Aussie producers warned they must also pay to tackle animal disease outbreaks

Australia's livestock and wool industries have been warned to brace themselves for a massive financial hit if the feared outbreak of an animal disease occurs.

They will have to pay their share of the clean-up costs.

Under agreed national arrangements, producers would have to pay 20 per cent of the cost of the response to an outbreak of foot and mouth disease.

This is on top of the devastating cost to individuals from lost markets and possible on-farm impacts, like culling.

With some estimates putting FMD's potential impact as high as $50 billion, producers would need to pay their one fifth share through increased transaction levies over 10 years.

If the outbreak were the other grave threat, lumpy skin disease, at the moment producers are up for half the total bill - again to be paid back over 10 years.

Government experts calculate a lumpy skin disease outbreak could cost Australia more than than $7 billion in its first year.

This is why beef and dairy farmer groups want lumpy skin disease to be given a stronger priority under national arrangements, to bring it into the same category as FMD.

This would avoid the expensive 50/50 cost sharing deal, to access the 80/20 arrangement.

Experts believe lumpy skin disease is much more likely to arrive in Australia before FMD.

African swine fever is also lurking dangerously close to Australian shores and shares the same category as lumpy skin, with the 50/50 cost sharing arrangements.

An ACIL Allen impact modelling report on an African swine fever outbreak has predicted it could cost Australia's 3700 pig producers, plus meat processors, transport operators and others linked to the meat industry, $2.03 billion over five years.

The wool industry is considering how best to prepare for an animal disease outbreak, given it does not have the same levy arrangements and only $5 million tucked away for an animal disease outbreak.

Red meat livestock industry bodies are signatories to the federal Emergency Animal Disease Response Agreement which sets out the response to 66 categorised animal diseases.

The government is expected to "initially" cover an industry's cost-sharing obligations but the relevant industry "will then repay the government within a reasonable time period - generally up to 10 years".

The cattle and sheep industries fund their industry commitments through transaction levies paid through the sale of stock.

Those industry levies pay for marketing, research and development and a small contribution for Animal Health Australia, which is responsible for reacting to animal disease outbreaks.

But most producers do not realise their levies also include a component called Emergency Animal Disease Response Agreement or EADRA levy which currently lays dormant but would be "activated" to repay the government for the industry share of an outbreak.

The size of that "extra" payment would still need to be negotiated and would depend on the actual cost of the outbreak, but still needs to be paid.

Wool Industry Australia has estimated a FMD outbreak would cost the industry an estimated $2.2 billion in revenue alone over a decade.

Australian Wool Innovation has been questioned over its preparedness for an outbreak.

Victorian Farmers Federation livestock group president Steve Harrison suggested during a webinar with AWI last week they should consider doubling the size of its outbreak emergency fund.

AWI chairman Jock Laurie said both AWI and growers were operating in a tight financial environment.

"What other industries have is a levy mechanism set up ... so in the very unfortunate position that that did happen there is a cost sharing arrangement ... the other industries they trigger a levy and the levy pays a pool of funding for the management of that (outbreak), under an agreement of 80/20 with the Federal government," Mr Laurie said.

Mr Laurie said the wool industry was in discussions with industry bodies about establishing a levy which could potentially collect those funds.

"If the wool industry doesn't do it we still have an obligation to meet that 20 per cent funding over a period of time and we need to think about how we are going to do it and AWI is not a position to turn around and pull that money out."

Source: Chris McLennan, Farmonline National, 2 November 2022