$40 Million Dollars Has Vanished

Now that I have your attention….

Have you ever had the opportunity to sell your ranch for $40 million and then, overnight, that opportunity is gone, kaput, vanished? 

Cattle producers in Australia’s Northern Territory know exactly what it feels like in light of the recent export ban resulting from a video of cattle being severely mistreated in and Indonesian abattoir. I highly suggest you read my post on NCBA’s YPC blog, watch the video and then come back here – it will only take 10 minutes and I swear, it’s worth it and so extremely relevant.

Now that you’ve read all that (seriously, if you haven’t you NEED TO DO IT), let’s get back on topic.

As I was saying, live exports to Indonesia (and only Indonesia) have been banned for at least six months but could last for a whole year. There are several cattle stations that had been in negotiations to sell for sometime and since the ban, those negotiations have stopped and all offers have ceased. There is even a case where one Australian company had completed several months due diligence on a property but, upon hearing of the export ban, backed out before submitting a final offer. Yet another station, worth approximately $40 million, was in the final stages of the sale only to have the bottom fall out.

The North Queensland Register’s Matthew Cranston states that “A halt to live exports prevents owners from selling their cattle and generating cash. Without revenue the properties lose value in the same way office towers do when they have no tenants. They may also struggle to pay bank debt, raising the prospect of defaults.” 

This is a serious issue affecting cattle ranchers not just in northern Australia but in the southern states as well. The market will likely be flooded with beef that had been destined for Indonesia and beef prices will fall. Of course, consumers will be happy but this comes at great detriment to producers all over Australia.

What’s your take on this issue? Do you think government officials took the right steps or did they act in senseless haste? Would love to hear your feedback!

Until next time,
~ Buzzard ~