May 16th 2009

  Buy Issue 2803

Articles from this issue:

COVER STORY: Impending collapse of Australian agriculture

EDITORIAL: Implications of the budget black hole

CANBERRA OBSERVED: Kevin Rudd backs down on climate change

GLOBAL FINANCIAL CRISIS: IMF's global outlook: expect the worst

MANAGED INVESTMENT SCHEMES: Behind the collapse of Timbercorp

INTERNATIONAL TRADE: Re-inventing the wheel of international trade

CHINA: China sees US as dying Roman empire

INTERNATIONAL AFFAIRS: Taiwan's WHO entry breakthrough

UNITED NATIONS: UN anti-racism conference blames Israel

ARTIFICIAL REPRODUCTIVE TECHNOLOGY: Does family matter? Ask the kids…

POPULATION: One-child policy for Australia, says green group

ABORTION LAWS: Further threats from pro-abortion fanatics

RUSSIA: Russia faces catastrophic population decline

AS THE WORLD TURNS: Ageing population adds to financial crisis / Turn back the clock / Obama axes school voucher program

CINEMA: Shielding one's eyes from the truth - 'Good'

BOOKS: HEAVEN AND EARTH - Global Warming: the Missing Science, by Ian Plimer

BOOKS: WORLD WAR II: BEHIND CLOSED DOORS: Stalin, the Nazis and the West, by Laurence Rees

BOOKS: WAR AND MEDICINE, by Thuyavan with John Whitehall

Books promotion page

Behind the collapse of Timbercorp

by Peter Westmore

News Weekly, May 16, 2009
Managed investment schemes (MIS) radically distorted rural communities by taking productive agricultural land out of production and exacerbating the acute scarcity of irrigation water, writes Peter Westmore.

One of Australia's premier agribusiness investment managers, Timbercorp, has gone into voluntary administration amidst calls for a re-examination of the business model on which the managed investment scheme was based.

Managed investment schemes (MIS) were set up in the 1980s to get money from city investors to buy up cheap rural land, and turn it into plantation timber and olive and almond groves, using huge quantities of water purchased from irrigators. They operated by giving city investors large tax benefits to offset the losses incurred in setting up the business.

However, they radically distorted rural communities by taking productive agricultural land out of production, and by using their capital base to make themselves water barons at a time of acute scarcity of irrigation water.

Timbercorp's share price has plummeted over recent years, falling from $1.85 per share in 2007, to just four cents late last month, when trading in the shares was suspended. Timbercorp has some 18,000 investors.

Timbercorp, established in the mid-1980s, was put into voluntary administration last month because its directors were unable to raise more money to keep the business afloat.

Timbercorp appointed KordaMentha to administer the company, and the administrators immediately suspended the company's forestry and horticulture operations while funding options were determined.

Among many farmers, some of whom were displaced as Timbercorp took over prime agricultural land, the collapse of the company has led to a bitter-sweet response.

One described the tax-driven plantings of blue gums by Timbercorp and other MIS companies as "absolutely ridiculous".

Another allocated the blame for the MIS plantings at federal and state government politicians. "A lot of good agricultural land has been wasted under this shady (MIS) deal that had the support of politicians," he said. "It does need an investigation into it."

Timbercorp manages large-scale farms across Australia, and has 120,227 hectares of plantations.

It grows and sells almonds, olive oil, citrus, table grapes, mangoes, avocados, and timber from eucalyptus plantations. It has 180 employees and is responsible for a further 1,500 employees and contractors throughout regional Australia.

Olive production

The group's internet site says Timbercorp first began to establish the olive grove at Boort, northern Victoria, around a decade ago and today it is one of the largest single-site olive groves in the world, consisting of almost one million olive trees.

The grove and on-site olive-oil processing-plant are major employers in the local area and an open day was held before Easter as staff were gearing up for the annual olive harvest.

This year it is expected that Timbercorp's Boort grove will produce more than 3.5 million litres of olive oil, which equates to around one-third of the total Australian olive oil crop.

Timbercorp's Boort site was named Olive Grove of the Year in recognition of the investments the company had made in the latest technology and farm equipment to produce large volumes of high-quality olive oil while maintaining cost competitiveness.

Oil produced at Boort is sold under the Cobram Estate label. The Cobram Estate brand competes against the world's best olive oils at shows in Australia and around the world. In 2008, it won two trophies and 39 medals.

The problem is that with the collapse in asset values and over-production flooding the Australian market, the future of the Boort grove is in doubt.

A long-time critic of managed investment schemes, Lance Milne, stated that the collapse of Timbercorp could have ramifications throughout rural Australia.

Mr Milne said that, with Timbercorp having 40 subsidiaries and several major companies dependent on it for their survival, the coming weeks will, he believes, see a string of these companies appointing administrators.

He added that the water policies of the previous federal Coalition government had played a large part in the growth of managed investment schemes, causing traditional irrigators to lose their access to water.

The federal government claimed that separation of water rights from land ownership would encourage more efficient use of water. "Rather than seeing water going to its most profitable use, with unbundling the opposite had occurred," Mr Milne said.

Mr Milne said he had written many letters to the local and rural press in recent years, and joined a Victorian Farmers Federation delegation to Canberra to voice district concerns about managed investment schemes, but no one had been interested in growers' views.

He said it appeared that all that was needed to win people over to the propaganda of companies such as Timbercorp had been a ride in their bus and a gourmet lunch amid manicured rows of almonds.

"The politicians and bureaucrats had never felt it necessary to determine if these developments were viable and capable of generating sufficient income to cover their operating costs," he said.

- Peter Westmore

Join email list

Join e-newsletter list

Your cart has 0 items

Subscribe to NewsWeekly

Research Papers

Trending articles

SAME-SEX MARRIAGE Memo to Shorten, Wong: LGBTIs don't want it

COVER STORY Shorten takes low road to defeat marriage plebiscite

COVER STORY Reaper mows down first child in the Low Countries

COVER STORY Bill Shorten imposes his political will on the nation

SAME-SEX MARRIAGE Kevin Andrews: defend marriage on principles

CANBERRA OBSERVED Coalition still gridlocked despite foreign success

ENVIRONMENT More pseudo science from climate

News and views from around the world

Menzies, myth and modern Australia (Jonathan Pincus)

China’s utterly disgraceful human-rights record

Japan’s cure for childlessness: a robot (Marcus Roberts)

SOGI laws: a subversive response to a non-existent problem (James Gottry)

Shakespeare, Cervantes and the romance of the real (R.V. Young)

That’s not funny: PC and humour (Anthony Sacramone)

Refugees celebrate capture of terror suspect

The Spectre of soft totalitarianism (Daniel Mahoney)

American dream more dead than you thought (Eric Levitz)

Think the world is overcrowded: These 10 maps show why you’re wrong (Max Galka)

© Copyright 2011
Last Modified:
November 14, 2015, 11:18 am