CEO wants AACo to be agricultural giantAugust 12, 2008 -...

CEO wants AACo to be agricultural giant

August 12, 2008 - 2:47PM


The new chief executive of beef producer Australian Agricultural Company Ltd (AACo), Stephen Toms, says he wants the company to become the nation's agricultural powerhouse.

AACo announced the appointment of Mr Toms on Tuesday.

Mr Toms had been acting chief executive since May and is a former chief financial officer of AACo.

"This company is well positioned to take advantage of our significant asset base," Mr Toms said after the release of the company's half year results on Tuesday.

"We want to become the agricultural production powerhouse of Australia.

"We're well positioned to do that.

"The cattle price is rising and there is what would appear to be very strong underlying demand for protein in the next six months onwards."

Mr Toms said AACo was looking at diversifying its portfolio into other areas and not just focusing solely on beef cattle.

"It's embryonic ideas that takes you out into other agribusiness," Mr Toms told AAP.

"We're good at feedlotting cattle. The next extension of that is you say, why beef cattle? Dairy cattle is obviously the next one.

"And when you talk about feedlotting animals of that quantity, you need the crops to feed them, so we can either grow the crops ourselves or rely on other farmers to do that for us."

AACo was also considering the possibility of turning some of its land in the Northern Territory and around the Gulf of Carpentaria over to the production of crops such as sorghum.

Mr Toms said there was plenty of interest from agricultural funds and corporations, especially in the United Kingdom, about investing part of their portfolio in the world agricultural sector.

"The thing Australia has, compared to say Brazil or Uzbekistan or any of those places, is that we have a stable economy, stable politics, a currency that's tradable and a financial system that is one of the best in the world," he said.

Mr Toms said his short-term goals for the company included to keep driving cashflow until global credit markets settled, to establish AACo's fresh breeding herd, and increase meat production to take advantage of rising beef prices.

AACo was in the process of adding 100,000 animals to its base herd of around 500,000, to lift numbers to 600,000 in another two years.

Mr Toms said lifting the herd numbers would generate economies of scale.

There was also a gradual shift of animals to grazing land to the north, where water and pasture are more reliable.

AACo aims to have a herd of one million by 2015 so would need to acquire more properties in the Northern Territory or the gulf.

Mr Toms said AACo needed $150 million to $200 million to buy more properties and could raise capital through the creation of an agricultural fund.

"It's in process. Could be a while yet ... I'll keep the market updated but I can't say too much about it," Mr Toms said.

Mr Toms also said AACo was interested in participating in an emissions trading scheme and carbon sequestration.

"What we're looking at doing is either forestry-type carbon-sinking, which is one avenue," he said.

"The other is soil sequestration of carbon.

"There is also reducing our own footprint - that's methane (gas) reduction from cattle.

"They're all embryonic projects at the moment."

AACo on Tuesday reported a net loss for the six months ended June of $2.1 million, compared to a net profit of $5.9 million in the prior corresponding period.

At 1404 AEST, AACo shares were steady on $3.01.