GINA Rinehart’s S. Kidman and Co pastoral arm has sold its Tungali beef feedlot in South Australia’s eastern corner to nearby grainfed beef producers, Simon Rowe and family’s Princess Royal Station.
The private deal settled on Thursday, but no price was disclosed, and Kidman was not prepared to offer a comment.
Following the earlier sales of Anna Creek, Macumba and Innamincka stations in South Australia’s northeast, the Tungali feedlot was Kidman’s last remaining cattle asset in South Australia, ending a century-old connection tracing back to Sidney Kidman.
Located in the state’s southeast corner near Sedan on the edge of the Barossa Valley, Tungali feedlot is licensed for 4966 Standard Cattle Units, and has been used principally to finish 100-day shortfed export steers from company properties, some of which were fed into the company’s Kidman Santa Gertrudis beef brand program.
The yard no longer served a strategic role for Kidman, and was considered surplus to requirements.
The Rowe family’s operation span from the Princess Royal feedlot near Burra through to the northern Flinders Ranges and comprises historic properties such as Mackerode Homestead and Princess Royal Station.
The acquisition of Tungali represents a significant expansion of Princess Royal’s grainfeeding operations, and is close enough to be run as an integrated business.
Princess Royal feedlot, located about an hour away, is currently completing its latest stage of expansion, increasing another 5000-6000 to give a one-time capacity of 18,000-20,000 head.
In 2019 Kidman secured approval to increase the Tongali feedlot’s capacity, following a deal with SA Water to secure more supply from the nearby Murray River.
New owners the Rowe family plan to expand Tongali’s operational capacity out to about 15,000 SCU, representing closer to 20,000 in actual numbers. Milling infrastructure will be upgraded, in addition to more pens and bunks.
The expansion projects follow a trend being seen more widely in the SA grainfeeding industry, with Thomas Foods International also expanding its Southern Cross feedlot (formerly known as Iranda Beef) near Tintinara, in SA’s Murray/Mallee region, from 17,000 head to 30,000 head.
Princess Royal focuses heavily on grainfed EU-eligible production, fed 100-200 days, with a smaller portion of domestic supermarket contract feeding totalling 144 head a week.
“We are a drought country, and there are more and more people to feed across the world. Animal protein is a popular commodity, and the only way we can guarantee consistency of supply as a viable option is grainfeeding,” Simon Rowe said.
“To raise a bullock on grass here, the country is now too expensive, given the numbers we can run per area,” he said.
Mr Rowe described the deal for Tongali as ‘fair market price for the vendor, and fair for the buyer.”
“Bank valuers in this region talk about feedlot prices ranging from around $600/unit on feed to $1000/head, depending on the quality of infrastructure. In my opinion it’s always too light, but it only accounts for 70pc of its true value, because of the borrowing capacity,” he said.
There was about 2000ha of surrounding backgrounding country involved in the sale. Being outside the Goyder line, it is considered marginal for farming, but useful for stockfeed when conditions allow.
Princess Royal Station itself runs about 3000 breeders, with the bulk of the feeder cattle requirements for both yards coming out of the market. About 75-80pc of the cattle on feed are black – but only because there are ‘more blacks than anything else bred in this area,’ Mr Rowe said.
Most of the grainfed turnoff is directed through Teys Australia Narracoorte or Tamworth, into EU and Angus brand programs.
Tungali was listed with Tom Russo from Elders.