Australian importers worried about rising costs

June 4, 2009

The rising cost of international horse transport, together with the economic downturn, have raised fears in Australia of a declining market.

Professor Peter Shergold was commenting on costs in his latest report to the Australian Government on progress in implementing tighter biosecurity measures recommended in Ian Callinan's report into the country's 2007 equine influenza outbreak.

"It is not surprising in the current economic climate," said Shergold, "that all parts of the horse industry are concerned about the costs of horse importation and the impact that this might have on the volume of trade.

"According to the Thoroughbred Breeders Association, the costs of bringing a shuttle stallion to this country from Ireland has increased from around $A25,000 in 2004 to $A45,000 in 2008," he said.

"Of this, the additional import conditions and increased AQIS [quarantine] fees are estimated to be $A5000. Travel costs and, more recently, the decline in the value of the Australian dollar, are far more significant factors.

"The major cause of concern that I discern is the perceived inequity of the two-tier quarantine fee put forward by the Callinan Review and agreed by the government.

Shuttle stallions represent only about one in ten of horses coming to Australia from overseas, excluding New Zealand, he said.

Shergold said the median free-on-board (FOB) value of horses imported by International Racehorse Transport (IRT) last year was $A41,000 (the mean was $A84,000).

"The rising cost of freight transport and quarantine for shipping a horse in a single stall is now estimated to range from $A20,000 (ex Europe) to $A25,000 (ex USA).

"With freight costs comprising such a high proportion of the value of many horses - indeed in some cases more than the value of the horse - it is understandable why there is concern that the market will decline, including for imported thoroughbred mares which enhance the Australian gene pool.

"It is clear that the additional costs of quarantine as a result of the implementation of the recommendations of the Callinan Review are a relatively small part of the financial challenges faced by horse importers," Shergold said.

"It is equally apparent that in an industry in which costs are rising sharply during a global economic downturn, it is hard to absorb any additional financial pressures.

"Against this, it needs to be borne in mind that another outbreak of equine influenza, particularly in the absence of legislative authority for cost-sharing, is likely to be devastating for the industry.

"The challenge ... is to ensure that the implementation of new measures imposes the minimum costs necessary to ensure effective biosecurity."