Weekly Agribusiness News Recap - By Georgia Devenish

By: "Farm Tender" News
Hay & Fodder News
Mar 07, 2019
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By Georgia Devenish - Agricultural Research Analyst at JLL.

Agribusiness

Japan’s S Foods has purchased southern New South Wales beef processor Monbeef. S Foods is ranked within the top five meat importers in Japan by volume. Monbeef has supplied S Foods with beef in the past through its export agreements with Sanger and Agricomm. S Foods has no previous investment history in the Australian red meat supply chain, but it owns and operates two beef processing plants in the US.

GrainCorp has announced the sale of its Australian Bulk Liquid Terminals business for a total enterprise value of approximately A$350 million. This has set a deadline of 10 May 2019 for the takeover bid by Long Term Asset Partners.

The buyer of the assets is ANZ Terminals which owns and operates bulk liquid storage facilities in Australia and New Zealand. Palisade Investment Partners, Colonial First State Global Asset Management, Northleaf Capital Partners, Fengate Capital and Macquarie Capital are all reported to have a stake in the company.

Japan’s Nisshin has bought the Allied Pinnacle flour and bakery business, Australasia’s largest end-to-end bakery ingredient supplier. Nisshin is Japan’s largest flour-milling company. The sale was announced by Pacific Equity Partners (PEP), a fund manager which formed the business by combining Pinnacle Bakery and Integrated Ingredients with Allied Mills which they acquired in 2017.

The sale does not include the company’s ten major assets, including mills, which PEP sold in 2018 to investment fund Qualitas for $400 million. They are leased to Allied Pinnacle on a 30 year triple-net lease.

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Since 30 June 2018, the Rural Funds Group (RFF), the largest fund managed by Rural Funds Management (RFM), has increased its property and livestock investments along the eastern seaboard of Australia by more than $233 million. As at 31 December 2018, RFF owned $871.256 million worth of total assets across 49 properties in comparison to the $637.808 million across 38 properties at 30 June 2018.

SunRice’s mothballed Coleambally rice processing mill in southern New South Wales is to be converted into a major livestock feed manufacturing plant by its CopRice division. CopRice confirmed it would rebuild the plant during the coming nine months with aims to become one of Australia’s largest ruminant nutrition milling facilities.

The ACCC’s decision in 2013 to not oppose Ruralco’s bid to acquire Elders’ rural business may have paved the way for the current bid by Nutrien to take over Ruralco.

Livestock

The high demand for – and the low supply of agistment in Queensland’s north west is becoming apparent in those areas which received rain during February. The strength of demand is being driven by inflows of cattle from the Barkly Tablelands in the Northern Territory as well as central and southern Queensland and northern New South Wales. Producers in the region have been slow to respond to inquires given that many are still assessing flood damage and the alternative of restocking is increasingly appealing as cattle prices continue their decline in markets further south.

Western Queensland livestock agents are warning large numbers of Northern Territory cattle will be coming onto the market within the next month. The Australian Agricultural Company and Australian Green Properties are both offloading, offering a combined 10,500 cattle at the Western Queensland Livestock Exchange in Longreach in March. If rain fails to arrive this month many more cattle will likely come onto the market.

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Growth Farms is restructuring the operations of the recently purchased Kangaroo Island Cygnet Park Farms aggregation by restocking with sheep and shifting away from cattle. Managers are in the process of restocking with 12,000 additional sheep sourced on the Island and from as far as New South Wales.

Aquaculture

Esperance, Western Australia could be the site of a new abalone hatchery after the Esperance Shire Council gave in-principle approval to engage in a commercial undertaking with Ocean Grown Abalone.

Subject to community feedback and endorsement by council, Ocean Grown Abalone is expected to lease the 34 hectare property on Wylie Bay Road for a period of 12 months to carry out a feasibility study and assess the land's development potential.

Condabilla, a 570 hectare aquaculture enterprise and one of the largest of its kind, located at Condamine in Queensland, has been offered for sale via auction on 5 April 2019.

Dairy

Bega has pointed to the purchase of its Koroit plant as a reason it has reported a drop in its profits at its half-year results. On a normalised basis, Bega reported half-year profits of $18 million, down 48 percent and EBITDA of $58 million, down 17 percent.

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Bubs Australia is set to partner with Beingmate Baby and Child Food Co, one of the largest Chinese owned enterprises in the infant nutrition industry. The companies have entered a non-binding memorandum of understanding and will form an eventual joint venture in Shanghai.

Water

Duxton Water more than doubled the value of its entitlement portfolio over 2018 to $194.4 million and spent $31.76 million buying an estimated 104,000 megalitres of allocation water. In contrast, at 31 December 2017 it held just $1.6 million worth of allocation water.

The Government has released the first report of Foreign Ownership of Water Entitlements. The report shows the proportion of total water entitlements that have a level of foreign ownership (20 percent and above) is 10.4 percent. The US and China are Australia's largest sources of foreign investment in water entitlements. Of the 10.4 percent that is foreign owned, 66.5 percent is used for agriculture and 26.3 percent for mining.

Trade

Australia and Indonesia have signed the Indonesia-Australia Comprehensive Economic Partnership Agreement.

Other

ABARES agricultural commodities March quarter 2019 has been released.

Steve Hatfield-Dodds, executive director of ABARES has said his agency was preparing to change how it does forecasts in the wake of the increasing volatility of global weather. He also said that his agency was concerned the US-China trade negotiations could lead to disastrous consequences for Australian agriculture.