A SALE and leaseback arrangement involving one of Consolidated Pastoral Company’s largest properties will provide funds for further cutting-edge productivity improvements and value-adding of cattle for the forward-thinking beef operation.
CPC has just announced it will sell Carlton Hill Station in the Ord River district of Western Australia to a Chinese company which trades in Australia as Kimberley Agricultural Investment (KAI), but retain access for beef production through a ten-year leaseback of the vast majority of the property.
The sale has received Foreign Investment Review Board and WA government approval.
The 476,000 hectare Carlton Hill is the fourth largest of CPC’s 19 cattle stations and grows around 20,000 steers and heifers a year for export to Asia.
CPC, Australia’s largest privately-owned beef production business, also has a majority interest in the joint venture JJAA, which runs two feedlots in Indonesia.
The company’s chief executive officer Troy Setter said proceeds from the transaction would be re-invested in the significant operational improvements CPC has been implementing which is underpinning a strategy to be an integrated global beef supplier and marketer.
CPC’s work on lifting fertility without losing growth rates and increasing weaning rates and the speed of young cattle growth is viewed as some of the most progressive in terms of boosting profitability in northern Australian herds.
Mr Setter said delivering carcase-focussed feeder cattle capable of superior feedlot performance was key to CPC’s vertical integration plans in Indonesia.
The Carlton Hill deal would allow for more investment in genetics to continue that work and build on the very strong base CPC already has, he said.
It would also allow for continuing capital investment in northern operations, including water and fencing infrastructure to facilitate more precise grazing management, he said.
Increasing the total number of cattle those properties can run is the end goal.
Proceeds from the Carlton Hill sale will ultimately support the next phase of CPC’s transformation from a producer to a more vertically integrated supplier of cattle and beef, Mr Setter said.
“We are continually assessing where we participate in the beef supply and marketing chain,” he said.
“Our business in Indonesia is only one step away from the end consumer.
“Asia has enormous potential - a huge population growth that is fast moving from a lower to middle income demographic and that is all right on our doorstep.
“It’s our job to ensure we have in place the production system to meet that demand.”
Around 14000ha of Carlton Hill is earmarked for KAI development and CPC hopes to make use of some of the byproducts of crops, whether it be cotton, sugar or grain, for cattle feeding.
KAI says it is looking to continue developing land for intensive irrigated farming, adding scale to the region and the company’s existing operations.
On the back of this acquisition, KAI would be exploring other integrated business opportunities in northern Australia.
As for whether CPC had any plans for similar sale/leaseback arrangements with any its other properties, Mr Setter said: “We continue to asses our portfolio but there are no plans at the moment for similar structures.”
