http://www.theaustralian.com.au/business/aaco-mulls-building-top-...

http://www.theaustralian.com.au/business/aaco-mulls-building-top-end-abattoir-as-southeast-asian-nations-stop-taking-live-cattle/story-e6frg8zx-1225942435246

AAco mulls building Top End abattoir as Southeast Asian nations stop taking live cattle
Andrew Fraser From: The Australian October 23, 2010 12:00AM

THE vast lands of northern Australia are home to some of the biggest cattle stations in the world.

But somewhat surprisingly, there's no abattoir of substance above a line from Perth to Townsville.

This lack of processing facilities has not been a big problem until this year. Over the past decade, the Northern Territory cattle industry has grown on the basis of bigger demand from Southeast Asian countries, in particular Indonesia, which now takes 80 per cent of the live cattle exported from Darwin.

But Indonesia is now following the lead of other Southeast Asian countries, such as The Philippines and Thailand, in trying to build up its own domestic beef industry, and is cutting its imports of Australian cattle, large ones in particular. This move, in turn, is leading to moves to build a major new abattoir in Darwin to service the territory beef industry, which suddenly finds itself with a surplus number of large beasts. For more than a decade, Indonesia has had a ban on importing beasts weighing more than 350kg, but this has not been enforced until the past year.

The results of the Indonesian action have been immediate. While last year there were more than 500,000 live cattle exported from Darwin to Southeast Asian countries, this year the figure is expected to be below 350,000.

This has created a particular problem for the Australian Agricultural Company, which has some of the biggest cattle stations in the territory, such as the 1221 million hectare Brunette Downs.

Chief executive David Farley has built up AAco's herd on his watch, after gambling (correctly) that the drought would break. But with a reduction in Indonesia's take of cattle and big costs of transport interstate, he has been looking at the economics of building an abattoir in Darwin.

Incredible as it seems, the meat in Darwin supermarkets could well come from the Northern Territory, but is put on a truck and transported either to eastern state abattoirs such as in Townsville or Oakey on the Darling Downs near Brisbane, before being packaged and put back on a truck to the Northern Territory.

There have been abattoirs in the territory in the past, notably at Tennant Creek and Katherine, but since the one in Katherine closed more than a decade ago, there have not been any new ones.

There are four small abattoirs in the territory, but they would have a total capacity of fewer than 50 beasts a week, certainly not enough for a major operation.

Farley has been in Darwin this week trying to drum up support for the idea of an abattoir in which AAco would be the main user, but not the only one.

He told The Weekend Australian that while the AAco was the largest cattle producer in the territory, it still needed the support of other cattle producers to make the abattoir viable.

"The distances you have to take cattle from the territory are so vast that cattle can lose up to a third of their weight when they're being transported," he said.

"We've been selling older cows into the Indonesian market, but they're exactly the ones that they're not taking now. Some of those old bulls can be 420kg or more, and that's really the market that we need to look at."

A briefing paper prepared by AAco states that the company currently has 300,000 cattle in the territory and of those, about 40,000 head are cows or other cull cattle that require alternative marketing options.

If this is extrapolated across the whole of the Northern Territory herd of 2 million cattle, there are about 265,000 cattle every year in the territory requiring an alternative market, or 1200 cattle per day for 44 weeks of the year.

Northern Territory Cattlemen's Association head Luke Bowen said that more than 80 per cent of territory cattle were shipped live to Indonesia and as such the local industry was concerned about relying on the one market.

He said that an abattoir could create a new chilled and frozen meat trade for the territory.

"We've had problems in the past with continuity of supply as well as labour -- housing costs

in the territory now are very high and that affects the number of people who've been available to work in an abattoir," Bowen said.

"But what's different now is that we have a lot of beasts being put on transport and taken interstate, and it's more economic to have them slaughtered here."

A new abattoir would cost $35 million with land and other associated costs of about $12.5m, while the company still needs to work out a deal regarding supplies of gas, electricity and water.

Farley said yesterday that if other cattle producers and the government came on board, the plant could be running by April 2012.