The Australian Agricultural Company is an Australian based company that is involved and engaged in the business of feedlots and farms. This company covers the area of 7 million hectares of land in the Northern territory and the Queensland. A roundabout 1% of Australia land is acquired under this business by the company. As of the July 2008, AACo Company is having a team of 500 which is operating the 24 cattle stations and 3 major feedlots, consisting of over 565000 beef cattle (Australian Agricultural Company, 2018).
Under the act of the British Parliament with the right to select 100000 acres in the New South Wales for the development of the agriculture. Its headquarters are situated in Brisbane and the company is also listed on the Australian Stock Exchange 2001. The company operates under the Wylarah, Westholme, Master Kobe, and Darling Downs Wagyu brands. The key executives that are involved are Hugh Killen who is the CEO of the company and Dr. Shehan Bharatha Dissanayake who is the vice chairman in the company. The total revenue earned by the company in the year 2018 is $379679 which is low as compared to the previous year which was $446727 (Australian Agricultural Company, 2018).
The business of the AACo is mainly to produce and sell the beef and the cattle in Australia. The company also engages in the pastoral properties, producing beef which also involves breeding, feed lotting, processing of the cattle and the production of the grass fed beef. The stations owned by the company are 19 and 2 leased stations and 7 agented properties (Australian Council of Learned Academies, 2017).
The revenue earned by the company is recorded at AUD 197.23 million, with the net earnings of AUD 37.67 million. The gross margins decreased from 31.12% to 42.43% as compared to the same period over the last year. Though the earnings rose comparatively yet the operating and the pre-tax margins decline in the overall year. The table shows the preliminary results of the recent performance and trends of the company and the other key metrics also Australian Council of Learned Academies, (2017).
|
2017-09-30 |
2017-03-31 |
2016-09-30 |
2016-03-31 |
2015-09-30 |
|
|
Relevant Numbers (Semi-Annual) |
|||||
|
Revenues |
197.23 |
232.63 |
214.1 |
236.98 |
258.21 |
|
Revenue Growth (YOY) |
-7.88 |
-1.83 |
-17.08 |
21.01 |
71 |
|
Earnings |
-37.67 |
23.71 |
47.88 |
17.98 |
49.83 |
|
Earnings Growth (YOY) |
-178.68 |
31.86 |
-3.91 |
-22.54 |
466.7 |
|
Net Margin |
-19.1 |
10.19 |
22.36 |
7.59 |
19.3 |
|
EPS |
-0.06 |
0.04 |
0.08 |
0.03 |
0.09 |
|
Return on Equity |
-3.72 |
2.43 |
5.26 |
2.12 |
6.35 |
|
Return on Assets |
-4.91 |
3.11 |
6.65 |
2.67 |
7.89 |
(Source: Capital cube, 2018)
AACo’s change in the revenue in this period is mainly because of the earnings decreased from feed lotitng and breeding areas. Due to the low debt position the company is not able to invest the funds in buying the cattle and producing a mass produce. Statutory EBITDA was a profit of $133.2m in the financial year 2017 and the operating EBITDA was profit of $45 million which mainly includes the unrealised livestock and gains in respect of the livestock (Australian Council of Learned Academies, 2017). The cattle is the main reason which helps to grow the market and the value of the herd and the rations are directly dependent upon the volume of the cattle (Sippel, 2015).
Australia is the major producer and exporter with over 32500 people employed in the Agriculture business inclusive of the forestry and fishing. The GDP constructively is related to the sector of the agriculture which helps to earn a roundabout 12% GDP. Therefore, the pestle analysis of the chosen company that is Australian Agricultural Company is also necessary to figure out the major effect of the external factors on the operations and the working of the organisation (Australian Agricultural Company Limited, 2017).
The pestle analysis includes the factors such as Economic, Political, Social, Technological, legal and the environmental factors.
The political factors such as the restrictions and the imposition of the best practice standards affect the position of the company. The major gap us between the public company and the private company leading to the ultimate goal of grabbing the greater market share (Magnan, 2015)
Expansion of the landholdings and the reduction in the public sector research ultimately led to low financing from the banks. The commercial lenders charge the high level of interest rates to grant the place to keep the cattle and animals.
Moreover the level of the capital and the investment needs to be strengthened to fight against the financial war. In terms of the growth Australia is the best place to invest and the exchange rates is also affordable (Head and Atchison, 2016).
Due to the concentration on the farm sector there is a wide gap between the need for the social health of the animals and cattle and hence this reduced the viability of the business and affects the employment ratio. The organization has stopped hiring the people and focuses on technology more (Sherval and Hardiman, 2014).
Due to the high level of the competition amongst the competitors like NAPCO, The consolidated Pastoral Company the company tends to bring the labour from outside to supply the temporary workers.
The new technology such as the Livingstone facility and beef processing facility has been introduced by the company to work more efficiently and effectively and to produce the meat and beef in higher quantities and to serve ethe large number of the customers. The company shall focus on implementing the new technological equipment’s to restore the grains and the feed properly (Willer and Lernoud, 2016).
The company needs to hold the Environmental Protection Licence and shall also abode by the rules of the under the Waste Management and Pollution Control Act in order to fulfil the quality criteria of the cattle trading (Bogueva and Phau, 2016).
The swot analysis is the major framework which is used to evaluate the competitive position in the market. The position can be achieved by identification of the strengths, weakness, opportunities and threats.
Since it is the oldest organisation operating in the agriculture business, it itself is a strength that attracts the more customers, also the company is vertically integrated and has a diversified agribusiness operations.
AACo is the owner of the several properties and the feedlots and it has the farms in the outskirt. The area covered by the farms is 7.2 million hectare which is double the capacity of what it was when the company started. The farms are present in the Queensland and the Northern Territory (Ariyawardana, Lim-Camacho, Lewis and Crimp, 2015).
The company follows several strategic programs such as LPAQA, WQA, EUCAS. These kinds of programmes give the encouragement to the customers to buy the products directly from the company, thereby eliminating the retailers and the middleman. More over such initiatives makes the company grow in terms of brand value.
Set apart the strengths there are certain weaknesses that affect the performance of the organisation and which shall be improved so that the company can utilise the positive energy towards the goal and objectives of the company (Mehlhorn, Bonney, Fraser and Miles, 2015).
.The weaknesses are outlined below.
The operating costs of the company are increasing and thereby the earnings even if growing are respectively adjusted within the cost factor. The loss of customers due to the less return on investment is again a big concern and henceforth, the company needs to work upon the variances.
The complex procedures with regards to the needs of the animal rights and forum are also the concerning factor that eventually affects the position of the company
The major opportunity for the agribusiness companies is to expand its operations in other countries and especially in the areas which are away from the city so that the pollution is low and the farming can be done easily.
The second best thing the company can do is the processing of the meat and the cattle that wouldn’t build the concept of costa and eventually add up to large amount of expenses and capital expenditure and the company can save the costs (Agus and Widi, 2018).
The implementation of more value added services and process will bring the company to improve the standards of its own. For example the beef through the Branded Beef Division is an example of how the company can evolve using such techniques.
The threats posed by the competitors are huge to cope up with and therefore the company must prepare itself in advance. If the work is restricted to only the trading of the cattle and the processing of the activities indulged in the beef and meat processing than the company would not be able to grow extensively (Burn, 2016).
Outbreak of a particular epidemic or disease can affect the trade policies and the customers of the global and the domestic market, the trade policies also change with regards to the change in the economies of scale.
The major resources of the company are Water Resource Planning, Wild Rivers legislation and the conversion of land titles in relevant areas. This company covers the area of 7 million hectares of land in the Northern territory and the Queensland. A roundabout 1% of Australia land is acquired under this business by the company.
The company is having a wide knowledge of the livestock, branding and marketing, beef manufacturing, and the technology used by the company to extract the various materials are the most important capabilities of the company (Sippel, Larder and Lawrence, 2017).
AACo’s is a world largest producer of beef and the agricultural products. The company is also using the modern technologies and ideas to increase the volume of sales. The cattle is the main reason which helps to grow the market and the value of the herd and the rations are directly dependent upon the volume of the cattle (King, 2017).
Northern Australian Beef Limited (NABL), a wholly owned subsidiary of the Company operates the beef processing facility in various places and being the owner of the subsidiary it has dual advantage over the competitors (Sippel, Larder and Lawrence, 2017).
Conclusion and Recommendations
In order to be futuristic and strategy driven the company needs to make amendments in the policies to increase the growth factor. It is recommended to the company to introduce the lucrative policies to shift the focus on the core activities such as the cattle trading and the high quality production of the beef. The company shall focus on implementing the new technological equipment’s to restore the grains and the feed properly. The main income of the agricultural company is through the breeding, cattle trading and feed lotting and therefore it is advised to the company to prepare the futuristic strategies on the basis of the current scenario and opportunities. The major competitors of the company are NAPCO, The consolidated Pastoral Company who are also constantly devising new strategies and therefore the company shall analyse those strategies in order to understand their strengths and weaknesses so that the company can acquire the greater market share
References
Agus, A. and Widi, T.S.M., (2018) Current situation and future prospects for beef cattle production in Indonesia—A review. Asian-Australasian journal of animal sciences, 31(7), p.976.
Ariyawardana, A., Lim-Camacho, L., Lewis, G. and Crimp, S., (2015) June. Consumer acceptance of climate adaptation strategies in Australian agribusiness. In Presentation at the 25th Annual IFAMA World Conference, St Paul, Minnesota(Vol. 14).
Australian Agricultural Company Limited, (2017) Financial report [Online] Available from https://member.afraccess.com/media?id=CMN://2A1013508&filename=20170510/AAC_01856033.pdf [Accessed on 23rd August 2018]
Australian Agricultural Company, (2018) Annual Report [Online] Available from https://www.annualreports.com/HostedData/AnnualReports/PDF/ASX_AAC_2017.pdf [Accessed on 23rd August 2018]
Australian Agricultural Company, (2018) Our products and services [Online] Available from https://aaco.com.au/ [Accessed on 23rd August 2018]
Australian Council of Learned Academies, (2017) Australia’s agricultural future: the social and political context [Online] Available from https://acola.org.au/wp/PDF/SAF07/social%20and%20political%20context.pdf [Accessed on 23rd August 2018]
Bogueva, D. and Phau, I., (2016) Meat myths and marketing. In Impact of meat consumption on health and environmental sustainability (pp. 264-276). IGI Global.
Burn, S., Hoang, M., Zarzo, D., Olewniak, F., Campos, E., Bolto, B. and Barron, O., (2015) Desalination techniques—a review of the opportunities for desalination in agriculture. Desalination, 364, pp.2-16.
Capital cube, (2018) Australian Agricultural Company [Online] Available from https://www.capitalcube.com/blog/index.php/australian-agricultural-co-ltd-aac-au-earnings-analysis-for-the-six-months-ended-september-30-2017-november-18-2017/?yptr=yahoo [Accessed on 23rd August 2018]
Head, L. and Atchison, J., (2016) Ingrained: a human bio-geography of wheat. Routledge.
King, A., (2017) The future of agriculture. Nature, 544(7651), pp.S21-S23.
Magnan, A., (2015) The financialization of agri-food in Canada and Australia: Corporate farmland and farm ownership in the grains and oilseed sector. Journal of Rural Studies, 41, pp.1-12.
Mehlhorn, J.E., Bonney, L., Fraser, N. and Miles, M.P., (2015) Benchmarking entrepreneurship education in US, Australian, and New Zealand university agriculture programs. Journal of developmental entrepreneurship, 20(03), p.1550017.
Sherval, M. and Hardiman, K., (2014) Competing perceptions of the rural idyll: responses to threats from coal seam gas development in Gloucester, NSW, Australia. Australian Geographer, 45(2), pp.185-203.
Sippel, S.R., (2015) Food security or commercial business? Gulf State investments in Australian agriculture. The Journal of Peasant Studies, 42(5), pp.981-1001.
Sippel, S.R., Larder, N. and Lawrence, G., (2017) Grounding the financialization of farmland: perspectives on financial actors as new land owners in rural Australia. Agriculture and human values, 34(2), pp.251-265.
Willer, H. and Lernoud, J., (2016) The world of organic agriculture. Statistics and emerging trends 2016 (pp. 1-336). Research Institute of Organic Agriculture FiBL and IFOAM Organics International.
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