Beef producer moots shift to lamb and grain
Australia’s largest cattle exporter to Indonesia, Consolidated Pastoral – which made a $19 million annual loss in 2010 – has indicated the live cattle export ban is likely to encourage its possible expansion into sheep grazing and grain growing.
Its chairman Ken Warriner noted the key reasons for the losses – which were incurred prior to the recent live cattle ban – resulted from Indonesian decisions regarding cattle weight restrictions and the limiting of import permits.
As a result of the more recent ban of live cattle exports to Indonesia, Consolidated Pastoral Company says it will be investigate wool and sheep meat markets.
“These markets have improved considerably recently as a result of the sheep herd in Australia dropping from 170 million in 1990 to less than 70 million today,” Mr Warriner said.
“All markets and opportunities are being monitored closely; however the appropriate opportunities are quite rare at this time due to the lack of suitable sizeable properties coming on to the market,” he said.
The loss announcement coincides with cattle prices beginning to fall across eastern Australia as export-destined stock is redirected towards the crowded domestic market.
Consolidated Pastoral, which is the second largest beef producer in Australia, is majority owned by British private equity firm Terra Firma.
Consolidated Pastoral, whose livestock assets are worth more than $233 million, runs 357,000 cattle over 18 properties, covering more than 5.8 million hectares – representing about 0.75% of Australia’s land mass. The cattle numbers were up 3%. But its cattle sales were down by 9% to 53,000 sales.
It was 2008 when Terra Firma bought the company, which had been part of Kerry Packer’s family company. At the time of its reputed $425 million purchase it had 16 beef-producing properties – mostly in the Northern Territory and Queensland. Its 300,000 head of cattle were valued at $145 million in 2008 when the company had leasehold land valued at $162 million and $27 million worth of freehold land.
The late Kerry Packer had begun putting the parcels of properties together after his purchase of the 1 million-hectare Newcastle Waters station in the Northern Territory in the early 1980s.
Mr Warriner, a long-time Packer family friend and who has been chief executive and chairman of Consolidated Pastoral, maintained his 10% stake in the business alongside Terra Firma. Mr Warriner says after running the company since 1983 he will step down from his role as soon as a replacement CEO is found, but he intends continuing as its chairman.
"The challenges relating to the Indonesian market have curtailed our desire to acquire land in areas overly dependent on that trade," Mr Warriner says.
"All markets and opportunities are being monitored closely. However, the appropriate opportunities are quite rare at this time due to the lack of suitable sizeable properties coming onto the market that meet Terra Firma purchasing guidelines."
Consolidated Pastoral's total asset value slipped to $696.1 million in the full year compared with $703 million in the previous corresponding period. As at December 31, 2010, property, plant and equipment was valued at $417 million.
It also supplies grass-fed Japanese ox and cattle for the local domestic market. The annual report of the company noted 2010 had been a year of challenges, particularly the unexpected restrictions by the Indonesian government limiting import weights and restricting the issue of import permits.
“This resulted in the redirection of cattle which otherwise would have been exported to Indonesia to eastern and southern Australian meat processors,” it said.
“CPC and others have done a considerable amount to address the welfare of cattle in both Australia and Indonesia, and the enforcement of recognisably acceptable standards of welfare will continue to be our priority,” Mr Warriner said.
“CPC and our business partners AGP have led the development of a humane and halal compliant killing process in Indonesia, with the introduction of stunning guns to be used in conjunction with restraining boxes.
“Stunning guns operated with compressed air are currently being installed in all abattoirs where CPC cattle and other cattle from our Indonesian joint venture feedlot will be slaughtered,” he said.
