Production

Research puts northern valuations in spotlight

James Nason, 23/04/2013

Research showing most cattle in northern Australia don’t walk further than one kilometre from water has significant implications for property valuations and future development potential, according to Mt Isa cattle vet Ian Braithwaite.

Citing research findings from the Pigeon Hole research project in the Northern Territory, Dr Braithwaite said 81 percent of northern Australian cattle did not walk more than one kilometre from water.

This meant that a large portion of available feed was not being utilised, and potential stocking rates of properties was often being over-estimated beyond sustainable carrying capacity.

Dr Braithwaite used the example of a property deemed to have a 40,000 head carrying capacity to illustrate his point.

At an arbritary value of $1000 a beast area, the property would be valued at $40 million, while the 40,000 cattle it is expected to run would represent about $20m in value (at an average of $500/head), equating to an overall value of $60 million.

However, if valued according to the number of permanent waters, and accounting for the research finding that most cattle do not utilise pasture beyond a 2.5km radius of each water, the valuation would be significantly different.

With 55 permanent waters, each able to support around 270 beasts, the property would be deemed to have a sustainable carrying capacity of around 15,000 LSUs.

At $1000/beast area, that amounts to a valuation of just $15m for the land, and $7.5m for the cattle it can carry, or an overall value of $22.4m.

“So we have come up with two valuation methods for northern Australia, we know where we’ve been, this is what they’ve paid for it, and this is what it is really worth,” Dr Braithwaite said.

“All of a sudden we have significant debt levels which we’re trying to service.

“I know if I have got 40,000 head hanging on 55 waters I am not going to get production – I have got no body condition, they’re walking a long way, the whole business is spiralling into the ground.

“And it is this carrying capacity, stocking rate issue that has just wrecked northern Australia.”

However the findings also highlighted the potential that exists in northern Australia to increase sustainable carrying capacity through more development.

“What we have got in northern Australia is a whole heap of grass that is over 2.5km from water that is really utilisable with more water and wire.”

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