Why are you putting three properties up for auction?
Some of the properties, such as Isis Downs, a southern property in Queensland, and some of our northern stations, have got significant areas that can be further developed by putting in underground water bores, so that the cattle can graze cost-effectively. It is cheaper [for us] to do this because we’ll get larger scale than on those properties that we want to divest. We can develop it cheaper than we can buy it developed.
What are your plans considering the current cattle and beef markets?
If you look at the Australian southern and northern markets, [prices] are at record highs, driven by tightness in supply due to ongoing drought [and] strong demand for live cattle into south-east Asia, and boxed beef globally – even with increased production of boxed beef from the US and Brazil.
We are quite focused on building our herd and productivity and looking to reach more customers in south-east Asia. We are using quite a bit of modern DNA selection technology and composite breeding methods. We have moved our business from being a seller of growing and unfinished cattle to selling most of our production as carcass beef.
How would you describe the shift in Australian beef production and cattle markets over the last 10 years?
Since 2007 [when prices were also at record highs, after which they dropped] we have seen more vertical integration, investment in technology, labour saving and consolidation in the meat processing, live export and feedlot sectors. We’ve seen market diversification and a focus on connecting the right product to the right markets. Australian boxed beef now goes to 100 countries globally as we break the carcass down into its 50-plus cuts, as well as offal, and that certainly helps the Australian beef industry. Australia now sends feeder and slaughter cattle to Indonesia, Japan, Vietnam, Cambodia, Thailand, and Malaysia.
How will you consolidate and grow your presence in south-east Asian markets?
We have a broad Asian strategy rather than a single market strategy. Our northern business predominantly supplies live cattle to feedlots in Indonesia, where we have two joint ventures with partners [Dicky Adiwoso and Greg Pankhurst]. We have been supplying cattle to markets in Vietnam, Cambodia, Thailand, through our northern operation. We have also been supplying exporters who export to North America, China, Europe and other markets through boxed beef, as well as in Australia. We are focused on not just selling to the highest value markets – which we do – but also having a good balance of market opportunities. We are seeing further value-adding and carcass breakdown by customers. So we are focused on carcass yield as well as performance in the feedlot.
Why can’t you invest in the company by taking on leverage instead of selling assets?
We are not actively looking to take on more debt – it’s not part of our strategy. We will only divest the three properties we are actively looking to auction, which combined run about 12,000 head of cattle, if we receive the value they are worth. We have a 375,000 head capacity and can grow that on an existing land portfolio. It really doesn’t impact our overall numbers, helps streamline the business and reallocates cattle to higher-returning areas.