ALTHOUGH the future of the Millicent Saleyards has been in question for some time now, a report released by Wattle Range Council recently has highlighted just how bad the situation really is.
“There are potential investment risks facing council,” an independent report read.
The likelihood of the Millicent Saleyards closing in the near future is high, with the report recommending the facility shut the gate next year amid a forecast loss of around $1.3m over a decade.
Wattle Range Council publicly released the full report at a brief special meeting last week after discussing the 53-page document in confidence at the April monthly meeting.
The review highlights current users having alternative locations to source buying and selling services provided at the yards as the “critical issue”, continuing to say “if this were not the case, it is likely our conclusions would be different”.
Although the report said the Millicent market provided some benefits – principally for smaller producers and selling smaller lots – the site’s limited focus of conducting only a prime cattle sale resulted in a lack of benefits for general buyers and sellers.
The report says maintaining a business as usual approach would result in a five-year operating loss of $625,000 and $750,000 in addition to losses of almost $700,000 over the last six years.
The facility’s operating costs are currently between $125,000 to $150,000 per year, with infrastructure upgrades estimated as exceeding $200,000.
The report claimed the current operating loss situation was unlikely to improve, and would be unable to break-even under the current cost structure of $362,000 – 2.3 times the current income level – due to industry trends and yard competition.
Increasing competition between Mount Gambier and Naracoorte yards, Millicent’s “narrow audience” and more marketing options for larger producers were flagged as contributing factors to the decrease in patronage in SED Advisory’s research.
The council-commissioned report highlights eight potential options including continuing operations, increasing fees and charges, and changing operational responsibilities.
The report also outlines growing the market, selling or leasing the facility to a third party, maintaining operations while partially developing the site and closing the yards.
While detailing the potential alternatives to closure, the review said only three “realistic alternatives” existed – continuing to operate the yards, closing the yards immediately, and closing the yards in a staged approach.
“The operating losses at the yards over the next five years are forecast to be in the order of $625,000 to $750,000,” the review said.
“There are potential investment risks facing council.
“In the long term, it is highly likely the yards will close due to operational losses arising from reduced throughput and/or costs associated with infrastructure investment.
“Unless there is a compelling argument to continue to fund the forecast losses and expose council to the potential investment risks, we see no other option but to recommend the closure of the yards.”
The report recommended a staged closure, providing a a date of June 30, 2019 in order to minimise impact and disruption to sales.
Council resolved to receive and note the review, effectively maintaining a business as usual approach.
Mayor Peter Gandolfi said any decision on the future of the facility would be the responsibility of the next council.
