AACo claims its herd is biggest in Australia’s history
18/03/2013
The company estimates total losses as a result of the live trade suspension, which began in mid-2011, and the related devaluation of its northern Australian properties, to be $51.2 million. The company reported a full-year after-tax loss of $8.4 million in 2012.
“As a result of the suspension, cattle which would have ordinarily been exported to the Indonesian market remained in the Australian market,” said AACo chairman Donald McGauchie at the company's annual meeting. “This caused oversupply issues and a subsequent deterioration in the domestic cattle price.”
The high Australian dollar has continued to impact AACo. “Apart from the effect the higher dollar has on our profit and loss, it has also enabled the US to compete more effectively in our markets,” said Mr McGauchie.
In response to the Australian government's suspension of trade, the Indonesian government accelerated its policy to have a self-sustaining cattle industry by 2014. It reduced the number of import permits from Australia from 500,000 head in 2011 to 283,000 head in 2012.
“Indonesia remains an important live export market for AACo and we urge the Australian government to renew efforts to rebuild our diplomatic and commercial relationship with Indonesia, which will continue to rely on Australia as a local and reliable source of quality feeder and breeder cattle,” said Mr McGauchie.
He added that the US’s trade agreement with Korea has “put the entire Australian beef industry at a competitive disadvantage and increased price competition on cuts of beef that are commonly exported to Korea”.
Korea is AACo's largest boxed beef export market, accounting for more than 20% of the company's annual beef sales, and is a major trading partner for many Australian industries. “If Australia is to capitalise on the opportunities presented on our doorstep by the Asia, our political and industry leaders must take every step to ensure our industries are supported by forward-thinking policies that foster competitiveness on the global stage,” added Mr McGauchie.
Despite a tough year, through a three-year turnaround strategy and AACo has emerged as a globally focused, vertically integrated beef producer, according to the company, and achieved a $63 million turnaround improvement in operating cashflow.
“This strategy has delivered significant benefits, including substantial increases in the size and quality of AACo's herd, with an upgraded genetic and age profile,” added Mr McGauchie. “In addition, the company is extending its vertical integration through the Northern Territory abattoir development.”
The Australian government suspended cattle exports to Indonesia in June 2011 after an outcry over video footage showing inhumane treatment of cattle there.
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