Hundreds of farmers and livestock companies are making plans to recover thousands of cattle from a pre-export isolation (PIE) farm near Tokoroa.
The move comes after Hamilton-based livestock exporter Genetic Development NZ (GDNZ) was forced to abandon a contract of 12,000 cattle to China when a livestock ship failed to arrive as planned.
In a memo to agents GDNZ managing director Dave Hayman advised that the livestock carrier he had contracted, the Al Kuwait, remained a “lame duck” and had not yet moved into dry dock.
Al Kuwait required repairs to a broken propeller and was not able to commit to coming to NZ even by the end of May.
“Hence, we cannot ship the cattle that are currently in the PEI isolation farm near Tokoroa.
“Your cattle are at this farm and unfortunately we have to face the reality of local sale of these cattle,” Hayman said in the memo.
He went on to advise that the Chinese importer is not prepared to underwrite the process, so GDNZ cannot fully honour the purchase agreement at the export premium value.
“We now need to get your instructions to proceed to sell the cattle as efficiently and as soon as possible,” Hayman said.
Progressive Livestock managing director Andrew Robins is agent to several farmers with cattle involved.
“Effectively everyone, including GDNZ, has been left high and dry, a series of events offshore has led to this.”
Robins says the priority is planning to distribute the cattle out into the local market.
“Some may go home to the farms they came from but with stock right across the country it’s logistically not viable to get cattle back to the South Island.
“Shipping across the strait will be an obstacle to start with and it’s right on (dairy) herd shift time for transportation.
“On top of all that GDNZ has stated any cattle that go home will be at the cost of the farmer so its almost prohibitive.”
Robins described the situation as “awkward” for agents.
“We procured the cattle but the contracts are directly with GDNZ, but the eyes turn back to us to do the best by our clients.
“We can’t pay for the cattle because we have not been paid.
“In fairness it could not be predicted, as a livestock company we have been blindsided by this and we are trying to resolve the situation as best we can,” Robins said.
Live cattle export is about creating premiums and Robins says farmers budget for that premium.
Many of the cattle were contracted at $1100 a head but will now only fetch $750-$850 in the local market.
“Reality is this is the chill wind of international trade coming right to the farmgate directly,” Robins said.
Live export consultant Brent Wallace says in his more than 20 years in the industry this current situation would be the worst he has seen.
“Sometimes there might be delays around import permits or a ship actually arriving but I have never seen it get to this extent – to have cattle in PIEs is alarming,” Wallace said.
“The best outcome for all involved first and foremost is the welfare of the animals and they are getting well looked after.”
Hayman is seeking legal advice on a claim against the shipping company and says if he gets any settlement then a portion of it will be set aside for cattle payment top-ups to farmers.
The shipping company has claimed “Force Majeure”, unforeseeable circumstances that could not be prevented.