If live sheep exports to the Middle East do not resume soon, nations with lower animal welfare standards could fill the gap, West Australian Premier Colin Barnett has warned.
About 75 per cent of Australia's live sheep trade comes from WA, where exports remain in limbo after the federal government stopped issuing permits last week.
The halt in export licences followed Bahrain's rejection of a shipment of live sheep from Australia amid disease concerns and an apparent cull of the animals after they were moved to Pakistan.
While Karachi announced the 21,000 sheep would be destroyed after testing positive for salmonella and actinomyces, Australia's Department of Agriculture, Fisheries and Forestry said there were conflicting reports about the cull.
On Sunday, Mr Barnett warned if the trade did not resume soon, other export nations would step in and WA farmers would be hit hard.
"If Australia was to exit the market, all you would see is it replaced by sheep and cattle exports from other countries, countries that do not have the higher standards that Australia has," he told reporters.
Mr Barnett said he wanted to see greater deregulation of the industry, excluding the use of export permits, but added he thought the live trade was on the decline anyway.
"Over time, I think the live trade will probably reduce," he said.
"But that's only going to happen as the markets shift to a more Western style way of consuming meat."
Mr Barnett and WA Agriculture Minister Terry Redman were in talks with the Gulf states to increase their investment in WA sheep farming and abattoirs to promote the trade in refrigerated and frozen meat.
"I would hope that we would see abattoirs here and maybe the export of carcases, maybe more value-added product, and that is slowly evolving," Mr Barnett said.