Hassad Australia is poised to move into grain and meat marketing and processing as the Qatari state-owned agribusiness confirms it will carve off three more properties from its recently amassed 300,000-hectare farming portfolio.
The sell-off of Hassad’s historic 9700ha Central West NSW stud sheep, beef and cropping property, “Raby”, and its 10,300ha South Australian mid-north and Eyre Peninsula cropping farms is set to reap about $80 million.
The money is unlikely to be spent on replacement land acquisitions, but rather diversifying the company’s footprint into value-added exports to various markets.
No specific investment targets have been flagged, but local partnership investments in premium product ventures, including meat processing, are apparently on the cards.
Meat sheep re-think
The restructuring move signals a significant revision of Hassad’s “food security” priorities on behalf of the Qatari government, including its ambitions around fat-tailed Awassi sheep production to service meat orders direct from Doha, or other markets.
In recent years the company has imported genetics and bred up a flock of about 40,000 Awassi breeders based on a stud at “Raby”, alongside the Warren property’s famed 120-year-old Merino stud.
It also has at least 40,000 Awassi-based crossbred sheep.
However, despite their reputation for handling adverse feed and temperature conditions the arid-hardy Awassi has not proven so suited to southern Australian climate zones, and has not generated the sort of premium meat price returns first anticipated.
“We are reducing our Awassi numbers, but we’re still assessing our long term strategy after the `Raby’ sale”, said Hassad’s chief executive officer, John McKillop.
“There are some problems with running Awassis in southern climates – footrot has been one issue.
“They’re bred for desert conditions to provide meat (and milk) in pretty harsh environments, but they’ve failed to return the sort of value initially hoped for in our operations.”
They’ve failed to return the sort of value initially hoped for in our operations
Hassad’s latest sell-off plans follow the July sale of prominent 125,300ha South West Queensland aggregation “Clover Downs” last month to northern NSW’s Zell family at Collarenebri for a speculated $27m.
Late last year Hassad also offloaded the first of its Australian-bought assets, the 2632-hectare “Kaladbro”, near the Victoria-South Australian border, to big scale SA beef and sheep producers Tom and Pat Brinkworth.
The Kaladbro Estate, which includes covered sheep feeding facilities, was purchased in 2010, partly for its potential as a finishing point for Awassi sheep to be shipped overseas from nearby Portland.
In the years to follow Hassad accumulated 13 more grazing and grain aggregations – five in NSW, three in Western Australia, two each in SA and western Victoria, and one in Queensland.
Food security vs dividend
Hassad is an offshoot of the tiny oil-rich Gulf State’s sovereign wealth fund the Qatar Investment Authority (QIA).
Although QIA owns partial stakes in milling and agricultural ventures in the Middle East and North Africa, and a big 30 per cent share of global agribusiness and mining giant, Glencore, Hassad is the fund’s fully-owned agricultural production business.
However, while the Australian division recently won a tender to supply 340,000 sheepmeat carcases to Qatar, Mr McKillop, said it had rarely actually operated as part of direct food supply line to the Gulf since its formation.
Original plans had been for the company to be a food security safety net for the country’s 2.6m population, but the open market had proven just as convenient, competitive and responsive to any fluctuating food requirements from the Middle East.
We’re probably just as useful as an investment vehicle with a balanced portfolio of farming and post-farmgate operations
“Until June, we had not supplied a meat tender from Australia for 18 months,” he said.
“We’ve only ever done one grain shipment to Qatar – 50,000 tonnes of barley four years ago.
“It’s probably not the most sound strategy to own farms in Australia and rely on them as a significant food source when it takes a long time to grow crops and livestock.
“If you have the money you can always buy from elsewhere.
“In Australia, we’re probably just as useful as an investment vehicle with a balanced portfolio of farming and post-farmgate operations.”
Mr McKillop, who took the reins at Hassad 18 months ago, said the restructure had been brewing since early 2016 and would likely involve partnerships in “other projects in the agribusiness pipeline”.
“Like any farming enterprise it will help us to have several sources of income.”
Strong buyer interest
The sale of “Raby” involves expressions of interest to Landmark Harcourts by October 19, while the Eyre Peninsula’s 7100ha of Cummins-Ungarra area graingrowing properties will be marketed by Elders and the 3260ha aggregation in the tightly-held Glendale district will be sold by CBRE.
Mr McKillop said a key reason for selling the SA holdings was Hassad found it hard to expand and “fill in” its footprint in the state.
“We didn’t get the extra property we would have liked – it’s very tightly held country.”
CBRE expects the multi-generation history of land ownership in the mid-north will see the land attract strong interest from existing farmers and aspiring newcomers.
Landmark’s corporate sales manager, Phil Rourke, said Hassad’s timing was good given current interest in agribusiness in most of eastern Australia and historic high commodity prices.
Inquiry for quality rural property was up, but available listings were shrinking.
“Raby”, 15 kilometres from Warren – also a tightly held district – fronts the Macquarie River and Crooked Creek and includes quality irrigation and dryland cropping country.