Australian Country Choice (ACC) Gains Approval for 65000 Head Feedlot
Operators in the Australian beef supply chain Australian Country Choice (ACC) have been given permission to build a 65,000 head feedlot on one of their aggregations. The chief-executive of the family-owned company, Anthony Lee, is pleased to have received the permission for construction at the Tungamah aggregation near Moonie on the Western Darling Downs.
However, he has also made it clear that the company will not be taking advantage of the permission right now. There are no plans for construction to begin at the present time despite the company having received local council approval.
Instead, the permission is likely to play a part in the company’s future operational strategies. These strategies will be shaped by the ongoing situation in the meat industry, and more specifically the beef industry, in Australia. They will also be dependent on the success of the diversification which features in ACC’s plans for the future.
Key points
- Australian Country Choice (ACC) beef supply chain operation has been given permission to build a greenfield 65,000 head feedlot at the property Tungamah near Moonie.
- The company will not be taking advantage of the permission at the present time.
- The construction of this type of feedlot is expensive in the current market, hence the decision not to progress right now.
- For the foreseeable future, Tungamah will continue to be used for cropping and backgrounding.
Australian Technology
Approval is part of a long-term strategic plan
While the recent planning approval is welcome, it plays a part in ACC’s long-term strategy and is not integral to its current operations or plans. Lee suggested that the approval of planning for construction at Tungamah is about getting the organisation set up for the future.
It’s part of ongoing changes to the ACC business model that began around two years ago. The company is moving from being a dedicated domestic processor for the Coles supermarket chain to a more diverse model including an increase in exports and the incorporating of a Wagyu stream.
In general terms, under the new model, ACC plans to allocate around 40% of its weekly kill capacity to current domestic clients Coles and Woolworths. A further 40% will be dedicated to export kills for a range of customers and 20% will be dedicated to producing high-quality beef products marketed under ACC’s own brands.
As part of this new model, ACC is moving away from 60-70 day domestic programs to longer-fed Angus and Wagyu cattle. This means that there will be a need to increase feedlot space at some point. This space may be found at current sites or may be provided at a new-build site in the future.
Tungamah property to continue being used for cropping and backgrounding for now
Although the 12,300ha five-property Tungamah site may be developed to provide this extra feedlot space at some point, it will continue being used for its current purpose for the foreseeable future. This purpose is cropping and backgrounding to provide silage and hay for the Opal Creek feedlot near Millmerran which ACC purchased in 2015.
The current uncertain situation in the cattle market, resulting from the COVID-19 pandemic and the trade issue with China, means that now is not the right time for construction to begin at Tungamah. The financial risk is too great in the current climate and the rewards are not guaranteed. When the timing is right, the proposed building of the site is likely to take place in five stages if it happens at all.
This type of staged development happens with many commercial feedlots. Time is taken before maximum potential capacity is reached, if it ever is. For example, Stanbroke’s feedlot at Chinchilla was first built in 1994 and operated at only 10,000 head capacity for the first ten years. It’s only relatively recently that the capacity increased first to 20,000 and then to 40,000. The development process for the feedlot has been planned to best suit the needs of the business.
It’s clear that the planning of feedlot construction takes time. It also has to be in line with the current market situation and the strategy of the owning company. The executive team at ACC is aware of this and is proceeding accordingly. The awarding of planning permission is the first step in a process that will not be completed quickly.
The company’s planning proposal, which was estimated to create 70 full-time jobs, was approved by The Western Downs Regional Council. This means that ACC has the option to build a 65,000 head feedlot at Tungamah and has the support of a pro-development council. This is a solid foundation to have should the company decide to progress to the building stage.
The construction of this type of feedlot is expensive in the current market. This is the main reason why there is no intention to begin work right now. But the company is ready to go should the situation change.
As the global, and domestic beef markets begin to settle there is every chance that ACC will take advantage of the planning permission it recently received. Only time will tell if this happens.