Hot on the heels of unveiling ambitious live export plans to China, Gina Rinehart’s expanding Hancock cattle business has bought a Queensland feedlot to help beef up domestic marketing options.
The 8000-head capacity Maydan feedlot at Warwick accommodates both short-term and long-term custom feeding.
Bought from Geoff and Rebecca Willett, “Maydan” currently specialises in providing feeding strategies for premium beef producers.
Mrs Rinehart’s Hancock Prospecting agricultural arm already sends its 2GR fullblood Wagyu cattle from properties in central NSW to be finished at “Maydan”.
Hancock expects the site to continue servicing existing customers, and new suppliers.
Mr Willett will stay at “Maydan” to ensure a smooth transition through the sale and beyond.
“This acquisition secures a key part of the supply chain producing, and then processing, export quality full-blood Wagyu to our Asian neighbours and local markets,” Mrs Rinehart said.
“The `Maydan’ acquisition continues the company’s pursuit of integrated investments in the cattle industry focused on optimising the quality of our beef.
“We are pleased to invest in regional Australia and regional jobs.”
Her comments on local investment reinforce the Hancock company message early this week after news of its China live cattle export plans were publicised.
Hancock insisted it remained committed to growing all aspects of its beef business and continuing to supply into multiple distribution channels.
“While our premium 2GR brand Wagyu and southern Kidman and Company cattle will continue to be processed locally, our northern cattle are generally better situated and suited to live exports,” a company statement noted.
“Under this proposal, the planned downstream investment would increase our share of income from those exports.
“This will help underpin ongoing investments in our local assets for years to come.”
Maydan Feedlot’s Mr Willett was pleased to see the family-run business being handed to “a great Australian company” with “great plans for the cattle industry”.
“I am confident that with Hancock’s investment “Maydan” will continue to thrive,” he said.
China quarantine strategy
Meanwhile, Hancock’s chief executive officer, Garry Korte has confirmed the company is pinning its live export expectations on a strategic quarantine breakthrough to open the doors for its new northern trade with China.
Hancock is currently fine tuning two joint venture deals involving cattle and supply chain co-operation with the Zhejiang Aozhou Cattle Industry Company (Aozhou).
The strategy involves a 150,000 head a year capacity feedlot and abattoir effectively quarantined on Jintang Island, near the big port city, Ningbo.
To date Chinese quarantine protocols around bluetongue virus have provided a significant hurdle for live exporters aiming to ship cattle from northern Australia to mainland China.
“We are confident that given separation of Jintang from the mainland, and the fact that China also has a blue tongue line which is proximate to Jintang Island, an appropriate quarantine protocol will be able to be developed allowing trade of cattle from Australia’s north to proceed,” Mr Korte said.
He noted the current heads agreement deal with Aozhou was still subject to Chinese government approvals which included necessary amendments to quarantine regulations.
The joint venture proposal is for Hancock to control a majority 66.7 per cent share in the Australian based business sourcing stock for export from Hancock’s northern stations, and other producers.
Aozhou will own the remaining 33.3pc.
Hancock has an option to take a minority share in Aozhou and its Chinese operation.
The company said once completed this agreement would enable it to participate in all aspects of the supply chain through to the end customer and so capture a greater share of the total value of our Australian grown products.
A new market for Australian cattle would also serve to increase competition and should lead to improved prices for the pastoral industry and encourage further investment.
Local processing and live export
Answering questions as to why Hancock had not pursued the option of processing more northern cattle in Australia, the company said it believed multiple available markets provided the best possible return for different product specifications and qualities.
“For this reason we currently support a range of supply channels, including live sales into local markets and processing, as is typical for the cattle out of S. Kidman and Co’s southern stations; retaining direct ownership of cattle through the processing chain and then directly marketing the resulting produce (this occurs with Hancock’s premium Wagyu and is planned for Kidman branded beef), and selling into live export markets, which is typical with northern cattle.
“Hancock is actively investing in all its cattle stations to grow the sustainable carrying capacity.”
The company was also focused on growing various markets for produce from those stations.
There was no reason access to, or growth in, any one of those markets should be constrained.
“Such constraints would not improve the international cost competitiveness of Australian produce in those other markets, but would instead likely result in the substitution of more competitive produce from alternative suppliers eroding Australia’s market share and export income,” the company noted.
Cattle from northern Australia were typically better situated and suited for live export markets and were therefore typically already exported live.
Under the Aozhou joint venture, rather than sell cattle to exporters which currently undertake such exports and on‐sell to importers, Hancock proposed to retain a direct ownership interest all the way through to the end‐customer.
This retention would increase the Australian share of income derived from locally-grown cattle.