Greater access to China is positive: AACoOn 01/31/2019 by admin
The nation’s biggest beef and cattle producer, Australian Agricultural Company (AACo), says the free trade agreement between Australia and China creates greater market access, but AACo will focus on pursuing high-value customers wherever they may be.
AACo managing director Jason Strong said the company needed to see more details of the China agreement.
But the reduction of tariffs under the China deal would provide AACo with greater opportunity in that market and a greater opportunity to establish relationships with high-value customers.
“Certainly any increase in market access we see as a positive, but it’s a bit hard to project what that impact might be,” Mr Strong said on Wednesday.
He said free trade deals with Korea and Japan were also significant because over time they would improve access to those markets, which would benefit all meat exporters.
“While some of these individual agreements provide some significant opportunity, our focus is still very much on finding the best, highest-value customers that we can to make sure that we can maximise price and margin as we increase our percentage of product which is being exported as meat,” he said.
AACo on Wednesday reported a net loss of $13.59 million for the six months to September 30, but it was an improvement on the $31.62 million loss of one year ago.
AACo significantly lifted its sales of processed, packaged meat, in line with its strategy of becoming less dependent on producing live cattle for volatile domestic markets and producing more high-quality beef for sale into higher-value global markets.
AACo intends to add value by processing its cattle through its new abattoir – called Livingstone Beef – near Darwin.
The abattoir should be able to process 500 head of cattle per day by March 2015.
“The results of the first half demonstrate the progress and the changes that we’ve made, and the benefits of the full execution of the strategy will become evident over time due to the long inventory cycle associated with cattle production,” Mr Strong said.
Sales of AACo branded beef lifted 38 per cent to $115.5 million compared to the prior corresponding period, driven by increased volumes at improved prices for Wagyu and shortfed beef.
Branded beef sales now account for over 76 per cent of AACo’s total revenue compared to 50 per cent in the prior corresponding period.
Cattle sales fell 64 per cent to $28.2 million as AACo built up cattle numbers for the Livingstone Beef abattoir and retained cattle so that they could take advantage of improved pasture conditions and gain weight.
The number of live cattle for export to Indonesia and other destinations had recovered to levels seen before the live export suspension in 2011.
AACo expects beef sales to remain strong for the remainder of its fiscal year, while live cattle sales are expected to pick up in ahead of the wet season.
AACO FIRST HALF LOSS NARROWS, BEEF SALES RISE
*Net loss of $13.6m, compared to $31.6m loss in 2013/14 *Revenue of $150.9mn, down 9.4 pct from $166.7mn
*No interim dividend