Alterra finds avocado project viable

Agribusiness developer Alterra has completed the feasibility study of its 300-hectare avocado farm in Pemberton and plans to start planting avocados later this year.

The study confirmed a development funding cost of $40.6 million, a minimum 30-year life of the project and a double-digit internal rate of return. It found the orchard, called the Carpenters Project, could be completed within three years.

Most of the funding for the project will be sourced from external equity and debt providers, with Alterra retaining a substantial minority interest.

In a statement to the ASX, Alterra said discussions with equity and debt providers were underway with first external contributions expected in early 2021.

Subject to capital, Alterra plans to plant up to 50 hectares in 2021, with remainder planted over two years through to 2023.

Alterra has so far incurred direct costs of around $1.4 million in priming the site, including an initial five-hectare planting in October 2020 to collect data.

Alterra chief executive Oliver Barnes said the results of the study confirmed the opportunity to develop a large-scale project in a premium horticultural region.

“In pursuing this opportunity, we are adopting conservative assumptions around yield and market prices,” Mr Barnes said.

“However, we are also applying the best available technologies and horticultural practices to ensure Carpenters has the best chance for outperformance.”

To ensure the site has adequate access to water, construction of the 4.1 gigalitre dam is underway and is now being funded by the landowner.

Originally, Alterra was going to fund the dam with construction to start in late 2021.

However, the landowner has elected to start construction early, in part due to permit requirements that dam construction must be substantially commenced by June 2021 and any construction beyond this date may require a permit extension.

According to Alterra, the Carpenters Project has the potential to make up 10 per cent of the state’s planted avocado hectares.

The company is planning on exporting its avocados internationally.

Shares in Alterra closed at 5 cents each, up 4 per cent.