Adelaide, Australia - Australian meat exporters warned that the nation's waterfront dispute was damaging its reputation in international beef and sheep-meat markets and could undermine the annual A$3.2 billion industry.
“The current situation is extremely grim,” said Christopher Creal, executive director of the Australian Meat Council (AMC), which represents 95% of meat exporters.
“There is no other way to describe it than as horrendous in what it does to Australia's reputation in a very, very competitive international market,” Creal told Reuters.
Australia exports about 70% of its annual beef and sheepmeat production, with major customers including the United States, Japan and Korea, competing in world markets against the United States, New Zealand, South America and South Africa.
“If we falter, then the risk is that they can take a market edge on us,” Creal said.
With the dispute going into its third week, Australian meat exporters were able to move containers but with increasing difficulty and added cost, with exports being shifted from affected ports to less-troubled regional operations.
“In some cases those cost penalties have probably eked out what little margin there was for profit in that particular transaction,” he said.
Exporters also faced being hit by steep price discounts which applied when product arrived “out of commercial time,” that is later than stipulated in contracts, particularly in the United States and Japan.
“The enormous challenge that now confronts us all, even if this dispute finishes tomorrow, (is) we have to go around the world and re-establish Australia's reputation as a reliable supplier,” he said.
Creal said he was taking many calls from concerned overseas customers and while existing contracts were unlikely to be affected -- with most orders already in transit when the dispute began -- new contracts were at great risk.
“Clearly there is a whole range of customers out there that are seriously considering whether they will place their order with Australia or...elsewhere,” he said.
Creal said he could not quantify the costs of delays and diversions or amounts of meat which could be held up in ports, saying the problem varied from port to port, state to state and day to day.
The New South Wales Farmers Federation said at least 50 containers of meat were believed to be held up at Sydney's Port Botany.
“Product is still moving, but it is moving with increasing difficulty and incurring significant increase in cost,” Creale said, adding one processing plant in the state of New South Wales had closed production rather than risk the additional costs.
The docks dispute ignited on April 7 when Patrick Stevedores sacked its 1,400 union dockers and replaced them with 400 contract staff, many of them trained by a company linked to the National Farmers Federation which has long wanted to break the union monopoly on the waterfront.
Docks operated by Patrick, a unit of Lang Corp Ltd (LAC.AX) has since been picketed by the Maritime Union of Australia, with an estimated 11,000 containers stranded on its docks.
The dispute has been dragged through a number of courts and will be heard by the High Court of Australia in Canberra next Monday where Patrick will argue against a lower court ruling that it should reinstate the sacked unionists.
Some economists have warned that the dispute could affect Australian's economic growth if it lingered, while the foreign exchange market has started to see the confrontation, along with the Asian downturn, as a negative for the Australian dollar.
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