Northern Stations

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The Australian

North stakes claim to cheapest beef territory

Feb 16, 2008 – by Jo Studdert – The Australian

HERE is a question. Where is Australia’s best value-for-money rural land?

If it is beef production you are interested in, the answer is the Northern Territory, followed by Queensland’s Upper Cape York.

Heron Todd White, Queensland-based property valuers and researchers, wanted to know where to get the best returns on beef farming.

To find out, HTW research director Rick Carr crunched some numbers for each region to pinpoint where value for money sits in terms of production.

price per kilogram of beef

First, the average price per hectare went into the pot, then how many kilograms of beef came off a hectare in the district.

“In arithmetical terms, we looked at the average sale price per hectare, and the productivity of the land in terms of kilograms of beef produced, and expressed it as a ratio,” Carr says. “We wanted to know how much you have to pay, not per hectare but per kilogram of beef produced. It’s as close as we can get to something consistent with the price to earnings ratio in the stock market: a tool to give you the expected return on your investment as far as income stream is concerned.”

The figures were stark. “The cost varies quite radically from area to area,” he says.

Two years ago, the dearest land per kilogram of beef produced was in New England, in northern NSW. Today, the honours go to central Queensland.

He also looked at the price per kilogram of beef and threw in other variables — bank interest rates and changes in the Australian dollar-US dollar exchange rate — and came up with figures showing how much it costs to produce a kilogram of beef in each area.

So, for instance, the cost in the Northern Territory is $5 but in Queensland’s Brigalow belt it is $35.

“The results caused a bit of a stir,” says HTW principal Kerry Heron.

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The Australian
Asian demand for beef lifts land values

April 23, 2009 – by Jo Studdert – The Australian

YOU wouldn’t expect meatballs in Indonesia to have much effect on Australian land values nor on expenditure decisions at global corporate headquarters, but they do.

Corporates have been gobbling up land in Australia’s north, driven by confidence in the long-term growth of Asia’s demand for red meat.

Macquarie’s $169 million purchase of three Georgina Pastoral properties, AAco’s $105 million push for Tipperary and Lichfield, and Primary Holdings’ $250 million bite at AAco holdings are not coincidental.

The big companies have crunched the numbers and do not intend to miss out on the rivers of gold flowing from Asia’s growing, meat-hungry middle classes.

“Corporates have the money and know exactly where best to place it,” says Denis Schy, valuer in Townsville for Herron Todd White.

“They have positioned themselves strategically in the northern cattle districts.”

But it is not just locals: the call of the wild has reached London, and private equity group Terra Firma has answered to the tune of $420 million for Consolidated Pastoral Company holdings in the north.

Twenty per cent of pastoral land in the Northern Territory is company-owned rather than privately owned.

All these properties produce cattle and any situated north of Tennant Creek produce it for the live export market, 93 per cent of which goes to Indonesia, where the beasts are fattened in feedlots and sold.

“The corporates are all north of Tennant Creek. They are there for the export market,” said Frank Peacocke at valuer Herron Todd White in Darwin.

“Live exports are the future for the Northern Territory,” according to Alister Trier, director, pastoral production in the NT’s Department of Regional Development, Primary Industry, Fisheries and Resources.

“They have really put a spark into cattle prices. Farmers get nearly double the price for live weight they used to get selling refrigerated meat into southern Australian markets.”

As an indication of the potential growth in Indonesia alone, Mr Trier said the 600,000 head of cattle Australia exported to Indonesia every year represented the same amount that the Indonesian island of Java consumed every year.

“And Sumatra, an even bigger island, is seeing a huge middle class emerge,” he said. “The demand for our cattle is not going away.”

As cream on the top for buyers, grazing land in the northern end is cheaper than anywhere else in Australia.

Mr Schy said: “Our beast-area value is much lower. Where in southern states it ranges from $4000-$5000 per beast area, in the Territory it is $1100-$2300, or $2500 at the highest.”

No wonder the corporates are excited: they have a guaranteed and burgeoning market, the kilo weight is sweet and the cost of the land cheaper than anywhere else in the country. And, Mr Trier said, they could expect to extract productivity gains of about 5 per cent in the short term and more as road and port infrastructure in the north developed.

“On top of that are the genetic and management improvements the corporates will bring to their properties, which will lift profitability even further,” Mr Trier said.

Beef for the home market benefits too. Adam Hill, CEO of the Northern Territory Live Export Association, said the export trade provided a platform for the wider Australian beef market, keeping southern prices up by ensuring those saleyards were never oversupplied.

Indonesia’s enormous cattle feedlot industry is heavily reliant on exports of live cattle from Australia. Those feedlots, according to Mr Peacocke, “are in serious expansion mode”.

Santori alone is, every 10 days, building new lots for 500 cattle, and TUM Brothers plans to more than double their feedlot capacity to 80,000 within two years.

There are opportunities for vertical integration as well, with companies such as Elders already owning export ships, and others opening their own feedlots in Indonesia.

Property agents, government officials and exporters all believe the long-term future is bright for live export.

The cattle that flourish in the north, Brahmins and Brahmin crosses, are particularly favoured in Indonesia for their low fat content.

And as long as Australian herds remain disease-free, Australia’s exports are not threatened by competitors such as Brazil and Argentina.

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The Australian
Barefoot cattleman walking on gold

Mar 29, 2008 – by Paul Toohey – The Australian

IT’S not that Tony Davis can’t afford a pair of boots, but growing up in central Australia he says he just never learned to wear them. The barefoot cattleman says that won’t change when one of his stations, Limbunya, goes to a much-anticipated auction in May, where it is expected to fetch well over $40 million.

The value of cattle properties in the Northern Territory is skyrocketing and people such as Mr Davis, who have hung in theindustry through good and bad, areseeing land turn to gold beneath their feet.

Cattle growers are turning northwards, chasing the heavy and reliable Top End rainfalls, and big equity groups are looking to invest in terra firma rather than capricious share markets.

The high prices are also part of an overdue correction as Territory properties are rated alongside the better Queensland leases. It wasn’t so long ago that Top End land was seen as good for nothing but producing unhappy shorthorn cattle for tinned bully beef.

But now the tropically attuned Brahmin herd is fully established, and the live cattle trade out of Darwin to Southeast Asia is roaring, everything appears to be falling into place for the Territory.

Cattleman Peter Sherwin earlier this month sold Alroy Downs on the Barkly Tableland for $70 million, three years after he bought it for $30million. It is especially remarkable given that the Barkly, in the Territory’s centre, is in the midst of a partial drought.

But no one doubts rain will come again to the Barkly. Further north, on Limbunya, in the western Victoria River District, and on Mr Davis’s other Top End property, Moroak, east of Mataranka, rain is never an issue.

“Here, we don’t know what drought is,” Mr Davis says. “That’s what’s bringing this country into favour.”

Indeed, when The Weekend Australian visited him at Moroak yesterday, weneeded to be choppered across the Roper River, which has been impassable for months.

Mr Davis is happy being locked in during these wet season months – from his front veranda, he can cast a lure into the Roper where the barra are, at this time of year, savagely hungry.

His wife, Pam, loves the 5200 sq km Limbunya and would have preferred to sell the smaller Moroak, if anything. But Mr Davis, 60, says Limbunya, to be sold with a guaranteed 30,000 head of cattle, is a very big operation and he’s easing off, slightly.

Limbunya was once seen by the Vestey empire as its No1 bullock paddock for the bigger Wave Hill station. Mr Davis won’t disclose how much he paid for the property in 1996 except to say it was”more than nothing and less than $15million”.

With so few Territory cattle properties hitting the market, insiders say Limbunya will well exceed $40 million. At that kind of money, there’s little chance a family will buy it. Mr Davis says equity groups are “sniffing around on Limbunya right now”.

“I love private families owning stations, but I’m a realist,” he says. “The little butcher shop down the road is gone. I know Limbunya will sell, and I know it will be owned by a large company. I’ll lay money on it.”

Mr Davis bought the 2200sq km Moroak four years ago for $10 million. “It was ridiculous,” he says. “We paid far too much. But it now may be worth $35million. I love banks. I have been with one bank all my life and I’ll never move. They’ve been good to me – bar Pam’s father, who was a banker and wouldn’t lend me two bob.”

The big cattle price dive of the 1990s is long forgotten and these days banks love pastoralists, too. Ben Tapp, of Maryfield station south of Katherine, says lenders are “very positive about the Northern Territory; they’re very positive about any high rainfall land”.

“The Territory is beginning to be viewed as a safe real estate place,” Mr Tapp says. “People want to pull money out of the stock market and put it in land, and our land is still cheap despite the apparent high prices. There’s this big push coming. This country is as good as any country in Queensland. And investors are starting to think more about the land than the cattle.”

The industry is awash with rumours that high-polluting companies are interested in buying big properties and destocking them in order to use the land to trade carbon. It hasn’t happened yet, and won’t be popular if it does.

For now, with no one quite certain how carbon trading will work, Ross Peatling, manager of Alexandria station in the Barkly, warns that while companies are getting excited about land, they must remember they’ve still got to turn a profit on cattle.

“They’re looking to buy rainfall, or more reliable rainfall,” he says. “I wonder if they’re paying too much and where it’s going to stop. Properties here in the Barkly are pretty tightly held and don’t come up all that often.

“People are prepared to pay a premium, but they also have to get a return. They ought to be careful with interest rates and the dollar going up.”

With more than $40 million coming his way, Mr Davis doesn’t have much to worry about. But he feels a twinge. As the big companies move in and the small families move out, he says the personal connection with land will become lost.

“Whoever buys Limbunya, you have to remember that nobody owns dirt,” he says. “You’re very privileged to look after it. And that’s where the blackfellas have got things right. One old man explained it to me that he was a tree, with his roots going into the ground. They say they belong. That’s how I feel.”

And while he might be selling Limbunya, his shoeless feet will stay on the ground in the north. “I’ve heard it said I’m going to retire because I’m selling Limbunya. Jesus, there’s 20,000 cattle on Moroak. How can I retire?”

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The Age
Reserve to honour Irwin

July 22, 2007 – AAP – The Age

Terri Irwin has worked tirelessly to turn her late husband’s dream of a wildlife reserve in Far North Queensland into reality, Environment Minister Malcolm Turnbull says.

Mr Turnbull visited the Irwin family’s Australia Zoo on Queensland’s Sunshine Coast today to announce a $6 million purchase of 135,000 hectares of land [about $18 per acre for 340,000 acres] to honour the conservation legacy of the late Crocodile Hunter, Steve Irwin.

The Steve Irwin Wildlife Reserve, north-east of Weipa on Cape York Peninsula, will be run by the Irwin family who will manage the environmentally-sensitive land and care for endangered species.

Mr Turnbull said the reserve, bordered by the Wenlock River, contained the endangered northern quoll and speartooth shark as well as important gallery dry vine forests.

“Steve Irwin had a long-held dream for this region to become a wildlife sanctuary and Terri and the family has worked tirelessly to turn this dream into reality,” he said.

Terri Irwin, accompanied by children Bindi and Robert, and Steve’s father Bob Irwin, today said the family would be proud to manage the region.

“Steve was in awe of the prolific wildlife of the Wenlock and Ducie rivers bordering the reserve and he would have been proud to see the property protected as a wildlife reserve,” she said.

She said controlling feral animals and protecting wetlands and forest would be an integral part of their work.

A scientific research centre in collaboration with the University of Queensland and other research organisations would also be established on the land, she said.

The project was funded under the National Reserve System Program which has helped protect more than 88 million hectares of Australia’s most fragile landscapes.

• www.theage.com.au