By Matthew Cawood
BEEF production was the hook that got Danish pension fund Pensionskassernes Administration (PKA) interested in investing in Sustainable Land Management Partners’ (SLM) 480,000 hectare pastoral portfolio, but it was management principles that clinched the $75 million deal.
Over the past few years, SLM Partners has quietly invested about $60 million to put together an aggregation of grazing properties in western Queensland, grouped in geographical hubs around Cunnamulla, Quilpie and Blackall.
The properties will be managed using Holistic Management (HM) grazing concepts, which aim to mimic the effect of large wild herds of herbivores in a domestic grazing situation.
Long-term investors see potential
THE idea of a sustainable, low-input management regime with the flexibility to ride through Australia’s infamously variable seasons has proved attractive to long-term investors like PKA, SLM Partners director Tony Lovell said.
The appeal of low-cost rangelands beef production in a world with a fast-rising population, and with growing Asian affluence putting beef on the tables of people who previously couldn’t afford it, has made the northern Australian beef industry attractive to overseas investors.
SLM Partners’ point of difference is that it aims to lift the productive capability of its land through strategic grazing management.
(A similar proposition, based on the same grazing concepts, underpins the $40 million investment being made in the Dunnicliff/Armstrong family’s Northern Territory property Beetaloo.)
Investors are increasingly interested in understanding the sustainability planning around agricultural investments, Mr Lovell said.
“We’ve got peak oil, peak water, peak almost everything. Lay climate change on top, and it’s clear we have to do things in a more sustainable manner,” Mr Lovell said.
“We are looking at maximising sunlight and rainfall, which are provided free of charge. On top of everything, we’re doing what we’re doing because we genuinely believe it’s a way to be more consistently profitable.”
HM is also pitched as a strategy for increasing the resilience of the ecosystem – and by implication, the pastoral business – by allowing SLM’s managers to better budget for the peaks and troughs of Australia’s climate.
That proposition has been stress-tested from the outset. “Every property we’ve bought has just had one of the five driest years in the past 100 years,” Mr Lovell said. “It’s been a baptism of fire.”
SLM has so far only been able to set up Cunnamulla property Padua Park with the infrastructure – subdivided paddocks, reticulated water – that enables the fine-grained grazing management it wants to implement across all its holdings.
Mr Lovell said the grazing principles have already proven their worth. While undeveloped country in the portfolio has had to be managed “with a very light touch”, Padua Park has carried 3000-3500 cows for the past 12 months.
“We brought those animals through the drought quite happily,” Mr Lovell said.
The cattle are run in a single mob, and are moved daily, or occasionally every second day. The effect, Mr Lovell said, is to have huge amounts of energy concentrated in a small area for a day, cropping back plants, trampling vegetation into the soil, and leaving a concentrated deposit of dung and urine – and then moving on, sometimes not to return for a year.
The effect of massive disturbance, followed by long rest, has been well documented around the world.
Through disturbance, plants produce compensatory growth, new ecosystem niches are created, and the soil receives a mulching of organic matter. Extended rest allows highly palatable species, which are often overgrazed under a conventional stocking regime, to reoccupy the landscape.
SLM Partners have built a virtual “data room” for investors that contains about 60-70 scientific papers and case studies supporting the process. Investors are also directed to successful practitioners.
For the foreseeable future, while it builds out grazing infrastructure and tightens up herd genetics, SLM will focus on turning off commodity beef.
“Go forward 5-6 years, and at that point we believe we’ll be able to supply sufficient volumes of product with enough consistency to start considering moving further up the value chain,” Mr Lovell said.
Most of SLM Partners’ portfolio is in country that has traditionally run sheep. Mr Lovell said sheep won’t return to these properties anytime soon.
“We’re not ruling out sheep, but a lot of that country has had sheep on it for 150 years. It just needs a break. And you can do stuff with cattle – with 3000 cows in a mob, you’ve 2500 horsepower of energy available, and you can control it with a single wire electric fence. You can’t do that with sheep.”
The company has finished property acquisitions for this stage of its development.
“We’re still on a capital raising process, and as we raise more capital, we’ll expand,” Mr Lovell said.
Mick Keogh of the Australian Farm Institute has commented on the “perplexing issue” of why a Danish pension fund will invest in Australian agriculture, but local pension funds will not. Visit the AFI website.
Mob management an ‘essential ingredient’
RUNNING up to 4000 head in a mob, and moving them daily, is something few cattle producers would contemplate. But it is an essential ingredient of the management regime SLM Partners is introducing to 480,000 hectares of western Queensland.
Fortunately, SLM’s Cattle and Grazing manager, Graham Finlayson, is entirely comfortable with the process.
A Brewarrina, NSW, grazier, Mr Finlayson and wife Cathy more than doubled their stocking rate and restored vegetation to hundreds of hectares of bare claypan on “Bokhara Plains” using planned grazing.
In 2008, Mr Finalyson undertook a Nuffield scholarship on grazing management.
The results he saw in the United States, Mexico and southern Africa confirmed his belief in the value of the principles.
Temporarily based at SLM’s Cunnamulla hub, Mr Finlayson has been managing a mob of up to 4000 head, which are moved between 200 hectare paddocks on a daily basis on a roughly 12-month grazing cycle.
The operation has demanded some fresh thinking about water supplies and handling – as Mr Finlayson observed, a wrong move with 4000 cattle in hand could be disastrous – but the returns are already evident.
In acutely drought-affected country, the enterprise has been achieving about 20 stock days per hectare, in an area where the traditional stocking rate has been around 14 stock days per hectare.
“And we wouldn’t be taking 25 per cent of the feed out of a paddock each move,” Mr Finlayson said.
The ecological impacts are also apparent, despite the dry. Currant bush and wild orange that have been briefly grazed are covered in new growth, while bushes that haven’t been grazed have not produced any growth.
No-one can say exactly how the land will respond to this treatment in the long term, Mr Finlayson said, but the early signals are confirming what he has seen elsewhere: that thoughtful grazing management can have transformative effects on a landscape, and similarly transform expectations of how a livestock enterprise can perform in semi-arid regions.
Holistic Management delivering results
THE newest player in northern Australia’s pastoral sector, Sustainable Land Management Partners, differs from other pastoral ventures in that its competitive advantage is built largely around Holistic Management (HM) grazing practices.
The company was formed in 2007 as an alliance between businessman Tony Lovell and HM educator Bruce Ward, who collaborated with former Climate Change Capital employees to form an investment vehicle.
HM principles were developed by Allan Savory, a former Rhodesian game ranger who observed that huge herds of wild animals could sustainably graze the African savannah, while far fewer domestic livestock degraded the same grasslands.
Mr Savory developed domestic livestock management principles around the behaviour of wild migratory herds, which deliver a short, intense graze and massive disturbance to an area of land, and then move on and leave the land rested until the next wave of migration.
(Mr Savory’s TED talk on his ideas has received more than 2.5 million views.)
HM has been subject to intense criticism, but thousands of livestock managers across the world have found that Mr Savory’s ideas, and the decision-making process that underpins the grazing principles, have favourably transformed their grazing environments and businesses.
Mr Ward was the first advocate of Mr Savory’s ideas in Australia, and remained an ardent teacher of HM concepts until his death in 2012.
The large scale implementation of the concepts embodied in the SLM Partners project was an ambition that he had nursed long before the company was formed.
HM has been implemented at scale in other parts of the world – the Ovus XXI group in Patagonia is running more than a million sheep using the principles – but not in Australia.
Mr Lovell, an accountant who grew up on a dairy farm, caught Mr Ward’s enthusiasm for the triple-bottom-line possibilities offered by Holistic Management.
In 2009, the pair delivered one of the best-received presentations in a Guardian newspaper competition to identify 20 ideas for addressing climate change.
Mr Ward’s son, David, who is now SLM Partners’ operations manager, said his father learned of the Danish pension fund investment in SLM the same week that he was diagnosed with the cancer that killed him.
“He died knowing that we had bought the first property,” Mr Ward said.
Despite the limitations imposed by drought, Mr Ward said, “Dad would be pretty chuffed to see the results the capital investment in wire and water has given us. We’ve been able to maximise the use of the land, and the results are there in our carrying capacity”.