Leucaena established on Central Queensland grazing property Dumbarton, near Dingo

DESPITE universal acceptance that it improves production capacity, helps mitigate drought and delivers greater profitability, the jury is still out on whether there is a consistent value trend for land established to the browse legume shrub, leucaena.

In this week’s property review, industry experts discuss whether buyers are prepared to pay a premium for properties growing the drought-tolerant and high nutritious legume.

Leucaena is a long-lived, deep-rooted leguminous forage shrub that has been grown in northern Australia for more than 100 years. At its peak, its nutrient value is similar to lucerne.

Grazing varieties were first introduced by the CSIRO in the 1950s for beef systems in tropical Australia, and the most recent cultivar release, Redlands, is superior for insect resistance, frost tolerance and palatability.

Today more than 150,000ha of grazing leucaena has been successfully established, predominately in Central Queensland, according to the industry promotion body, the Leucaena Network.

More recent plantings are found across Northern Australia from the Top End of the Northern Territory and Cooktown in north Queensland and in southern Queensland to Goondiwindi.

Stuart Buck, agronomist

Rockhampton-based Stuart Buck is the principal agronomist at Sown Pastures, at Queensland’s Primary Industries Department.

He said latest costings had found that planting and establishing leucaena could range from $500/ha to $800/ha depending on how it is done, the actual landscape it was being planted into and what needed to be done to make the soils productive (in terms of fertiliser).

Stuart Buck

“Producers will pay less if they sow into existing buffel or improved pasture paddocks by cultivating strips, preparing those strips, planting leucaena into them, spraying for weeds and applying a modest amount of fertiliser. However, it doesn’t include lost productivity” Mr Buck said.

He said planting leucaena into an existing cultivation paddock (oats or forage crops) was cheaper because the bulk of the cost was land preparation.

“The worst-case scenario would be sowing into a paddock that has an undesirable grass, like Indian cooch, African lovegrass or giant rat’s tail.”

“Producers should consider starting again by ploughing the paddock from fence to fence, fully removing the existing grass and then reseeding to a new pasture, such as leucaena,” he said.

Mr Buck warned that producers who skimped on establishment costs would shoot themselves in the foot, because it cost more in lost productivity over the long term.

“The paddock may have limited use for the first 12 to 18 months of establishment, but producers will have a 30-to-40-year investment with little additional cost.”

Mr Buck said leucaena significantly improves productivity and flows through the cattle herd to the overall farm business profitability, minus the $500/ha outlay costs.

“I dare say properties with leucaena would make more money, but it depends on market demand and the buyer type,” he said.

“Broadly speaking, there have been some properties in Central Queensland that have sold for good money, because not every producer wants to plant leucaena as it can be quite fickle to establish. So, for some buyers, established leucaena paddocks may be a bonus they are willing to pay a premium price for,” he said.

Redlands, the latest highly psyllid (sap-sucking insect) tolerant variety, was anticipated to be a game changer for coastal areas of northern Queensland and the Northern Territory, however, the actual uptake has been lower than expected.

Mr Buck doesn’t exactly know why that was, but thinks it may be price driven.

“Redland seed is more expensive than other varieties. I believe it is selling for $90 a kilo compared to the long-standing Cunningham variety which is selling for $35/kg to $40/kg.”

“Then again, planting Cunningham in a psyllid-prone area like Mackay doesn’t make sense. Producers there are better off spending the extra money on Redlands because it will pay off in the long term,” Mr Buck said.

Jimmy Ashleigh, property agent

A recent property listing which could help provide some guidance on established leucaena land values is the 344ha Karinya situated in the Whitsunday region, 7km north of Gumlu and 38km south of Ayr.

The North Queensland backgrounding and finishing block underpinned by irrigated leucaena was developed by former Cattle Council of Australia president and North Queensland leucaena pioneer Greg Brown and wife Judy.

Karinya is heavily established to leucaena, growing 275ha of irrigated Redlands psyllid-tolerant forage legume developed specifically for Northern Australia by the University of Queensland and Meat & Livestock Australia, and conservatively running 420 Adult Equivalents on 57ha of improved pasture.

Vendor Greg Brown said leucaena had both environmental and productivity benefits.

“Redlands leucaena not only supports high cattle liveweight gains but also reduces bovine methane emissions by 20 percent, contributing to environmental sustainability,” he said.

Jimmy Ashleigh

During the expressions of interest campaign, Colliers agent Jimmy Ashleigh reported strong interest from neighbours and locals, as well as larger landowners around the Charters Towers region looking for a cattle growing and finishing depot.

In fact, co-agent, Bram Pollock from Prophurst received five written offers resulting from seven inspections.

Earlier this week, Karinya was placed under contract.

Unable to disclose the buyer or the price paid, Mr Ashleigh said the block attracted a ‘value add’ compared to other similar properties that have sold locally.

“The sale will set a benchmark on a price per hectare for developed leucaena country which has the ability to increase weight gains and carrying capacity,” he said.

“Properties growing leucaena attract more interest, but typically, producers are not looking for standalone leucaena blocks like Karinya,” he said.

Will McLay, valuer

Herron Todd White Central Queensland valuer Will McLay said a handful of properties with a portion of the country established to leucaena are offered to the market each year, but it is rare for any assets to have a significant amount of established leucaena like Karinya.

“Due to the lack of sales evidence, it is difficult to determine what people are paying for properties with developed leucaena,” Mr McLay said.

“What I can say is, the sales that have come through in the last year or two have shown anywhere between about $8000/ha and $10,000/ha for the holdings with an area of leucaena, compared to scrub country that is selling for between $7000/ha and $8000/ha. That is an added value of between $1000/ha and $3000/ha,” he said.

Will McLay

Ranging anywhere between 20 percent and 35 percent above the underlying land value, Mr McLay said there was no doubt leucaena country was worth something more than the same country without the browse legume on it.

“It is not a premium, it is really a value-add. It is a recognition of the uplifting carrying capacity the owner gets from leucaena,” he said.

He said while most producers were happy to have some leucaena on properties listed for sale, once there are substantial amounts, the buyer profile narrows.

“The reason is there’s increased management compared to grass pasture on the same area. Depending on where you are, producers need to maintain leucaena by hedging or trimming it to ensure it doesn’t get out of control.”

Mr McLay said leucaena was recognised as a supporting improvement to pasture (not the other way around), with grass promoted as the primary source of fodder (70pc) and leucaena as the ‘top-up’ (30pc).

Roger Hill, valuer

Roger Hill, a valuer at Preston Rowe Paterson (North Queensland) said leucaena provided producers with an opportunity to increase kilos of production and take control of delivering a consistent finished product.

“Leucaena produces superior weightgain. It allows producers to deliver regular and consistent lines of fat cattle. For instance, cattle can feed on leucaena and be delivered on a certain date and market specification.”

Mr Hill said there was little evidence to guide as to the added value of a leucaena paddock on a property.

“The development of the leucaena industry has been a learning curve in terms of different varieties and planting widths and, as a result, there is still no consistent market evidence showing what the added property value is in the north for dryland or irrigated areas.”

Mr Hill urged interested parties to conduct a cash flow analysis, taking the leucaena into account.

“Rather than looking at the hectare rate of leucaena, producers should examine the cash flow from the added value of having that leucaena paddock.”

“Determining how many more kilos a year will be produced and how much it costs to grow over a certain period of time will establish a commercial valuation calculation.”

“While the grazing industry is not diving into leucaena, some clients in Mitchell grass downs country are interested in growing leucaena for drought mitigation and speeding up cattle production.”

When the Redlands cultivar was released several years ago, it was heralded as a potential game-changer for Queensland and the Northern Territory by expanding the area planted to the legume tenfold.

Mr Hill said it was still considered a new variety and as such, only small areas have been planted.

Rather than paying a premium for properties growing leucaena, he said potential buyers were happy to pay for the added value.

“A well set up leucaena block has an added value component to the property. For example, 100 head of cattle may be able to feed on 100 to 120 acres of leucaena, depending on whether it is irrigated or dryland.”

“Dryland will mean a lower stocking rate and lower level of production, however it may be more profitable than irrigating the crop.”

Mr Hill said it was important that producers check whether there was an economic benefit of growing leucaena under irrigation.

“Some producers have found planting leucaena under a centre pivot too expensive. An alternative is to use trickle-tape (a subterranean irrigation system). So, the irrigation system is relevant to the economics of how profitable the leucaena is, compared to just simply leaving it in the paddock.”

Matt Beard, property agent

Last week, a Central Highlands backgrounding and finishing depot growing leucaena was passed in at auction for $13.5 million, with RBV Rural agent Matt Beard now negotiating with several interested parties from central and north Queensland.

Matt Beard RBV

The 3740ha Amatunga is located 30km east of Clermont and 49km from Capella.

Around 240ha had been developed to dryland leucaena (planted into old cultivation), with the vendors running 1500 Adult Equivalents on well grassed coolibah and brigalow country.

Mr Beard said leucaena turns average basalt, black soil country into higher value grazing land.

“Traditionally in Central Queensland, producers plant leucaena in areas where they might be struggling to establish buffel grass. If leucaena is planted correctly, in terms of row spacings, varieties and maintenance, there is no doubt it adds value to that country,” he said.

“While I believe leucaena adds significant value to a property because it is a high-capacity pasture, what value it adds on a per hectare basis, I’m not sure. Beauty is in the eye of the beholder.”