Investment flow into agribusiness schemes dries up
Sydney Morning Herald
Tuesday July 21, 2009
AUSTRALIA'S agribusiness managed investment schemes face an uncertain future after the sector crashed 77 per cent to $250 million in 2008-09 following the collapse of Timbercorp and Great Southern.Down from $829 million the previous year, the total is the lowest recorded since surveys of managed investment schemes (MIS) began, according to Australian Agribusiness Group's annual survey of the sector.AAG director Tim Lee said the sector would face many changes after two investigations were completed, by the Australian Securities and Investments Commission, and the parliamentary joint committee on corporations and financial services.Irrespective of any changes in regulations, "the agri-MIS industry will face significant challenges", he said. It must overcome sliding consumer confidence and rebuild agribusiness's investment reputation.Mr Lee said the sector had been affected by the lingering drought in many regions, the global financial crisis, and the uncertainty surrounding future tax deductions despite the favourable Federal Court decision in December.Then came the collapse of the two largest operators, Timbercorp and Great Southern, just before the main selling season near the end of the financial year.In 2008-09, the number of individuals investing in the schemes fell 69 per cent, from 24,300 to 7560. Timber investments still accounted for 90 per cent, or $227 million, of total funds raised in 2008-09, but horticultural investments plunged 95 per cent to $13 million.Other key findings of the AAG survey were:The average project investment was $31,402, a fall of 45 per cent from the previous $57,603.Three companies reported zero sales.There were 26 investment offerings, down 54 per cent. AAG estimates investors will receive $116 million in tax refunds, but expects three times that amount will be paid in tax on future project revenues.Of the funds raised in the last financial year, 90 per cent were directed to the timber sector, and about 21,000 hectares of trees were planted.Woodchip offerings declined 82 per cent to $90 million, from a total of $398 million the year before. Pine/eucalypt sawlog offerings were down 71 per cent to $133 million.Only one viticulture project was offered compared with four the previous year.
© 2009 Sydney Morning Herald
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