Agribusiness returns wanting

A SURVEY has found that just eight managed investment schemes are making a return for investors. However, of these, half were offering returns above the forecast amount.

A further 29 projects reported that while they had yet to pay returns, they were on track to do so as forecast.

Compiled by the Australian Agribusiness Group, the surveys were sent to 46 managers who released a project in 2002 or 2003 and covered about 140 projects.

The three projects that have paid higher than forecast returns included Palandri American Wine Business 2002, Blaxland’s Old Mundulla Wine scheme and the Margaret River Watershed Premium Wine Project.

Those that paid below forecast were Palandri’s two Margaret River wine projects, Australia Pastoral Investments Cattle project and Blaxland’s Cowra Crossing Wine scheme.

The timber industry was found to be the most wanting when it came to paying returns.

“A total of 66 per cent of the projects that haven’t paid returns were timber, 17 per cent olives, 10 per cent wine grapes and 6 per cent other agribusiness schemes,” AAG research manager Tim Lee said.

The returns to investors from these projects ranged from 10 to 16 per cent.

Some of the earlier timber projects that raised funds during the early to mid 1990s did not forecast an internal rate of return. This was due to the way that their offer documents were prepared and the regulations regarding the raising of funds at the time.

The strong showing by Palandri American Wine Business was supported last month by a survey released by managed investment scheme research group Adviser Edge.

Adviser Edge ranked it in seventh position in its top 10 rated projects for 2003 with a four out of five star rating.

The Margaret River Watershed Premium Wine project was ranked in ninth place, also with a four-star rating.

However, Mr Lee said he believed the real test for the sector was yet to come, as more projects began to mature.

“The big test for the agri-managed investment scheme industry will be in the next two to five years when most of the horticultural projects come on line and many of the timber projects are harvested,” he said.

“The actual returns and forecast returns position for the agri-MIS absolutely outperforms forecast returns for listed stocks, other managed funds and most superannuation investments.”

Mr Lee said the industry would also begin contributing more by way of employment opportunities including in the service and support industries as well as through substantial tax revenues.

“The agri-MIS industry is the biggest movement of city-based capital into regional areas annually, with not less than $1 billion invested in the last three years,” he said.

“Regional areas contribute substantially to the pool of available superannuation funds for investment; relatively few dollars are invested back into regional areas.”

In its end of year round up report, AIG suggested that of the estimated $300 million in capital raised by the sector in 2001-02, forecast gross income was in the order of $1.8 billion, a seven time multiple of the capital raised. In addition, future tax payable on forecast revenue is in excess of $820 million.