AACo blames slump on live cattle ban
THE Australian Agricultural Company (AACo) has blamed $50 million in write-downs squarely on the federal government's temporary ban on live cattle exports to Indonesia in mid-2011.
AACo slumped to an after-tax loss of $8.4 million in 2012, a loss mostly attributable to impairments, with a $41 million reduction to the value of its northern Australian properties after the trade with Indonesia was disrupted, and another $8.6 million hit to the value of its trading cattle.
The live export ban, which lasted a month, was imposed after an ABC Four Corners expose of cruelty at some Indonesian abattoirs. After the ban was lifted the Indonesian government set a target to be self-sufficient in beef by 2014, lowering demand for Australian beef.
AACo managing director David Farley said the deliberate disruption of the live export trade, in combination with the rising dollar, "took the commerce out of the north".
Just this week the live export-geared 5414 square kilometre Killarney Station, in the Northern Territory, was placed into receivership by NAB.
Mr Farley said the Filipino-owned Killarney was "a beautiful property" and the receivership was a consequence of the live cattle ban.
He welcomed the government's provision for compensation in the last budget. "To do that to a federal budget admits some form of malfeasance," he said, adding that a negotiated solution was preferable to litigation, with a number of class actions under way.
Mr Farley said AACo had confidence in the long-term future of the Indonesian market and was engaging with Trade Minister Craig Emerson, but said "what Australia has to do is start being responsible with the governance surrounding its agricultural industries in the north".
The government had to decide whether to recapitalise the smaller end of the pastoral industry in the north, he said, "or are they just going to accept they brutalised an industry?"
AACo shares fell 3 per cent to $1.215 on Thursday. Mr Farley said after completing a three-year turnaround at AACo, the 2012 loss "doesn't give me the chance to say I've delivered financially, but I know I've delivered - the team has delivered - operationally".
Last year AACo boosted operating cash flow by $63 million. It built a record herd of 681,700 head weighing 94.6 million kilograms at the end of the year, after deciding to grow rather than trade its cattle.
Mr Farley predicted beef prices would rise after recent rains.
He said Australia was well-positioned for export growth, taking advantage of the severe drought in the US which had depleted North American herds.
With 30 million head, he said, Australia was "just about the only country that's building our herd".