The property is about 150km south of Darwin in a seasonally wet dry monsoon area with rainfall of about 1200 - 1500mm across the property, with more near the western coastline. It also has virtually all year round access to the main developed areas closer to the Stuart Highway.
Tieerary was the first of the large properties to be cleared in the late 1960s with over 30oooha cleared for cultivation. Sorghum and other crops have been grown over the years but it is true to say that overall, grain production was not successful on that scale. Some smaller areas have been used for grain and other cultivation since then, and some areas have enormous potential for continued use including irrigation of higher value crops, for example peanuts. Maybe even cotton too.
The buyer is Australia's largest cattle operation......Australian Agricultural Company or AACo, and the seller is Melbourne barrister Alan Myers.
The $105 million purchase of the famed Tipperary Station and Litchfield, as well as 60,000 cattle, will be funded by the sale of three of AACo's properties in Queensland - Clonagh, Kalmeta and Gregory Downs, which together cover 481,000 hectares and come with 62,000 cattle, ands are being sold for $152m.
The complex deal also includes the purchase of 19.9pc of AACo for $90m by Mr Myers, as part of Futuris Corporation’s sale of its 43pc stake in AACo. Futuris, parent company of Elders, will offer its remaining 23pc to the market.
"We have been looking at a number of options for disposal of our stake in AACo as we move Futuris away from passive investments to be fully focussed on being an owner/operator of core businesses in which we have demonstrable skill and market advantage and which match our cash operating earnings objectives," Futuris chief executive Malcolm Jackman said. "In that regard, the sale of a substantial part of our holding in AACo to a committed pastoral investor is an excellent fit with all stakeholders' interests." Futuris also is the principal owner of Elders, the major Australian pastoral supply business.
AACo CEO Stephen Toms said the company, by purchasing Tipperary and Litchfield, was acquiring a valuable and unique aggregation in the Northern Territory with unlimited tenure, excellent access to the Port of Darwin, reliable high rainfall patterns and a substantial infrastructure base.
"We have been conducting due diligence on the aggregation, off and on, over the past two years," Mr Toms said. "The likely trend, over the short to medium term, in consumer sentiment to beef will be toward lower cost products. "AACo needs to respond to that and stratify its sales and production programs for the changing market. "Accordingly the business will adapt its flexible pathway system to be weighted toward less costly grass fed production."
This is an interesting development with an obvious trend seen by a very large operator back towards grass grown and presumably grass finished cattle. The export livestock business is thriving in nortern Australia, with expected numbers exported likely to increase from 600000 head a year in 2008 to over 1.2 million by 2012, according to industry projections. Most go to Indonesia, a short 7-10 day journey, with very very little in the way of transport problems.
It also opens speculation about future development on Tipperary, particularly in relation to cropping and related enterprises including hay production and even expansion of better quality pastures. Other adjacent properties have also been sold to agroforestry companies, so that enterprise would also be an option. And interestingly, the NT government is moving to allow some tenative further clearing in the Daly Basin for agriculture and property development.
The other significant isuse is - if AACo are expanding and want grass fed cattle, presumably for the domestic market too, what will be the situation in relation to an abbattoir locally or will they ship cattle out for slaughter to southern states?
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