SLM agrees $34m lending facility as beef prices reach all-time highs – exclusive

The Australian beef cattle fund manager announced the lending facility during the same week as Beef Australia 2015, the industry event held in Rockhampton, Queensland, where speakers pointed to continued beef price hikes.

Australia’s beef industry presented a bullish investment case at last week’s triennial Beef Australia event in Rockhampton, Queensland, as beef cattle prices reached all-time highs and Australia’s Prime Minister Tony Abbott announced a A$100 million fund for the industry’s road systems.

At the 80,000 people-strong Beef Australia event in Rockhampton, Queensland, a range of speakers talked about the potential for beef prices to rise further, especially in light of the high prices – A$5 per kg – fetched for live cattle in parts of China. Australian Agriculture Company’s managing director Jason Strong said that cattle prices “will probably rise from here” but for the wrong reasons.

Drought and reduced cattle herds have tightened global supply of the meat, which is expected to keep international prices high and improve domestic prices for local producers, according to Rabobank’s latest Beef Quarterly.

“Contraction in domestic supply, a tight global beef market and an appreciating US dollar will finally mean Australian producers can realise some of the high global beef prices on offer,” reads the report.

Rabobank analyst Don Close also spoke during the event, echoing the bank’s views, but with a warning that beef producers will need to ensure any productivity increases are greater than the cost of inflation.

The event provided a good backdrop to an announcement from SLM Partners, the livestock fund management firm, about a lending facility it has agreed with a global bank for up to A$34 million to fund the development of its existing properties.

The fund, which is reaching the final stages of fundraising and is expected to close for the final time at the end of the summer, is understood to have agreed the facility with Dutch lender Rabobank, although SLM managing director Paul McMahon would not confirm their involvement.

“We are pleased to be working with a bank that has a deep understanding of the Australia cattle industry,” he said in a press release.

SLM launched the SLM Australia Livestock Fund in 2013 after receiving a $75 million commitment from Danish pension fund PKA. The fund invested that equity capital on acquiring properties in southern Queensland and northern New South Wales that it will now develop further using the new financing. This development will involve installing new water points and erecting fencing to create more paddocks.

SLM employs the regenerative agriculture farming system of holistic planned grazing, or rotational grazing, where very large herds of cattle are moved around fenced paddocks depending on various factors including weather and soil conditions.