The chief executive of one of Australia's biggest cattle companies says it will be difficult for the beef industry to recover from the continuing drought.
Troy Setter, ceo of the huge Consolidated Pastoral Company, said the drought in the northern part of Australia had been gutwrenching to many in the industry, from both a capital and mental approach for those working on the ground.
CPC is being sold in bits after its controlling main shareholder UK-based investor Terra Firma reached the end of its 10-year-investment timeline. So far, about $300 million of the company valued at about $1 billion has been sold. Vietnamese interests bought a recent parcel.
Mr Setter said there were huge opportunities for Australian beef, but the continuing drought throughout many parts of Australia was making it hard for investment in agriculture. With both foreign investment restrictions hurting and the fact CPC had been forced to invest from only a profit rather than debt basis, there were big questions to be asked about how to encourage investment in Australia's agricultural sector.
Nevertheless CPC had established a massive presence in Indonesia with two large feedlots that were a major link for live Australian cattle into the Asian market - a burgeoning growth area.
He said Australian farmland was still some of the cheapest in the world and as the demand for protein escalated, Australia was well-placed to be a major supplier to Asia.
But he said the drought had taken its toll, with killing rates getting higher, especially for female cows, while the herd diminished, and it would take some to rebuild after the drought. The good news was that there was a large amount of capital in Farm Management Deposits.
CPC controls nine massive cattle stations, involving over 3.5 million hectares, mostly in the Northern Territory. It employs high-tech apparatus to manage feedlots in Indonesia as it sells to butchers and 35 abattoirs in Indonesia from its Juang Jaya feedlot. Almost 12,000 Indonesian families are dependent on work from the feedlots, that grow its own corn and donates manure back to local farms.
It also has its own animal welfare officers who report on the whole way through the process chain.