Brakes put on agribusiness investments
The slowing of investment in agribusiness schemes has been confirmed by the latest research on the sector released by Australian Agribusiness Group (AAG).
The sector raised $1.141 billion, which was up 11 per cent on the previous year, however, the $1.024 billion raised in 2005 showed inflows growth of 54 per cent for agribusiness projects.
The average amount investors are putting into projects fell to $44,000 this year compared to $63,000 in 2005.
The AAG research also found 69 per cent of investors geared their investors in agribusiness projects this year.
AAG executive manager Tim Lee said the growth of agribusiness investments is now at a sustainable level.
“”It was a good year for inflows in percentage terms and we see this level of investment continuing in the long-term,” he said.
“It is going to be a $1 billion industry which is sustainable.”
This year’s research also shows there were more projects (57) compared to 2005 (47), however, the bulk of the funds raised went to timber projects and to the major players such as Great Southern and Timbercorp.
The timber sector raised $698 million, which was down 9 per cent on the previous year. Based on this year’s figures, approximately 84,300 hectares of trees will be planted for timber production.
While timber inflows declined, the strong performer in 2006 was horticulture projects. The sector saw inflows of $181 million — up 124 per cent on the previous year.
Olives are also still in favour with inflows of $73 million — up 114 per cent.
However, grape projects attracted less inflows this year, due to the general oversupply of fruit in the viticulture sector. Inflows were just $62 million — down 25 per cent on the previous year.
Lee said while the larger managers enjoyed good inflows again, a number of the newer managers struggled.
“There were good smaller projects and some actually did well for inflows,” he said.
“What we did see were managers who had a project last year, doing better with their second offering this year as they become established.”
Lee believes it takes a couple of years attracting interest from dealer groups to build a base to achieve good inflows to projects.
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