Elders Exits Live Export Trade
One of the largest suppliers to the live export market out of Australia, Elders, has announced it will exit long-haul live export and plans a managed divestment of its short haul and air freight of live animals.
Due to pressure on margins, and an increase in specialist operators within the industry, Elders will now involve itself in the accumulation of cattle for other exporters.
Elders reported a loss of $2.9 million from its live export businesses in the six months to March 30, 2016. That poor result had included a loss of $3.8 million attributable to the long haul business.
Since that report, margin performance in the long haul business has continued to be poor.
Elders chief executive officer, Mark Allison, said “In addition, we do not see that the China feeder and slaughter trade, which is yet to fully open, will deliver margins or a return on capital at levels that meets our, and our shareholders’, expectations. As a result, we consider that the long haul of live cattle is best suited to specialist logistics operators.”
While there has been a strong campaign waged against the live export industry, Allison said this was not behind the decision to pull out.
He says Elders remains supportive of the live export industry. “Our focus remains on increasing client access to a range of markets, including live export markets for their stock, and we will continue to work with industry live exporters to market our clients’ livestock,” Allison said.
At present, Elders’ long haul business comprises sea shipments of dairy cattle to China and livestock to Pakistan, and potentially includes the export of live feeder and slaughter cattle by sea to China and live export of cattle to other markets of over 10 sailing days.
Elders’ short haul live export business which trades as North Australian Cattle Company, currently comprises the purchase and sea freight of live feeder and slaughter cattle to Indonesia and Vietnam.
Elders is expecting underlying earnings to jump as much as 24 percent after the announcement.