Plenty of growth in agribusiness
The agribusiness managed investment scheme (MIS) sector has raised $1.26 billion for the 2007 financial year.
This was up 6 per cent on the previous year, according to new figures released by research house Adviser Edge.
The amount raised is seen as a positive considering the sector was facing drought, concerns over water rights and the Federal Government changing investment rules.
Adviser Edge managing director Shane Kelly said the extra cash raised this year has come from small to medium sized managers rather than major players such as Great Southern and Timbercorp.
“While perennial strong performers Gunns Plantations and Willmott Forests did very well, up 98 per cent and 20 per cent respectively, it was companies that are relatively unknown outside the MIS sector, such as Rewards Group, Arafura Pearls and Brooklyn Park Olives, that were responsible for gains in the amount raised,” he said.
“Standout sectors were horticulture, which accounted for more than $335 million, and high value timber, which raised $275 million, or about 20 per cent of total sales.”
Olives and nut crops were the popular horticultural sectors, raising $100 million and $168 million respectively.
“Wine grapes have also made something of a comeback, with sales lifting significantly, buoyed by improved confidence that the worst of the grape glut is now behind us,” Kelly said.
“The challenge now is for the industry to rebuild consumer confidence and improve margins, which may translate into higher farm gate prices for grape growers.”
He is optimistic for the 2008 agribusiness market, with improved weather conditions being forecast and the final year for non-forestry schemes to gain a product ruling.
“Given there is only one year of non-forestry investment remaining, and with improved confidence in agricultural markets, we believe the industry is well placed to take advantage of improved investor sentiment in 2008 to again lift sales,” Kelly said.
However, there are a number of factors that could put a dampener on inflows in 2008, and these include the speed with which the Australian Taxation Office (ATO) issues product rulings.
“How much water is in the Murray River and Murrumbidgee River catchments is another potential handbrake in 2008,” he said.
“In addition, the ATO test case to determine the future of non-forestry MISs will also commence in coming months.
“A win for the industry may not guarantee a MIS future for non-forestry products.”
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