May 26, 2006

 

Australian beef producer buys huge swathe of land

 

 

Australian Agricultural Company (AACo), a leading beef producer, would purchase two cattle stations worth A$97 million (US$73.6 million) in a major expansion, the company announced in its annual general meeting.

 

The company has purchased two properties in the Barkly Tablelands area in the Northern Territory - the Anthony Lagoon and Eva Downs stations. The total area, at 2.13 million acres, is roughly the size of Puerto Rico.

 

AACo chairman Nick Burton Taylor said the purchase would safeguard the company's future, adding that the company had acquired two outstanding stations with breeding capacity.

 

Taylor said the stations' ability to breed both composite and cross-bred cattle was one of the key reasons the company decided on the purchase.

 

Also, Australian agricultural land values have increased by over 10 percent a year for the past two decades, he noted, making the purchase a good investment.

 

AACo also hopes to expand its premium Wagyu beef market. The company would triple production from 8,000 head a year to 25,000 head a year during the next  five years.

 

Strong global demand for beef has enabled the company to maintain a positive view of the beef industry and the opportunities it provides, AACo chief executive Don Mackay said.

 

However, various negative factors are looming on the horizon.

 

Seasonal conditions in Queensland, NSW and Victoria remain very poor and are affecting market conditions, while higher cattle numbers are leading to lower prices.

 

On top of that, a stronger Australian dollar is expected to cut into profits. 

 

Still, given the strong demand for beef internationally, current pressure on domestic prices would soon be eased by lower supplies, said Mackay.

 

The company gained a A$16.8-million (US$12.8 million) net profit for the 2005 calendar year.