Marian Macdonald, Queensland Country Life, 31 January 2022
Packhorse Pastoral Company has made its first move into New South Wales with the purchase of 8654-hectare Ottley Station and the company is on track to accumulate 2 million hectares of cattle properties within five to 10 years.
It’s the job of chief executive of pastoral operations Geoff Murrell to realise the vision of Packhorse properties running its Grass Motel agistment model stretch from south of Queensland’s tick line to just north of the Victorian border.
Asked how much Packhorse Pastoral had paid for Ottley, Mr Murrell said the vendors had asked for the figure to remain confidential.
The Grass Motel
Ottley Station will host cattle under its Grass Motel agistment model, which provides Off-take partners exclusive access to the station for a base fee plus a per head rate.
The base rate is set at either a percentage of the asset purchase price or a percentage of the fee that the agistment would attract under fully stocked conditions.
“It protects the business in the event that we have some severe climatic conditions, such as drought, that mean we have to destock cattle off the asset,” Mr Murrell said.
“The exclusivity, or collar, payment, gives the right to that partner for when it comes back online, but at the same time basically covers our overheads.”
To ensure the pasture is managed sustainably, Packhorse Pastoral and its partners carefully defined carrying capacity parameters.
“Partners understand the environmental outcomes we need so we have an agreed position on carrying capacity,” Mr Murrell said.
“That depends on the type of pasture, for example with Buffel grass pastures, we agree that we won’t eat it down to point past 1500 kilos of dry matter per hectare.”
Under the arrangement, Packhorse Pastoral staff are responsible for all stock requirements from branding through to vaccinations and cattle weights are routinely reported to the client.
Even the manure is regularly tested to ensure the cattle are receiving a well-balanced diet of energy and protein.
Nutrition and management aside and important part of the offering is sustainable, highly marketable, agriculture.
Consumer preference for regenerative agriculture is growing and it’s a trend Mr Murrell is sure is set to accelerate.
“People want to know the product they’re consuming is ethically produced, that is done in a way that enhances the environment, it’s going to become just a licence to trade,” he said.
“We are targeting zero net emissions by 2028 and we’re happy to partner with anyone that wants to leverage that in their supply chain.”
Road to 2 million hectares
Packhorse Pastoral is banking on it with a three-stage growth strategy to reach its 2 million hectare target but it’s early days.
Ottley Station’s acquisition is just the second purchase made by Packhorse Pastoral, as distinct from the broader Packhorse business.
The first, the 8360ha Stuart’s Creek, was bought in July 2021 and, west of Roma, is roughly 700 kilometres north of Ottley, which is near Inverell in northern NSW. Mr Murrell said the two were an ideal fit.
“The first thing it does is give us the geographical spread, which is part of the risk mitigation strategy for the portfolio build,” he said.
Ottley’s more winter dominant rainfall contrasted with the summer-dominant southeast Queensland rainfall pattern of Stuart’s Creek.
Mr Murrell said the reliable 750 millimetre rainfall also made for a strong, secure grass-growing business.
Finally, he said, Ottley Station had “beautiful black basalt soils right across it, so it’s got a lot of potential for us to implement our regenerative practices and get good outcomes.”
Contract regen ag
Those regenerative practices mean there will be plenty of development work ahead at Ottley Station for Packhorse’s managers, dubbed Property Custodians.
Packhorse Pastoral runs a rotational grazing system with high density stocking rates using mob sizes of up to 1000 animal equivalents but, more typically, 700, and will refence the station into 70-80ha paddocks. That demands a water upgrade to allow water flow of 3.5 litre a second.
The regenerative approach could also reap investors a handy payout as demand for carbon credits grows.
Mr Murrell said the business was taking baseline carbon measurements on all its properties but the focus on regenerative agriculture was as much about climate adaptation as it was about a fresh revenue stream.
“There’s evidence that there’s desertification across the Australian landscape, so we’ve got to make a change. That change is regenerative practices,” he said.
In practice, that meant new species of grasses and legumes with the strategic management of animals.
“The byproduct of all that is that if you’re doing that right, in the right environments, you will be sequestering carbon into the soil so the carbon story is a byproduct of what we truly believe is necessary,” Mr Murrell said.
“The journey we’re on is to help address climate variation, climate change, call it what you like.
“We are not a carbon fund. We don’t have it in any of our modelling, we don’t include it in any of our financial forecasting or reporting, we just know there’s going to be opportunity down the line if we do this really well and we are committed to offering investors exposure to that opportunity.”
Still, Packhorse is interested enough in carbon to have registered what it says is Australia’s largest soil carbon sequestration at its Wallumbilla property, Lighthouse.
The business is also working with Agrimix, Meat & Livestock Australia and Queensland University of Technology to develop and trial new, lower cost methods of measuring soil carbon.
Mr Murrell said sampling currently cost around $20-30/ha but it needed to be much lower.
“If the government wants to achieve its COP 26 commitments and sees Australia’s landscape as this vast opportunity, they’re going to have to do something to reduce their costs because the upfront cash outlay is too high for most producers at current levels,” he said.
While acknowledging that the government had expressed a desire to see sampling costs fall to $3/ha, Mr Murrell said he wasn’t sure it would be achievable and would, in any case, come with strings attached.
“We are doing the full core baseline for our businesses,” he said.
“The reason we’re doing that and not waiting for these technologies and maybe a cheaper opportunity is because the credits will all come with some level of discount from the government, so depending on the technologies, a heavy discount to the gold standard, which is soil core samples.”