Hancock intends to redirect the sale of suitable cattle from its northern cattle stations from other live export channels into this Australian joint venture company, with shortfalls to be purchased from other exporters.
Hancock Prospecting and Aozhou will establish a joint venture in Australia for the purpose of purchasing, feeding and exporting suitable cattle to Chinese facilities.
Hancock has the opportunity to invest in Aozhou, a company incorporated for the purpose of developing a cattle receiving and processing facility on Jintang Island,
China.
The Jintang Island facility will have a capacity of 150,000 head per annum, with the potential to expand that capacity to up to 300,000 head per annum in the future as growth allows.
Aozhou will develop and operate this facility, and will sell and distribute the beef products to consumers in the Yangtze Delta region.
Hancock announced the signing of a strategic cooperation agreement with Zhejiang Aozhou Cattle Industry Co. Ltd (Aozhou), an entity jointly formed by Sino‐Australia Modern Industry Park, New Hope Group, Zhejiang Seaport Group and Harvest Fund.
Jintang Island is located off the coast of Ningbo, in China’s warmer south and greater Shanghai area, and has a population of more than 200 million people within a 200km radius of the island.
Hancock intends to redirect the sale of suitable cattle from its northern cattle stations from other live export channels into this Australian joint venture company, with shortfalls to be purchased from other exporters. All Australian and Chinese operations will be conducted to the highest animal welfare standards, including stringent compliance with the Exporter Supply Chain Assurance System (ESCAS).
Hancock Executive Chairman Mrs Gina Rinehart has welcomed the opportunity for an increased exposure to end‐user markets: “Australia needs to export currently two thirds of its cattle, so overseas markets must continue to be developed if we are to grow our cattle industry. Growing our cattle industry helps the many related industries, not just the stations themselves, but also the trough and tank suppliers, the hydraulic crush manufacturers, the contractors and truckers, accountants and other consultants, and more.”
Mr. Yonghao Liu, Chairman of New Hope Group, commented, “there has been an increasing demand for premium protein in China. Under the Chafta and the approval of live cattle exports to China, relying on the geographical, industrial and market advantage of the Sino Australia modern industrial park (Zhoushan), leading agricultural enterprises from the two countries are forming a strategic cooperation initiative. This will not only promote the development of the industry, but also provide a larger quantity of premium protein products, while at the same time benefiting the long‐term prosperity of all the businesses along the supply chain.”
The Australian herd and beef industry cannot be expanded significantly without being cost competitive and without access to additional markets.
Executive Director, Tad Watroba commented: “Win:win agreements such as this, where both the exporter and the importer can work together to increase the efficiency and profitability of the supply chain are exactly what was envisaged by Chafta. Agreements like this will help to grow trade, with recurring benefits for both countries”.
“Our cattle industry has the opportunity to cooperate and develop sustainable long‐term growth opportunities into export markets to achieve a better future for our beef and related industries, and contribute more significantly to Australian jobs and Australians living standards.”
Hancock CEO Garry Korte added: “We are truly pleased to partner with New Hope Group, Harvest Fund and Zhejiang Seaport Group, with strong support from the Government of Zhejiang. Hancock and our partners are committed to growing a more integrated and efficient supply chains and continuing to supply into multiple distribution channels. In doing so, we cannot overlook that China is an important market, with an increasing demand for high quality protein.”
Australian cattle producers are supplying varied domestic and overseas markets and not all beef types and qualities are suited or competitive in the same markets. Attempts to limit access to or growth in any particular market would not improve the international cost competiveness of the local processing industry, but would instead likely result in the substitution of more competitive produce from alternative suppliers, eroding Australia’s market share and income. Unnecessarily limiting the growth potential of the overall industry would also limit the growth of the many related industries that rely on the pastoral industry to supply a wide range of goods and services such as fencing, feed, vaccines, transport, technology and equipment.
Completion of the strategic cooperation agreement is conditional upon, inter alia, gaining requisite approvals from the Chinese Government.