Australian Ag Co expects "extreme losses" from unprecedented floods

Written on the 11 February 2019 by Matt Ogg

Australian Ag Co expects "extreme losses" from unprecedented floods

Shares in beef producer Australian Agricultural Company (ASX: AAC) are trading at their lowest levels since 2003 after the group released a statement about flood impacts in Queensland.

The board today confirmed severe flooding throughout northwestern Queensland had severely impacted four of its 21 properties.

"Of AACo's Gulf properties, Wondoola station has been most affected and its current herd of approximately 30,000 head of mainly composite cows and their calves is expected to sustain extreme losses," the company said.

"Canobie, Dalgonally and Carrum stations have a total current herd of approximately 50,000 head of mainly composite cows and their calves, and is expected to sustain lower but still material losses."

The group said its immediate focus would be on its people, the welfare of its animals and the "tight knit communities" where it operates.

"The full effects of the flood are being managed and measured in real time. Management will continue to monitor the situation closely and take all possible steps to mitigate the impact on operations," AACo said.

"All our staff and their families on the impacted properties are safe. People safety and animal welfare, as well as support for our local communities, will continue to be of the highest priority.

At 10:30 AEDT shares in AAC were down 8 per cent to $0.98.

The board emphasised an assessment will only be possible once flood waters start to recede, which is likely to occur over the coming weeks unless there are further wet season storms.

In contrast, below average rainfall and extreme heat conditions continue in south-western Queensland and the Barkly in the Northern Territory where AACo's has the majority of its properties.

"As flagged in the Company's half-year results, the seasonal conditions will significantly increase station operating expenses, particularly grain, feeding and transport costs," the board said.

"The overall impact of these seasonal conditions on the Company's financial earnings for the 2019 financial year (ending March 2019) is expected to be material, and management is currently working through an evaluation of the situation. An update will be provided when further assessments from the ground are available."

Last week the Queensland and Federal Governments announced grants for affected farmers would be increased from $25,000 to $75,000, with estimates around 300,000 head of cattle have been killed by the disaster and estimated losses of $300 million. 

Queensland Premier Annastacia Palaszczuk said stock losses would be immense with some farmers in Queensland reporting 100 per cent of their herds were lost, having received almost two years of rain in an area that was in drought just two weeks ago.

"Weakened cattle that have managed to survive the floodwaters are still unable to get to feed as properties remain isolated and in some cases, the water continues to rise," she said. 

"We have had reports of a station near Julia Creek that normally runs approximately 70,000 head of cattle and they have only been able to locate 1,000 of their herd to date.

"Another producer in the same area has reported 3,000 head of cattle have been lost so we need to provide as much assistance as we can to these farmers immediately."

Prime Minister Scott Morrison described the scenes of dead cattle as heartbreaking.

"The flooding is not over but we already know the situation is dire for many communities," he said. 

"Queensland's farmers need our support now, which is why this assistance is being made available immediately.

"The money is available to farmers in nine local shires, and can be used for things like the hiring and leasing of equipment, purchasing fodder, salvaging feed or crops and repairing essential plant and equipment."

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Author: Matt Ogg

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