Australia cattle rancher responds to market slump

SYDNEY, Feb 17 (Reuters) - Australia's largest cattle rancher, Australian Agricultural Company Ltd (AAC.AX) (AACo), is reorganising its operations as consumers turn to cheaper cuts of beef as the global recession bites.

AAco said on Tuesday it was selling three cattle stations in Queensland state and buying another two in the Northern Territory in a move to lessen its dependence on grain-fed beef production.

The move comes as its major shareholder, Futuris Corp Ltd FCL.AX, sold a 19.9 percent stake in the company for A$89.9 million ($58.4 million) to barrister and pastoralist Allan Myers and also said it planned to sell its remaining 23 percent. [nSYU006030]

AACo Chief Executive Stephen Toms said consumer sentiment meant the beef market over the short- to medium-term was moving to lower-cost products.

"Accordingly the business will adapt its flexible pathway system to be weighted toward less costly grass-fed production," said Toms in a statement.

Meat & Livestock Australia, the organisation that overseas Australia's beef industry, expects market growth this year to be limited by the global economic downturn.

But MLA said exports to the United States, Australia's second-biggest export market for beef after Japan, were forecast to rise 38 percent due to strong demand in the fast food sector and lower U.S. beef supplies.

Australia is world's second-largest beef producer after Brazil.

He said AACo was also developing new markets in China, the Middle East, India and Europe while continuing to service the high-end, grain-fed sector in which it had a 30 percent share of the global Wagyu beef market.