by Lynda Kiernan

After a challenging year, Rifa Salutary, the Australian unit of China’s Zhejiang Rifa Holding Group, announced it is listing its Australian farmland and agribusiness holdings as drought hits its bottom line. 

Rifa made its first Australian ag acquisition in 2014, and two years later, in 2016, made significant additions to its farmland portfolio, spending $45 million across New South Wales to build out a cattle breeding and fattening operation in eastern Australia. 

At the time, Rifa Salutary head David Goodfellow noted to Farm Weekly that newly-adopted foreign investment regulations had thinned out the numbers of overseas buyers, particularly large U.S. and Chinese investors looking to secure deals for Australian agricultural assets. Rifa took the opportunity to purchase seven farms, the largest being the 22,548 hectare Cooplacurripa Station that runs 5,000 head of cattle for a reported $29 million.

Other purchases by Rifa include two properties adjacent to Cooplacurripa  – the Kerriki and “Number One” for $3.5 million – that boast a combined acreage of 1,457 hectares. Four additional acquisitions totaling 4,050 hectares – Highland Plain, Avondale, Stonefield, and a portion of Durkin at Warialda have also been purchased for between $12 million and $14 million.

Goodfellow ended up parting ways with Rifa in 2018 to become CEO of AustOn Corporation, an offshoot of the Ontario Teachers’ Pension Plan (OTPP) with the goal of building out a $1 billion Canadian portfolio. Today, under the direction of Bobby Jiang, vice president of Rifa Holding Company, Rifa’s portfolio totals 44,000 hectares (108,726 acres) across 14 properties. 

This past year, however, has been challenging for the group, which posted an after-tax loss of $12.4 million for the year ending March 2019, which the company attributed mainly to ongoing drought. Over the same time period the company posted customer contracts of only $1.8 million, compared to contracts of $7.3 million for the year before, while at the same time,  cropping costs more than doubled to $9.8 million. 

Furthermore, losses before taxes for the year to March 2019 jumped to $18 million, up from $4.6 million for 2018, and current liabilities, which include loans of $96 million, stand at $97.6 million.

Jiang explained the driving factors behind the decision to sell, stating that the timing was right for the company to “capture value as a result of completed targeted capital expenditure and improvement programs across the portfolio, as well as underlying value growth,” reported AFR. 

“This is a business that has demonstrated excellent resilience through some difficult climatic conditions in the past two years,” said Danny Thomas, regional director, CBRE Agribusiness. “The maintenance of great genetics across the operation’s 20,000 head of beef cattle during this period is testament to the team managing this portfolio.”

Including equipment and outbuildings, the company’s land holdings have a net value of $133 million; its cattle is valued at $16.7 million, and its sheep and cropping operations are valued at more than $900,000, giving rise to expectations by Rifa of $150 million from the sale. 

 

– Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.