation in carcass size and backfat thickness P2 position (6-8 cm away from body midline

at the last rib level), increased deaths and veterinary costs (mainly medication and

vaccination). Disease treatment mainly involves the use of antibiotics that cost $0.75 per

40kg grower pig. The effectiveness of this treatment protocol is currently being review by

global regulatory authorities due to the emergence of antimicrobial resistance (Spirogene Pty

Ltd, 2010).

Pig mange

Pigs are susceptible to infection by a range of different external parasites including mange

mites and lice. Infected animals have irritated skin which they rub, and which can result in

production losses as well as damage to piggery facilities. Prevalence of this problem is

generally higher in free-range pig herds that are potentially exposed to infected wildlife.

Production losses from uncontrolled mange mite infestation has been estimated to be between

$20 and $40 per annum per animal. Losses include reduced animal productivity, as well as

potential penalties imposed by processors due to poor skin quality post-slaughter.

There are a range of different injectable and topical treatments available to manage the

problem, although they generally require a whole-herd approach in order to be successful.

Enzootic pneumonia

Enzootic pneumonia, caused by infection by the Mycoplasma hyopneumoniae organism

(MH) is an economically important respiratory disease for the Australian pig industry. The

most common effects of the disease are an adverse impact on food conversion efficiency and

weight gain, and often high morbidity rates. MH was present in 86.5% of Australian

piggeries prior to 2001 and was identified as a disease that was eradicable from pig herds

(Cutler et al. 2001). MH is commonly contracted from feral and wild pigs, however, the rate

of MH infection of feral pig populations has not been studied in Australia.

Although there have been no estimates made about the cost of MH to Australian pig

producers, vaccinating pigs for MH at four and 13 - 17 days of age has been shown to

increase profitability by approximately $5.13 per pig (Holyoake and Callinan, 2005). The

overall cost for Australian pig producers would not be dissimilar to that of the UK where

surveys have identified that the disease reduces growth by 40gm/day, resulting in additional

feed costs of £1.23 (AUD $2.39) per day (White, 2015).

Poultry diseases

The poultry industry has been growing in importance in Australia, as poultry meat

consumption has steadily increased at the expense of other meats. Despite the size and

growth of the industry, it is still predominantly a domestic industry with little or no exports

occurring.

As is the case with the pig industry, the intensive nature of most poultry production facilities

in Australia limits exposure to, and incidence of diseases in Australian poultry flocks. This is

potentially changing as consumers and markets increasingly demand eggs and chicken-meat

that has been produced in more natural and less intensive production systems.

The two most serious disease risk for the Australian poultry industry are Newcastle Disease

and avain influenza. These two diseases are not present in commerical poultry in Australia,

however the poultry industry is at risk from their introduction.

Like many other meats, consumer demand for organic or ‘free-range’ particularly with

poultry has caused big changes in the production of chicken meat. Certified organic chicken

meat means that the birds cannot be treated with routine vaccinations. There are some

exceptions, such as where treatment is required by law or disease cannot be controlled with

organic treatment.

Newcastle Disease

Newcastle Disease is probably one of the most important diseases in poultry in both

commercial and backyard systems. There have been a number of outbreaks of Newcastle

Disease in Australia, with the most recent being the 1998 detection in Peats Ridge, and 2002

outbreak in Sydney Basin, Tamworth areas and Meredith in Victoria. In each instance, the

response to control and eradicate the disease was to slaughter out the affected flocks, at

considerable cost to governments and poultry farmers.

There have been no outbreaks of Newcastle Disease in Australia since compulsory

vaccination was introduced in 2002, under a national plan to eradicate the disease. Over the

last few years there have been moves to gradually reduce the requirement for flock

vaccination in regions that are less susceptible to this disease.

Marek’s Disease

Marek’s Disease remains one of the most prevelant diseases of commerical poultry farms

worldwide with an estimated economic impact of $US1-2 billion (Morrow and Fehler, 2004).

After a prolonged outbreak of Marek’s Disease in eastern Australia from 1991-1996, new

vaccines were introduced to immunize layer and breeder chickens. Although these

vaccinations reduced infection, the disease remains a serious economic threat mainly due to

the periodic apperance of new strains of Marek’s Disease against which existing vaccines

produce only suboptimal protection (RIRDC, 2004). Intially, vaccinations provided a 97%

protection rate under field conditions, however now many formerly successful vaccine

programs seem to be reducing in effectiveness.

10. The potential cost of future foreseeable diseases

The potential cost of foreseeable diseases in farmed livestock industries of the Australian

agriculture sector are significant and pose a high risk factor for the future viability of each

industry. Australian livestock industries have historically experienced a low level of disease

outbreaks when compared with some livestock industries based overseas, many of which

have been severely impacted by disease outbreaks over the past two decades, as the following

figure highlights.

Figure 63: Economic impact of selected diseases in different regions of the world

Source: Newcomb (2004)

Some economic modelling has been carried out to estimate the potential cost of some of the

more important livestock diseases that could conceivably occur in Australia. The projected

costs of three of the major potential disease risks are displayed in Table 16, below.

Table 26: Economic costs of potential disease outbreaks in Australian livestock industries

Disease Total annual cost of outbreak

Foot and Mouth Disease $7,100 million

Classical Swine Flu $57 million

Avian Influenza (Global pandemic) 6.8% reduction in GDP

Source: Department of Agriculture 2015, Animal Health Australia 2012, Buetre et al, 2006.

Foot and Mouth Disease (FMD)

Foot and Mouth Disease (FMD) is highly contagious and has the potential to have severe

economic consequences if it were to be introduced into Australia. There have been a number

of outbreaks in FMD-free countries that have had large socio-economic impacts. The 2001

outbreak in the UK caused losses of more than US$7 billion and a further significant

outbreak in 2007 added to that cost.

Table 27: Costs and duration of Foot and Mouth Disease outbreaks, UK.

Foot and Mouth Disease 2001 2007

Duration of the Outbreak 8 months 4 months

Animals Depopulated 6 million 2.160

Farms Depopulated 120,300 Less than 10

Suicides 60 0

Extent of Outbreak Widespread Localised

Cost in US dollars 6.9 billion 200 million

Time to regain normalisation of trade

following eradication of disease 18 months 2 months

Source: DEFRA (2010)

In 2010, both Japan and the Republic of Korea experienced large FMD outbreaks which

required extensive programs to control. The 2010–2011 Korean outbreak is estimated to have

cost the government about $US2.7 billion.

Considering the relatively similar agricultural regulations and practices in many of these

countries, an outbreak of FMD would undoubtedly have equally devastating effects. Australia

estimates that a small FMD outbreak, controlled in 3 months, could cost around $7.1 billion,

while a large 12 month outbreak would cost $16 billion, depending on the response strategy

used (Department of Agriculture, 2015).

Figure 64: Economic impacts from a Foot and Mouth Disease outbreak


There are likely to be a series of flow-on effects, as illustrated in the figure above. Over 10

years, minimal trade restrictions following a small outbreak would result in expected revenue

losses of around $6 billion, compared with losses of up to $52 billion with extended trade

restrictions following a large outbreak.

On average, ABARES predicted compensation costs would vary between $6.3 million and

$60.2 million, depending on the size and location of the outbreak and control strategy

employed to eradicate the disease.

Table 28: Total compensation costs for a Foot and Mouth Disease outbreak.


Clearly, the scale of the cost and impacts of an FMD outbreak in Australia would have the

potential to dramatically reshape the entire livestock industries and their associated service

sectors, and are the reason Australian governments expend considerable efforts on prevention

and preparedness strategies. The investment in prevention and preparedness is an essential

national insurance policy against such sizable potential losses.

Bovine Spongiform Encephalopathy (BSE or Mad Cow Disease)

BSE is a fatal nervous disease of cattle that is associated with the accumulation of abnormal

proteins, called prions, in the brain. The disease can be transferred to humans through

ingestion of food that has been contaminated through contact with the brain, spinal cord or

intestines of infected animals. In humans, it is known as new variant Creutzfeldt–Jakob

disease, which has resulted in over 200 deaths in the UK over the past decade.

Australia has been fortunate to have no recorded cases of BSE. Currently there is no

treatment or vaccines available to prevent or cure BSE in infected cattle.

Of the 188,686 cases recorded worldwide over the last 22 years, 97.5% (183,895) have been

in the UK. The epidemic peaked in 1993 when almost 1,000 new cases per week were

confirmed. This severely affected the UK economy, costing over $30 billion in financial

losses. Since then, around 5,000 cases of BSE have been diagnosed in other countries.

Significant numbers of cases have been recorded in Ireland, Portugal, France, Switzerland,

Germany, Spain, Italy and Belgium.

Several other European countries have recorded very small numbers of BSE cases. The only

countries outside Europe that have reported more than one or two BSE cases have been Japan

(34 cases), Canada (18 cases) and the USA (3 cases).

Although there has been no economic analysis of the impact of a BSE outbreak in Australia,

it is not unreasonable to assume it would be significant, given the experience of the US beef

industry. The disease was detected in the US in 2004, with the effect that US beef was

banned from a range of export markets. Considering the US only exports 10% of beef

production, compared to Australia where two thirds of production is exported, Australian

costs would be relatively greater than those incurred by the US beef industry, as shown in the

following figure.

Figure 65: US bovine-related export trends 2002 –2008

Source: USDA ERS (2015)

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

2002 2003 2004 2005 2006 2007 2008

(US

$ b

illi

on)

Value of US beef exports

BSE occurred

on Dec. 23, 2003

Australia’s restrictions on importing animals to Australia help protect livestock industries

from transmissible spongiform encephalopathies (TSEs), including BSE and scrapie in sheep.

The National TSE Surveillance Program is managed by Animal Health Australia with its

primary purpose to support trade by maintaining a surveillance system for TSEs that is

consistent with the OIE Terrestrial Animal Health Code. This program aims to assure all

countries that import cattle and sheep commodities that Australia remains free of these

diseases (Animal Health Australia, 2014).

Classical Swine Fever (CSF)

CSF is a highly contagious disease resulting in variable mortality rates and post-mortem

lesions which are not unique to CSF, thus making it a difficult disease to diagnose. According

to Animal Health Australia, outbreaks have occurred in Australia several times, however

most recently in 1943 and 1961 with the disease successfully eradicated in each case.

The 2012 AUSVETPLAN Disease Strategy for CSF assessed the potential economic impacts

of an outbreak on the Australian pork industry and its producers. It was concluded that an

outbreak of CSF in the Darling Downs area of southeast Queensland or an outbreak in

northern Victoria would result in at least a 28% loss in gross income for the regional pig

industry in these areas. An epidemic in either of these regions would cost, on average, $57

million or 9% of the annual gross income of the national pig industry. These losses would

increase substantially if the disease was to become endemic in either area.

There has been some research to assess the expected economic impact of CSF, Nipah virus

and porcine reproductive and respiratory syndrome disease on the pig industry of Australia

(Garner et al, 2001). Scenarios involving either an epidemic event, in which the outbreaks

were confined to selected regions and were eradicated, or an endemic situation, in which the

diseases became established in Australia, were analysed. Based only on loss of sales and

disposal costs, epidemics were projected to result in regional losses in income of the order of

$10 million to $30 million (16% - 37% of industry value) depending on disease and region. If

any of these diseases became established, opportunity losses in gross national pig income of

5%-11% per year would occur, with CSF the most serious of the three diseases.

Porcine Reproductive and Respiratory Syndrome (PRRS)

One of the most damaging diseases to pork industries around the world is porcine

reproductive and respiratory syndrome (PRRS). The total economic cost of PRRS to US

producers is estimated at US$664 million annually (Holtkamp et al, 2013). This disease is

endemic to almost every pork industry globally, including many which wish to export into

the Australian market. This poses a threat to any pig that may come in contact with uncooked

imported pork meat. Currently Australian pigs do not have PRRS and Australian Pork

Limited and pig producers are working hard to keep it that way.

Avian Influenza (bird flu)

Avian influenza (AI) is an infectious disease of birds caused by an influenza virus. The AI

virus is not the same as the human influenza virus that normally causes seasonal influenza in

humans, particularly in winter. There are many different subtypes of the AI virus and only

rarely do any of these subtypes affect humans. There have been a number of outbreaks in

Australia that have been successfully eradicated. One particular sub-type, H5N1, is

particularly virulent and has also caused illness and deaths in humans in overseas locations.

There were major outbreaks of AI in Asia in 2003 and 2004. Authorities reacted by

eradicating millions of infected birds, which had substantial economic ramifications in

countries such as Vietnam, Thailand and China. Overall, the FAO estimated the H5N1 avian

flu led to the death of more than 200 million birds worldwide, resulting in economic losses of

over $20 billion (Harris, 2006).

There is a continuing concern of the possible emergence of bird flu in Australia and

appropriate responses to such a pandemic have been formulated. ABARES modelled the

potential economic impact of a global pandemic of the virulent strain of AI, which also

became established in Australia. A medium level outbreak of the virulent form of bird flu in

Australia (in conjunction with a global pandemic) was projected to result in an immediate

6.8% reduction in national GDP, and would involve an extended recovery period (Buetre et

al, 2006).

11. Current Australian expenditure on livestock health

The total annual expenditure by Australian livestock farmers on animal health and veterinary

medicines is estimated to be approximately $1 billion, which is a substantial cost for a sector

with annual production valued at approximately $20 billion (ABARES, 2014). The total

annual expenditure on animal health and veterinary medicines also compares to other farm

input items such as fertiliser and crop chemicals (that are used in many different agriculture

industries not just livestock) which have annual costs of $2.1 billion and $1.5 billion,

respectively (ABARES, 2014). Furthermore, the cost of animal health and veterinary

medicines is only part of the total cost of disease and animal health deficiencies for the

sector, and does not include the cost of production losses.

There has been some economic modelling carried out to more fully estimate the total costs of

livestock diseases to the Australian economy (see Table 19). Research has highlighted that a

significant amount of the costs associated with livestock diseases are due to farmers not being

able to control diseases using current technology (see Table 20). Farmers may be unable to

control disease for two possible reasons – either currently available technologies and

remedies are ineffective or inadequately implemented, or they are simply not economical to

implement.

Table 29: Annual costs of major diseases, pests and health issues in Australia.

Livestock industry National economic cost of major diseases and

animal health issues (2013/14)

Beef cattle $535.2m

Sheep $757.3

Goat $3.44m


Table 30: Cattle disease where available technology would reduce annual costs

Disease Estimated cost due to failure to

implement known management

strategies

Estimated cost due to not being able

to control disease using current

technology

Bloat $10.8m 23% $36.6m 77%

Buffalo fly $20.8m 27% $57.4m 73%

Tick Fever $8.9m 34% $17.1m 66%

Internal

parasites $4.8m 12% $33.8m 88%

Feedlot BRD $15.7m 39% $25m 61%


The cost of bloat in beef herds located in high-risk regions where managers do not implement

any control measures is estimated to be $17.69 per head (Sackett, 2006). In comparison, the

cost in the same herd where prevention strategies have been implemented was estimated to be

$11.72 per head per year. If farmers in high-risk areas adopted a recommended prevention

strategy, such as bloat capsules, it is estimated that the national cost of bloat would be

reduced by $10.8 million, a 23% cost reduction.

This is not necessarily the case for all livestock diseases. For example, cost-benefit estimates

for controlling a sheep lice infestation indicate it is not always economical to implement

treatment. Sackett et al (2006) argued that the lack of lice treatment in flocks was not due to a

lack of industry knowledge of available preventable systems, but rather that the overall

benefit achieved from treatment is often not financially justifiable for sheep producers.

In some instances, such treatment may be justified by an event that may have increased the

risk of lice so that treatment is used as a means of managing a possible outbreak. It should

also be noted that the withdrawal of the effective chemical diazinon due to occupational

health and safety issues from the market in 2009 and its replacement with less effective

products may have contributed to the increase in prevalence reported at the time (Lane et al,

2015).

Similarly, although cattle ticks are a manageable disease, management procedures are

extremely costly for cattle farmers. Research estimated that $16.8 million was spent on

tickicides nationally by beef producers in 2003 (Playford, 2005). Over the last decade, the

method of administration of tickicides has changed considerably, with a producer preference

now being for ‘pour-ons’ due to convenience once equipment is available. Playford (2005)

concluded however that the costs for these methods were approximately ten times more than

traditional dipping of cattle.

The cost of controlling an infestation of sheep lice in a flock is ranges from $7.14 per head in

high rainfall and severe infestations, to $1.44 per head in pastoral and controlled regions. The

national cost of controlling and preventing sheep lice is estimated to be $45 million. These

cost estimates account for chemical treatments and labour, as well as labour for general

management associated with lice such as monitoring and fence maintenance.

The Australian goat industry has similar health issues to those of the sheep industry. Internal

parasites and their associated prevention and treatment methods cost the goat industry $0.71

million, mostly in the form of drenches that are estimated to cost $1.50/goat a year (Lane et

al, 2015). For enterotoxaemia, almost 100% of the annual costs are due to prevention costs,

totalling $0.34 million a year to the goat industry. Additionally, lice prevention methods on

average cost $1 per goat, totalling $0.23 million a year to the goat industry.

Animal health products that are currently restricted for use in Australia

Australian biosecurity, food safety and animal health systems have meant that the nation has

experienced relatively few major disease outbreaks, and virtually no zoonotic disease

outbreaks. It has also meant that the Australian livestock industries enjoy relatively

widespread access to international markets, on which many of these sectors depend.

However, the strict product registration processes and relatively high costs associated with

such processes mean that some animal health products that are available to livestock farmers

internationally are not available in Australia. This has the potential to reduce the

competitiveness of Australian livestock industries relative to the livestock industries located

in other nations.

Three livestock production technologies in particular that are widely utilised internationally

but not utilised at all, or to a much more limited extent, are hormonal growth promotants

(HGPs), antibiotics, and bovine somatotropin (rBST).

Hormonal Growth Promotants (HGPs)

HGPs increase the feed conversion efficiencies and growth rates of treated cattle by between

15% and 30% in the case of grain-fed cattle, and by 5% and 15% in pasture fed cattle (MLA,

2010). They are delivered to cattle in the form of a slow-release injectable pellet. The

hormones they contain are identical to the normal hormones produced by cattle, and are

undetectable. HGPs have been used in Australia since 1979, and are widely used throughout

the world (MLA, 2010). The EU has imposed a ban on the importation of beef produced with

HGPs, although the World Trade Organisation (WTO) found this ban to be not supportable

on the basis of available science. The United Nations Food and Agriculture Organisation

(FAO), the US Departments of health and agriculture and the Australian Department of

Health have all declared meat produced with HGPs to be safe for human consumption.

Despite the available science, the EU has maintained its ban on imports of beef produced

using HGPs, and Australian-based Coles supermarkets have also imposed a ban on the use of

HGPs in beef marketed by that company. In imposing the ban on HGPs, Coles claims it is

responding to the wishes of consumers.

Antibiotics

The routine use of antibiotics as a feed additive for intensively-farmed livestock has been

found to improve livestock productivity, but the practice is viewed with some concern by

health authorities because of the fear that widespread use of antibiotics will accelerate the

emergence of antibiotic-resistant infectious species that can cause disease in humans. There is

widespread use of antibiotics in livestock production systems in the USA and other nations,

although their use has been much more tightly regulated in Australia.

Australian livestock industries such as the pig and chicken industries are only allowed to use

antibiotics that are not important for human health, and also restrict their use to situations

where treatment of an existing infection is required, or there is a specific situation where

antibiotic administration will prevent the outbreak of a specific disease. In the case of

antibiotics, careful regulation has meant that Australia has some of the lowest levels of

resistance in the world.

The US Food and Drug Administration (FDA) announced a program in 2012 to phase out

unsupervised drugs as feed additives and, on a voluntary basis, convert approved uses for

antibiotics to therapeutic use only, requiring veterinarian supervision of their use and

prescription.

12. Discussion and conclusions

The Australian livestock industries, including the beef cattle, dairy cattle, sheep, pig and

poultry industries, have an enviable record of freedom from many of the disease and pests

that impact on the livestock sectors of overseas nations. However, the maintenance of the

disease and pest status of the livestock industries depends heavily on Australian biosecurity

standards, and the continuing access the sector has to the full range of preventative and

curative animal health products.

Despite Australia’s livestock health and disease status, the livestock industries experience

significant annual economic costs associated with diseases and other animal health issues.

These costs are experienced in two ways – through reduced income due to productivity loss,

and through increased expenses for treatment and/or preventative measures. The extent of

these costs vary enormously by disease and by livestock species, and the best available

estimate is that the ‘normal’ total annual costs may be as high as $2 billion per year, almost

10% of the total value of annual production (ABARES, 2014).

These estimates are qualified by the fact that they rely on assumptions about the incidence

and prevalence of a disease within flocks or herds on individual farms, assumptions about

incidence and prevalence of disease between flocks or herds, and assumptions about the

likely trade or market responses to an outbreak of the disease in question.

There is obviously a significant margin for error in these estimates, as the current outbreak of

Avian Influenza in the USA has demonstrated. At the time this report was prepared, US

authorities were reporting that more than 40 million birds on almost 200 farms had been

slaughtered in an attempt to control the outbreak (USDA, 2015). This impact far exceeds the

impact of all previous outbreaks of the disease in the USA, and therefore any available

estimates of its likely cost.

The direct annual costs of livestock disease in Australia are able to be estimated more

accurately, based on industry statistics. In 2013, the direct cost of animal health products for

the treatment and/or prevention of pests and diseases in Australian livestock industries was

estimated to exceed $1 billion, with the majority of these costs incurred by the sheep and

cattle industries.

Compared to the sheep and cattle industries, the pig and poultry industries do not have the

same level of costs for preventing and treating animal health issues. However, these

industries are generally more intensive and when an outbreak of a disease or animal health

issue occurs there is a significant risk of an escalation in costs for treatment and/or

prevention.

There are a number of diseases that have the potential to impose significant costs on the

Australian livestock industries, if they became established in Australia. The maintenance of

biosecurity surveillance systems, and ensuring the continuing capacity of livestock industry

support services are critical to minimising this risk.

Australian livestock industries have a greater degree of exposure to export markets that many

national livestock industries, and hence are both exposed to more competition, but also

operate in markets that are more sensitive to animal disease incidence or risk.

This reinforces the need for Australian livestock industries to have good access to new or

emerging animal production technologies or products, and to retain a strong focus on the

capacity of the livestock disease and health system to optimise the management of livestock

in Australia.

The approach taken by some market participants, who have banned the use of specific

products and technologies despite their proven safety and the benefits they provide for

livestock producers, and despite these being endorsed by relevant authorities, is an

unfortunate and short-sighted approach.

This approach not only disadvantages livestock producers who are unable to access the

technologies or products to enhance the productivity of their livestock, but also acts as a

dampener on the research and development investment by both the private and public sectors

to develop these and new technologies. If there is a significant risk that supply chain

participants may decide to ban the use of a new technology, there is little point proceeding

with the R&D investment required to bring that product to the market.

The end result of this is that the potential productivity gains that the technology may have

brought to the industry are not realised, and Australian livestock industries are disadvantaged

relative to their international counterparts.

This is not to argue that the perceived needs of consumers should be ignored. Consumers

should be offered the opportunity to exercise choice about the production systems that are

utilised to produce the food they eat, but this can be achieved by product segregation and

identification systems, rather than blunt and clumsy bans.

This issue is becoming even more critical, given the need for Australian livestock products to

be positioned in higher value markets that demand the highest quality, safety and integrity

standards, while at the same time needing to compete with developing nation agricultural

exports that are produced with much lower costs of production.

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Appendix 1.

Table Australia’s status for OIE-listed diseases of terrestrial animals, 2013

Disease Status Date of last occurrence and notes

Multiple-species diseases

Anthrax Present Limited distribution

Aujeszky’s disease Free Never occurred

Bluetongue Viruses

Present Restricted to specific northern

areas of Australia; sentinel herd

and vector monitoring program

Brucellosis (Brucella abortus) Free Australia declared freedom in

1989

Brucellosis (B. melitensis) Free

Brucellosis (B. suis) Serological

evidence

Maintained in feral pigs in

northern Australia; rare

occurrence in domestic pigs

Crimean Congo haemorrhagic

fever

Free Never occurred

Echinococcosis/hydatidosis Present

Epizootic haemorrhagic disease Virus present Disease has not been reported

Equine encephalomyelitis

(eastern)

Free Never occurred

Foot-and-mouth disease Free 1872; officially recognised by the

OIE as free without vaccination

Heartwater Free Never occurred

Japanese encephalitis Serological evidence Detected annually in Torres Strait,

and on Cape York in 1998 and

2004

New World screw-worm fly

(Cochliomyia hominivorax)

Free Never occurred

Old World screw-worm fly

(Chrysomya bezziana)

Free Never occurred

Paratuberculosis Present National control /management

programs

Q fever Present

Rabies Free 1867

Rift Valley fever Free Never occurred

Rinderpest Free 1923; with the global eradication

of rinderpest finalised in 2011, all

countries are free

Surra (Trypanosoma evansi) Free Never occurred

Trichinellosis Not reported

Trichinella spiralis not present

T. pseudospiralis present in wildlife

Tularaemia Free Never occurred

Vesicular stomatitis Free Never occurred

West Nile fever Australian variants present A previously unknown Australian

strain of West Nile virus was

identified following an outbreak

of neurological disease in horses

in 2011. No cases were reported in

2013


Cattle diseases

Bovine anaplasmosis Present Restricted to northern areas of

Australia

Bovine babesiosis Present Restricted to northern areas of

Australia

Bovine genital campylobacteriosis Present

Bovine spongiform

encephalopathy

Free Never occurred; National

Transmissible Spongiform

Encephalopathies Freedom

Assurance Programs includes

surveillance; official OIE

‘negligible risk’ status

Bovine tuberculosis Free Australia declared freedom in

1997; last case in any species

(including free-living) reported in

2002

Bovine viral diarrhoea Present Bovine viral diarrhoea virus

(BVDV) 1 — present; BVDV-2

— never occurred

Contagious bovine

pleuropneumonia

Present 1967; Australia declared freedom

in 1973; officially recognised by

the OIE as free

Enzootic bovine leucosis Very low prevalence in beef cattle Australian dairy herd achieved

freedom from EBL on 31

December 2012

Haemorrhagic septicaemia Free Never occurred; strains of

Pasteurella multocida present, but

not the 6b or 6e strains that cause

haemorrhagic septicaemia

Infectious bovine

rhinotracheitis/infectious pustular

vulvovaginitis

Present Bovine herpesvirus (BHV) 1.2b

— present; BHV-1.1 and 1.2a —

never occurred

Lumpy skin disease Free Never occurred

Theileriosis Free Theileria parva and T. annulata

not present

Trichomonosis Present

Trypanosomosis (tsetse borne) Free Never occurred

Swine diseases

African swine fever Free Never occurred

Classical swine fever Free 1962

Nipah virus encephalitis Free Never occurred

Porcine cysticercosis Free Never occurred

Porcine reproductive and

respiratory syndrome

Free Never occurred

Swine vesicular disease Free Never occurred

Transmissible gastroenteritis Free Never occurred


Sheep and goats diseases

Caprine arthritis–encephalitis Present Voluntary accreditation schemes

exist

Contagious agalactia Not reported Mycoplasma agalactiae has been

isolated, but Australian strains do

not produce agalactia in sheep

Contagious caprine

pleuropneumonia

Free Never occurred

Enzootic abortion of ewes (ovine

chlamydiosis)

Not reported Never occurred

Maedi–visna Free Never occurred

Nairobi sheep disease Free Never occurred

Ovine epididymitis (Brucella ovis) Present Voluntary accreditation schemes

in all states

Peste des petits ruminants Free Never occurred

Salmonellosis (Salmonella

Abortusovis)

Free Never occurred; surveillance has

shown no evidence of infection in

sheep

Scrapie Free 1952

Sheep pox and goat pox Free Never occurred

Avian diseases

Avian chlamydiosis Present

Avian infectious bronchitis Present

Avian infectious laryngotracheitis Present

Avian mycoplasmosis

(Mycoplasma gallisepticum)

Present

Avian mycoplasmosis (M.

synoviae)

Present

Duck virus hepatitis Free Never occurred

Fowl typhoid Free 1952

Highly pathogenic avian influenza Free as of 21 February 2014 Australia achieved freedom from

HPAI on 20 March 2013,

following an outbreak in

November 2012. Two outbreaks

were reported to the OIE on 16

and 25 October 2013. Destruction,

decontamination and disinfection

were completed on 21 November

2013

Infectious bursal disease

(Gumboro disease)

Present Infectious bursal disease occurs in

a mild form; very virulent strains

not present

Low pathogenic notifiable avian

influenza (poultry)

Occasional reports An outbreak was reported to the

OIE on 8 March 2013; the

outbreak was resolved on 27 June

2013

Newcastle disease in poultry Lentogenic viruses present Virulent Newcastle disease last

occurred in poultry 2002b

Pullorum disease Not reported Last reported in 1992. Salmonella

Pullorum has been eradicated from

commercial chicken flocks

Turkey rhinotracheitis Free Never occurred

(Source: Animal Health Australia, 2014)

Australia’s status for other diseases of terrestrial animals that are reported to the OIE each

year, 2013

Disease Status Last occurrence

Actinomycosis Present

Avian encephalomyelitis Present

Avian leucosis Present

Avian salmonellosis (excluding

fowl typhoid and pullorum

disease)

Present

Avian spirochaetosis Present

Blackleg Present

Botulism Present

Caseous lymphadenitis Present

Coccidiosis Present

Contagious ophthalmia Present

Contagious pustular dermatitis Present

Distomatosis (liver fluke) Present Restricted distribution

Enterotoxaemia Present

Equine coital exanthema Present

Filariosis Present

Footrot Present Restricted distribution

Infectious coryza Present

Intestinal Salmonella infections Present

Listeriosis Present

Melioidosis Present

Nosemosis of bees Present Restricted distribution

Salmonellosis (Salmonella

Abortusequi)

Free Never reported

Sheep mange Free 1896

Strangles

Swine erysipelas Present

Toxoplasmosis Present

Ulcerative lymphangitis Free Never reported

Vibrionic dysentery Present

Warble fly infestation Free Never reported

Other clostridial infections Present

Other pasteurelloses Present

(Source: Animal Health Australia, 2014)

The economic importance of Australia's livestock industries and the ...

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