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Stewart Cruden - Northern Beef Processing Facility, AACo - PROJECT UPDATE: The outlook for the...
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Building the Territory AACo’s - Northern Beef Processing Facility Stu Cruden, General Manager 21 August 2014
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Stewart Cruden delivered the presentation at the 2014 Building the Territory Conference. The inaugural Building the Territory Conference 2014 is an opportunity to meet with the project owners and leaders, to hear about the new opportunities and developments for the built environment in the Territory. For more information about the event, please visit: http://bit.ly/BuildingtheNT2014
Transcript of Stewart Cruden - Northern Beef Processing Facility, AACo - PROJECT UPDATE: The outlook for the...
Building the Territory AACo’s - Northern Beef Processing
Facility
Stu Cruden, General Manager
21 August 2014
The Northern Beef Processing Facility
• Located at Livingstone, 50km south of Darwin on the Stuart Highway
• Process capacity of about 200,000 head p.a.
• Predominantly manufactured beef – hamburgers and mince
• From Darwin port via Singapore to export markets in the US and Asia, including Indonesia, China and the Philippines.
Australia’s largest beef producer is developing a strategic beef processing facility selling
directly into beef export markets
35 largest existing
beef processing
facilities
Legend
NABL (50km south of Darwin)
NABL
A flexible and low-cost facility
• “Hot-boning” production model – low cost and high productivity
• Stage Two will convert the facility from a manufacturing plant to a prime plant
• Includes cull cows and bulls and heavy steers in the NT and north Western Australia
• AACo has the capacity to supply 35-40% of cattle to the facility
• Ability to process 12 months of the year.
Key demand drivers for beef
• The Northern Beef Processing Facility will export
beef to the US and fast-growing Asian markets
World agrifood demand, population and income (2050)
50
100
150
200
250
300
2007 2014 2021 2028 2035 2042 2049
World income
World agrifood demand
World population
Index (2007 = 100) Source: ABARES model output (2007 US dollars)
211%
77%
40%
Index (2007 = 100)
Source: ABARES model output (2007 US dollars)
Key demand drivers for beef
Index (2007 = 100)
World agriculture imports in Asia (US$ billion) Beef import demand (US$ billion)
Source: ABARES model output (2007 US dollars)
79
5
39
123
123
108
360
591
0 200 400 600 800
Rest of Asia
India
China
Asia
2050
0
1
5
2
1
5
5
10
18
39
0 10 20 30 40 50
India
ASEAN
Rest of Asia
Africa
China
2050
World demand for beef is expected to grow from US$7 billion to $60 billion by 2050.
Impact on the northern cattle industry
• Current economics of slaughter leads northern
producers to retain cows despite likelihood of
death/lack of productivity
• Livingstone facility will provide an attractive
market option for these cull cows and bulls
• Improves the productivity and profitability of the
industry
Cow selling decision tree (ACIL Tasman analysis)
Cull cows
(< x years old)
Retain (status quo)
Send to
slaughte
r
Replace with
heifer / steer
Rears a calf (~24%)
Does not rears a calf
(~56%)
Dies (~20%)
Creates a viable marketing option for cull cows by eliminating transport / shrinkage costs
Immediately increases sales value and turnover
Benefits
Profitability
Improves average herd profile over time leading to increased fertility and lower mortalities
Productivity
Superior financial
outcome
Source: ACIL Tasman Report: “The economic impact of the proposed AAco abattoir”
Key regions of supply
11
Source: AgSurf Farm Survey Data
• Only material processing facility in
northern Australia
• Producers in NABL’s target regions
will incur lower transport costs and
shrinkage rates to Darwin than East
Coast facilities
Pilbara–Gascoyne
Kimberley Top End–Roper–Gulf
Barkly–Tennant Creek Victoria River District–Katherine Cape York and Gulf of Carpentaria
Major road transport route
Arc Distance (km) * Rate/km**
201-400 $ 1.76
2 401-800 $ 1.67
3 801-1000 $ 1.54
4 1001-1200 $ 1.51
1200 + $ 1.47
* Blue Arc lines display an indicative straight line distance from Darwin. **Transport costs based on RTA estimates. See slide 21 for more detail
Key regions of supply
12
Source: AgSurf Farm Survey Data
Region has a total herd of more than two million head.
* Blue Arc lines display an indicative straight line distance from Darwin. **Transport costs based on RTA estimates. See slide 21 for more detail
Northern regions 2006-7 2007-8 2008-9 2009-10 2010-11 Avg.
5 year
Alice Springs 268 345 182 245 230 254
Barkly Tableland 564 537 566 445 702 563
Katherine 676 800 843 843 907 814
Top End 176 294 42 56 55 125
Total NT 1,684 1,976 1,633 1,589 1,894 1,755
Kimberley 635 472 458 646 570 556
Total 2,319 2,448 2,091 2,234 2,464 2,311
Source: AgSurf Farm Survey Data
Summary of Northern cattle regions (‘000)
Northern regions 2006-7 2007-8 2008-9 2009-10 2010-11 Avg.
5 year
Alice Springs 65 126 57 55 48 70
Barkly Tableland 135 499 292 171 341 288
Katherine 136 247 243 188 217 206
Top End 31 117 7 14 13 37
Total NT 368 989 600 427 620 601
Kimberley 153 145 160 198 162 164
Total 521 1,134 760 626 782 765
Total cattle turnoff per annum (‘000)
Reduced transport costs
$- $50 $100 $150 $200 $250 $300
Katherine
TennantCreek
AliceSprings
Mt Isa
HallsCreek
Broome
Barkly
Dinmore Rockampton Townsville Darwin
Transport Cost Comparison ($/head) to processing facilities
Benefits for all, not just beef
• $ millions a year boost to the economy
• Creates 300 new / Permanent jobs and 500
indirect jobs
• 30 per cent increase in container traffic at Port
of Darwin
• Better cold-chain logistics for horticulture and
aquaculture
