Apparently Consolidated Pastoral Company, the pastoral company (90% owned by Consolidated Press) built up by Kerry Packer since the initial purchase of Newcastle Waters station in 1983, is on the market for $425 million. James Packer and family wouldn’t sell the jewel in the crown, Ellerston, in a fit, however its not yet known which of the other 16 or so CPC properties (Qld, NT & Kimberleys, plus one other in NSW) would be sold. Having only just spent a reported $28 million purchasing Ucharonidge (bordering Newcastle Waters) in July 2008, presumably the CPC sale is on the cards to fund unexpected holes in the overall Packer budget. Manager Ken Warriner (original part owner of Newcastle Waters) is said to be set to retain his 10% share in CPC. A British company called the seemingly apt ‘Terra Firma‘- but actually with no agricultural experience or connection – is said to be the likely buyer. Terra Firma is an investment company that has existed since 1994, with offices in London and Frankfurt.
Interesting to note that James Packer apparently appointed Ashok Jacob as director of Consolidated Pastoral Company, just days before the sale of properties was announced. Ashok Jacob is commonly described as James Packer’s ‘right hand man’ – running Consolidated Press Holdings and on a number of the other Packer company boards. Naturally the timing has led to speculation regarding Ashok Jacob’s involvement in the decision to sell the Consolidated Pastoral Company properties.
Large, long-term, stable and profitable Australian pastoral companies are exceedingly thin on the ground. In fact, only five spring to mind – S Kidman & Co (SK), North Australian Pastoral Company (NAPCo), McLachlan family owned Jumbuck Pastoral Company, McDonald Holdings (MDH) and the Packer-owned Consolidated Pastoral Company (CPC). And perhaps the Australian Agricultural Company (AACo), although the rumour mill has been in overdrive regarding financial status over the last 12 months or so (with the aborted Futuris sale, and now the sale of 5 AACo properties to Primary Holdings International), as it has been for the Holmes a Court owned Heytesbury Pastoral Company. (Menegazzo-owned Stanbroke and Western Grazing could also be added to the list – though more recent companies and not quite as extensive.)
The former five all have one thing in common – family member shareholders. And they have something else in common. This long term ownership leads to a steady long term view and stewardship of the land that is unfortunately lacking on some investor and public shareholder owned properties, both large and small, where the order of the day seems to be for the Lands Department to turn a blind eye to rape & pillage.
If Consolidated Pastoral Company – or the bulk of it – passes into the hands of a company that does not have a board consisting of at least 50% directors with hands-on Australian rural experience then it is guaranteed to be sold off within a few years. It will go the way of every other pastoral group that has been bought by a pack of bankers/city investors possessed by romantic ideals combined with gleeful handrubbing (great expectations of steady financial returns year after year). And the stations are likely to be in a worse shape when sold on, due to either poor management or lack of capital expenditure – or both.
City-based investment companies that have invested with great enthusiasm in Australian pastoral enterprises, ending in tears, are a dime a dozen, stretching right back to the first days of European settlement, when starry-eyed city syndicates took up large slabs of northern Australia – only to sell them on to those with hands on experience within a few disenchanted years. Often the enthusiastic would-be money makers had never even set foot anywhere near the big stretch of remote country that they had such high hopes of profiting from.
The value of large cattle stations on the market at present is at record levels – all at purchase prices that make a running profit impossible. The only way to make a real profit is to sell them on a real estate market that has risen, to realise capital gain. And the only buyers that can afford price tags of tens of millions of dollars are investment companies, or a rare handful of individuals who have built up land ownership by careful management and hard work over generations; or a few (who will remain nameless) who have taken either illegal, or immoral, shortcuts.
It’ll be a sad day for all when any of the big five pastoral companies are sold into other hands. And the time is right for a serious discussion on the merits of dividing up eminently suitable properties such as Tipperary (NT), thus allowing the expansion into the market of already established farming families and up-and-coming enthusiastic younger generations who are currently working as rural contractors etc. At present too many of these large stations are owned by distant investors with no personal interest in the land, who provide no management continuity and little in the way of overall improvements and efficiencies.
Tags: Rural properties for sale and ownership, Rural foreign investment