The $1bn-plus buyout of salmon farmer Tassal has put agribusiness back in the frame. The acquisition should be seen as an endorsement of Australia’s seafood and fresh fish sector.
That’s the view of Ross Anderson, the executive chairman of Murray Cod Australia, one of the few remaining aquaculture plays left on the ASX.
Anderson’s freshwater fish is getting attention in top-end restaurants across the country, including Elijah Holland’s Loti in Melbourne, Sydney’s MuMu and Josh Niland’s Saint Peter and Charcoal Fish in Sydney’s Rose Bay.
It has received additional push from British celebrity chef Heston Blumenthal, whose Fat Duck group also has a shareholding in the producer.
Anderson says the business has shifted from start-up to operational and is on a mission to shift consumers’ habits around seafood. For years the Murray cod has flown under the radar, known only to purists, and Anderson has been positioning the white-fleshed fish as a luxury food product that is sustainable and available for all. He labels it the wagyu of seafood, and following the recent backing from investors, is in process of producing millions of the native Australian fish.
His comments come after Tassal this month agreed to a $1.1bn mega-buyout by Canadian seafood company Cooke. Last year Brazilian meat processor JBS expanded into seafood with a $425m buyout of Tasmania’s Huon.
“It is a vindication of the quality of Australian aquaculture that large protein producers around the world – JBS and Cooke aquaculture – come as far as Australia and are prepared to pay the premiums to acquire those operations,” Anderson says.
Murray Cod, based in the NSW Riverina city of Griffith, hatches and grows its fish in ponds using water allocations from the Murrumbidgee River system.
The highly secure sites are on farms reclaimed from irrigation from the Murray Darling basin, but the land-based model means there is no run-off from the fish farming back into the natural river system.
Anderson points out his fish can’t escape his ponds because they are 6km from the nearest waterway. The set-up also avoids the problems that affect ocean-based farming, including fish kills or nutrients leaking into the water.
Murray Cod has an aspirational target of 10,000 tonnes annual production by the end of the decade up from a little over 100 tonnes now. It is opening up export markets including Europe, Japan and the US for the fish that can only be grown in the Riverina region. Last year investors supported a $31m raising, supported by Ord Minnett and Barrenjoey, to help fund its expansion, including opening 26 new ponds and acquiring a hatchery. The selling point around provenance is important; Anderson points out that of the 22,000 tonnes of barramundi consumed in Australia each year, around two-thirds is imported from Vietnam, Thailand and Indonesia. “Not only does Murray cod not grow anywhere else in the world, it doesn’t even grow anywhere else in Australia,” he says. “We’re effectively the only producer of what suddenly becomes a luxury food product, a high-quality scarce food product, as opposed to a commodity.”
His bet is the branding of the fish and geographic hurdles to growing will feed into Murray Cod’s profit-margins dramatically as more consumers take notice.
Murray Cod was built from the ground up over the past decade with trial and error in making sure growing conditions for the native fish were just right. Now the business operates a hatchery, nursery farming and processing facility and employs 80 people at its peak.
The fish are caught to order and delivered to restaurants the same day. Each fish is grown to 2-3kg and currently fetches wholesale rates of around $35 per kilo. It also sells under the Aquna Sustainable Murray Cod brand in supermarkets.
The land-based pond system gives traceability, Anderson says. “When you eat one of our fish on your dinner plate, we can tell you who its mother and father was, what’s been in the water with it; what it’s been fed, everything about that fish’s life from when it was born until the day it’s caught.”
Although a relatively young company after it listed in 2017, Anderson is not trying to grow too fast. “We want to make sure, step-by-step, we get things right and we innovate as we go along.”
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Inflation story
The August profit season is set to really ramp up. It’s the busiest week with hundreds of ASX-listed companies, including some of the nation’s biggest, scheduled to release their accounts and hold investor briefings in the next few days.
Amid the rush, here are five key companies set to give us the best insights into how inflation is washing through the economy and hitting households. Comments from their executives will give some clues as to the likely pace of further interest rises.
Rebranded from Caltex Australia two years ago, Ampol oversees Australia’s biggest petrol station network and operates the Lytton oil refinery in Brisbane as well as being a major importer of refined fuel. While petrol is affected by moves in global oil prices, Ampol boss Matt Halliday is expected to provide an update on import certainty and domestic supplies following six months of Russian oil sanctions. Keep an eye on the refiner margin, as the Ampol numbers come after premium fuel prices fell below $2 a litre in recent weeks.
Ampol hands down its June half numbers on Monday.
Together Coles (Wednesday) and Woolworths (Thursday) represent two-thirds of all the money spent in the supermarket and grocery sector in Australia. The two are set to deliver full-year numbers in an environment where inflation is running at its fastest rate since the GST was introduced two decades ago. Both retailers will put some colour around their expectations for higher shelf prices and whether in their view we are past the worst.
Woolworths was guiding a 2-3 per cent rise in shelf prices at the start of the year, so the key number to watch is where it sees prices going for the rest of this year.
Qantas has probably been the most talked-about company in Australia in the past six months. The air carrier, which is also behind Jetstar, delivers full-year results on Thursday, and while the numbers are expected to show its balance sheet is quickly being repaired after Covid-19 groundings, its reputation has taken a battering. Flight cancellations, lost bags and staff shortages have caused significant disruption for passengers during peak periods. Qantas chief executive Alan Joyce will give an update on what passengers can expect for September and the summer break, and is looking to lock in a new enterprise agreement for 19,000 staff. A number to watch is the average price for Qantas’s fuel hedging program for the second half – a number below average Brent prices means higher ticket prices are on the way.
The owner of Bunnings, K-mart and Officeworks, Wesfarmers, delivers its full year numbers on Friday. The retail giant will provide an important insight into how consumers are dealing with the higher prices of food and essentials and whether they are curbing spending in other areas. Bunnings generates more than 60 per cent of Wesfarmers’ earnings and the top-line sales growth remains critical for growth. During the pandemic it has been hampered by supply squeezes but it will be pushing suppliers to keep a lid on prices. Likewise a surge in inventories for K-mart, which includes Target, suggests a flood of discounting to clear unwanted stock.
Meanwhile, Officeworks’ performance offers a temperature check of the health of smaller businesses.
johnstone@theaustralian.com.au
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