Top End cattle market in the doldrums after live export ban

Top End cattle market in the doldrums after live export ban
Jonathan ChancellorJuly 3, 2011

The Northern Territory/Kimberley pastoral property market will remain in a state of limbo until there is some certainty on the resumption of live cattle export trade, according to Herron Todd White valuer Terry Roth.

“It remains very difficult to judge what the longer-term impact on property prices may be as we do not expect to see any market activity until the position becomes clearer,” Mr Roth said.

“But there is no doubt that the risk profile of investing in the northern Australian cattle industry has been elevated, even if the trade resumes immediately.”

Under the terms of pastoral leases, most stations have no practical alternative use other than cattle production, and economically, the only significant profitable market at present is the live export market to Indonesia.

“To put the Indonesian live export trade in context, Australia has exported live cattle for more than a century.

“We supplied about 500,000 head per annum to Indonesia – which was about 80% of our live cattle exports. It also represents about 25% of Indonesian beef consumption.

“The trade represents about $300 million per annum and is one of the Territory’s largest industries and by far its largest primary industry.

“Cattle producers across northern Australia, but especially in the Kimberley and the northern half of the NT, have come to rely almost exclusively on this market for their cattle.”

He said the industry had invested heavily in station infrastructure and herds in the last two decades, replacing inferior British breeds (such as the Shorthorn) with the tropically adapted Brahmin, to suit the live export trade.

The cost of freight to domestic markets was prohibitive, with the nearest commercial-scale abattoirs located at Townsville, Mr Roth said in HTW’s June month in review.

Danny Glasson, another HTW valuer, said prior to the introduction of the live export ban in June the pastoral market for Cape York Peninsula and the Gulf was already thinly traded with a number of properties on the market but very few buyers despite exceptional seasonal conditions across most of North Queensland during 2010.

“Cape York Peninsula in particular has seen property values come back substantially from peak levels reached around 2007/2008 , and the recent sale of Kingvale Station for only $875,000 – substantially lower than market expectations – is reflective of current conditions, albeit this sale was sold mortgagee in possession.

“There has been interest for closer in pastoral properties with Crystalbrook River recently transacting at asking price to an overseas buyer for $2.75 million,” Mr Glasson said.

He said prior to the live export ban agents were reporting limited enquiries for northern pastoral properties, although there would still appear to be some interest for closer in properties that have proximity to Tablelands and coastal fattening areas.

“Of interest, also in the north is a number of producers looking to value add product either by going organic or moving into the retail chain by acquiring butcher shop operations,” the report said.

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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