Ripe returns from agribusiness
The agribusiness investment sector has reported a good 2006 financial year for sales, but there are dark clouds on the horizon.
According to specialist researcher Adviser Edge, the sector has raised about $1.25 billion in the 12 months ending June 2006.
When this figure is confirmed — some managers are still reporting sales for the year — it would represent a 20 per cent increase on 2005’s sales.
Adviser Edge managing director Shane Kelly said the majority of managers found it tough this year with the exception of Great Southern and Timbercorp, which both reported significant sales growth.
Great Southern increased sales from $365 million to $457 million while Timbercorp achieved a significant increase, jumping from $176 million to $321 million.
“If you take Great Southern and Timbercorp out of the equation, it has been a pretty flat year with project managers having to work hard to achieve sales in line or slightly above the previous year,” he said.
“Timber investment was flat at $744 million (compared to the 2005 financial year) while there was significant growth in horticulture ($414 million) and agriculture ($98 million).”
Despite a successful year, the sector is facing a number of negative issues.
The grape glut has forced the wine industry to review plantings and contracts.
Kelly said this will impact on future wine scheme offerings.
“We would expect to see very low levels of new plantings by vineyard scheme managers this financial year,” he said.
“Based on preliminary figures, we would expect about 500 to 600 hectares being established this financial year with the majority covered by supply contracts with major wineries.”
Another problem for the sector is the growing hostility of the rural sector to agribusiness schemes.
Additionally, Federal Minister for Agriculture Peter McGauran has indicated the tax component of schemes should be reviewed sooner rather than later.
Kelly said a major review by the Federal Government now looks likely and is creating uncertainty in the sector.
“Given the way this year has played out, it is difficult to expect sales growth to be maintained,” he said.
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