THE downfall of two of Australia’s biggest managed investment scheme (MIS) companies has left a heavy question mark hanging over thousands of hectares of valuable agricultural land.
Great Southern manages about 240,000 hectares of forestry land on behalf of 43,000 investors, along with more than 150,000 head of cattle. The group is now in the hands of administrators with debts of over $700 million.
It follows the demise of Timbercorp last month, which manages over 100,000ha of large-scale horticultural and forestry assets on behalf of about 18,500 investors.
Great Southern has already put three cattle stations in northern Australia on the market and last week was believed to be about to offload 44 tree farms in NSW and Queensland.
It’s expected more land will follow, raising fears this MIS land could swamp the property market and drag down values in areas like south west Victoria.
However Victorian agribusiness analyst Sam Paton says it will not have an effect on farmer-to-farmer transactions.
“If a paddock of trees is worth $4000/ha and the trees are then harvested, the administrators are faced with the reality of clearing, burning, fertilising and sowing the land back to pasture - which could mean the net value is brought back to $1000/ha,” Mr Paton said.
He estimated the cost of converting forestry land back to grazing or cropping land to be around $3000/ha.
“It is a big cost to remove the stumps and I would suspect these companies would try and sell the properties as they are, so I don’t think it will have an impact on the wider property market,” he said.
Daniel Aarons, Ray White Rural director, says it would be unlikely that the land from the collapsed companies would flood the market and impact negatively on land values.
“Considering the size and scale of these operations, the likelihood that all of it would go onto the public market at once would be very slim,” Mr Aarons said.
“We really have to slow down and realise the value of this land and the necessity of timber and pulp to sustain our lifestyles.”
Mr Aarons said whoever takes over the management of these properties would most likely continue to use them for timber production.
“The costs associated with turning the land back into cropping are enormous and I think that as long as we need timber that land will remain valuable,” he said.
