NT agricultural property market still reeling from live export ban

The decline of the live export trade has cut the value of agricultural land in the Northern Territory with major land holders slashing the reported value of their holdings.

Herron Todd White's latest report says there were no new confirmed sales of commercial sized rural property in the Northern Territory in March apart from a small cattle block in the Florina District near Katherine.

“Details remain confidential at this stage however the sale will reflect a discount on the 2009 purchase price in the order of 35%,” Herron Todd White writes.

Meanwhile Macquarie Pastoral Fund’s Paraway Pastoral, one of Australia’s largest landholders, has lost $23 million after being hit by property devaluations, according to ASIC documents obtained by The Australian Financial Review.

The $700 million fund’s properties in Queensland and Northern Territory had $27 million wiped off their value over the year to December 2012.

The fund, which recorded profits of $700,000 last year, blames 2012’s losses on the declining live export market.

Valuations from Herron Todd White and M3 Property Strategists recorded a carrying value of $424 million for its overall portfolio of 3.6 million hectares.

But properties in Northern Australia, which include the 1 million-hectare Walhallow Station and the 1.5 million hectare Davenport Downs fell 8% in value to $248 million.

Indonesia is a critical live export market for Australian cattle producers. In 2007 Australia exported 772,000 live cattle to Indonesia but that dropped to just 278,000 in 2012 because of Indonesia's moves to become self-sufficient in beef following a temporary suspension of live cattle exports in 2011.

The collapse of the live export trade led to the market being flooded with cattle and sheep.

The fund didn’t pay any dividends to its shareholders but it has set aside more than $9 million to reinvest into property.

After spending $111 million on live stock properties in 2011, the fund did not purchase any major property in 2012, though its sister company Lawson Grains did, including $16 million of land in northern NSW.

Australian Agricultural Company recently posted a $40.8 million decline in its portfolio’s value.

It said the fund was hardest hit in the Northern Territory where properties were “impacted by the live cattle suspension”.

“This result was primarily due to flow-on effects from the Federal Government’s live cattle export suspension in mid-2011,” the company’s chairman, Donald McGauchie said in March.

“As a result of the suspension, cattle which would have ordinarily been exported to the Indonesian market remained in the Australian market. This caused over-supply issues and a subsequent deterioration in the domestic cattle price.”

He said the suspension “created a challenging property market in northern Australia, which has led to a significant decrease in the value of AACo’s extensive land holdings in the region.”

Herron Todd White’s latest monthly report says the situation may not last though, with the government’s push to introduce legislation allowing property holders to diversify how they use the land.

“During this recent period of uncertainty in the north of the Northern Territory where the market is still finding it difficult to stomach the prospect of placing all eggs in just one basket (ie the live export market), it looks like there will soon be more to consider now that the Northern Territory Government has announced their intention to push through with proposed changes to the Northern territory pastoral land act,” Herron Todd White writes.

“The proposed amendments aim to give 38 pastoralists greater freedom to utilise their property’s natural attributes and diversify the income streams possible from their cattle station.

“It would appear that the support for the change is wide and if enacted could have significant benefits for the Northern territory pastoral industry and is likely to change the way buyers and sellers look at a particular cattle station.”