Great Southern and Timbercorp
21 May 2009
What a disaster these agricultural schemes have been, especially for mum and dad investors; it will end up eclipsing anything else in Australian corporate history. Two years ago I went to a financial advisor to try and hide from the taxman and he strongly recommended that I buy into an almond plantation just outside of Robinvale VIC.
The adviser (in Perth) did not know that I am originally from Mildura (100KM West of Robinvale) or that almonds use more water per acre then any other agricultural crop, maybe apart from olives (another tax dodge favourite). Being from the Murray I am aware of the water issues it faces and 6 weeks before meeting this guy then Prime Minister John Howard had said that if there are no significant rains in the next 8 weeks then not even high security water licences would be honoured.
I asked the adviser if he knew that there were no water allocations for these schemes and he assured me there were and that the ruling only applied to smaller scale family farmers. Of course he was wrong, there really was no water for anyone. He even rang the Timbercorp spruikster who also claimed that this was not true and that he had received an email that very day telling him that extra water was to be allocated from the Dartmouth dam.
They were blatant lies, that left mum and dad investors - who trust these trailing commission dimwits – carrying a $6 billion plus can.
These schemes pose difficult questions to rural communities. On one hand they pump enormous capital into regions, providing jobs and opportunities. On the other, they bid up the price of water and raise costs for family farmers. It seems the market has dictated the answer to this question as these highly leveraged debacles fall over, yet the real concern is what effect this will have on capital raising efforts for future projects located in rural Australia.