Young steps back but urges sector to step up

Great Southern Ltd founder John Young remains as private and modest in retirement as he was during his 20-year reign as head of Australia’s most successful agribusiness investment company.

Described as passionate, driven and down to earth by his colleagues, Mr Young saw his impending 60th birthday as the right time to step away, in a full-time operational capacity, from the $1.1billion company he helped build.

From humble beginnings – starting from literally a zero base – the company has grown to become the country’s dominant agribusiness investment player, as well as the largest rural landholder by value.

Starting with the idea of investing millions of dollars of city money into the bush, Great Southern Plantations (as the company was originally known) was formed in 1987 when the state’s plantation forestry industry, and corporate farming, was in its infancy.

With the then government keen to move away from chipping native forests, the fund manager and fellow founding director, Helen Sewell, recognised an opportunity to replace native with plantation timber, with most of the investment capital to come from private, not public, funds.

Assessing the big picture, 20 years on, Mr Young believes industries such as the plantation timber industry would not have been developed were it not for large-scale corporate agriculture.

“MIS changed the face of agriculture, it has created brand new industries; MIS hasn’t come in competition,” he said.

“[Plantation timber] was attractive to city farmers because they could put money into a project today and wait 10 years, whereas a farmer in the bush obviously couldn’t.”

Great Southern expanded from its traditional focus on timber plantations some years later to pursue agricultural projects in organic olives, wine grapes, almonds and cattle.

The company is now the third largest grower of grapes for the viticulture industry, the second largest operator in the olive oil industry, and the fourth largest in cattle.

But the growth of MIS, particularly in the non-forestry sectors, hasn’t been without its detractors.

The encroachment of so-called city farmers, and the argument that MIS distort markets and displace traditional farmers are rejected by Mr Young, who credits MIS as the impetus to creating new agricultural industries.

“If you take viticulture, it’s always been MIS. If it wasn’t for MIS we wouldn’t have Margaret River in its current form,” he said.

“That was in a different form than we have. In early 1970s it was the doctors and so forth who went down to Margaret River and claimed tax deductions for planting viticulture

“It was enormous, pioneering stuff, but it was still MIS.”

As well as the growth of the company, Mr Young said one of the things he was proudest of was the company’s investment in regional communities.

With operations around the country – including pulpwood plantations in northern Tasmania and the Tiwi Islands off the coast of the Northern Territory – Mr Young believes the company has benefited local communities by investing in infrastructure and providing local job opportunities.

“We’re very proud of the fact that if you take places like Albany and Mt Barker, and Portland, Warrnambool and Horsham in Victoria...we’ve pumped large volumes of money into the area, created new jobs reinvigorated the whole new area,” Mr Young said.

“City money going into the bush is a good thing. Progress is not always well accepted, and in our industry that’s what were doing.”

While Mr Young will be stepping down from his management role at the company’s annual general meeting this month, he will stay on board in an advisory role as a non-executive director.

He will also retain his shareholding in the company, which is currently valued at just more than $80 million.

And despite the possible fall-out for non-forestry MIS if the Australian Tax Office is successful in the test case currently under way, Mr Young sees positive signs of growth for the MIS industry.

Fuelling that growth will be the demand for soft commodities from South-East Asia and the rapidly growing economies of China and India.

Mr Young believes significant capital injections and investment in infrastructure will be vital in realising the potential of Australia’s agricultural industry to fill that demand.

There are also significant opportunities in the growing biofuels and bioenergy industries, opportunities which Great Southern, as the country’s biggest timber plantation manager, is looking to take advantage of.

“Agriculture as we know it today has to change. That probably means more money being pumped into agriculture, and that money will come from private investment as opposed to government subsidies,” Mr Young said.

“The object of the exercise here is to change agriculture from being the undercapitalised, underutilised situation to concentrating your capital…and putting Australia on the map as the food bowl of South-East Asia.”