Elders finalises its live-ex division sale

20 May, 2017 04:00 AM
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The sale of Elders' North Australia Cattle Company to a new owner is close to being wrapped up and will involve an Elders contract to continue supplying cattle to business.
The sale of Elders' North Australia Cattle Company to a new owner is close to being wrapped up and will involve an Elders contract to continue supplying cattle to business.

ELDERS will wrap up the sale of its live export business this month.

The North Australian Cattle Company (NACC) and what’s left of its southern counterpart business are being sold to the same buyer, speculated to be a joint venture involving mining mogul, turned big beef enthusiast Gina Rinehart and China’s big New Hope Group.

Ms Rinehart’s Chinese partner in the Kidman pastoral business, Shanghai CRED, was the end-use customer for the pioneering young cattle shipment organised by Elders from Victoria to China early this year.

Elders managing director Mark Allison confirmed the NACC sale was “98 per cent wrapped up” and would involve an Elders contract to supply cattle to the new owner, but he would not divulge who was involved.

He said negotiations and the sale process had been with the same party since Elders announced it was quitting the live export market in September.

A downturn in demand had created challenging conditions for Elders’ main long haul live export trade in dairy heifers to China, while its more profitable short-haul live export business run by NACC into Indonesia, Vietnam and Malaysia also struggled with reduced demand for high-priced beef cattle last year.

Elders, an early player in the live export cattle trade to Asia two decades ago, reported a $2.9 million loss in its live export division in the first six months of 2015-16, largely because of the $3.8m lost by its long haul business.

NACC opened the sea-bound trade to China in January exporting 1200 Angus cattle from Portland, Victoria, to Shidao Port in China, destined for high-end consumers, hotels and restaurants.

The shipment was bought by Baozhu Food Company, part of the frozen food processor Tai Xiang Group, for customer Shanghai CRED.

The breakthrough followed two air-freighted consignments by Elders in 2015 and 2016, which proved effective trials for the trade.

Mr Allison told a profit results briefing on Monday that high cattle costs continued to hurt Elders’ overseas feed and processing businesses in Indonesia and China.

But the affect on its beef business was offset by earnings improvements achieved with higher occupancy rates and increased efficiency at the company’s Killara feedlot in northern New South Wales.

Elders expected Killara’s margins on principally held cattle would continue to be under pressure because of high cattle supply costs, although buy-in prices could ease as the year progressed.

A forecast for drier seasonal conditions could ease re-stocking pressures if rainfall did continue to be lower than average over winter, prompting producers to offload cattle at discounted prices.

FarmWeekly
Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media

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I went to the State barrier fence coastal - end yesterday - and was appalled at the state of
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The days of DAFWA having the bulk of GRDC funding in WA are long gone, they can't even
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In a domestic market situation I can see why this would be supported but in a 90% export market