Farm services 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.
Mrs 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.
Managing director, Mark Allison, confirmed the NACC sale was “98pc 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 basically with the same party since Elders announced it was quitting the live export market last 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, one of the early players 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 China trade.
Mr Allison told a profit results briefing on Monday high cattle costs continued to impact Elders’ overseas feed and processing businesses in Indonesia and China.
However, the impact 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 NSW.
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.