Prime Value Citrus Trust

Our first direct agricultural investment is in the citrus sector, driven by strong underlying fundamentals supporting the industry. The Nangiloc Citrus Farm, acquired by Prime Value in June 2017, is located on the banks of the Murray River in prime Victorian horticultural land.

In global terms Australia is a small citrus producer representing less than 1% of world production. It is also a higher cost producer due to labour regulations and land costs. However Australia occupies a high quality niche in the fresh orange market (as distinguished from the juicing market). It is counter seasonal to northern hemisphere citrus and in the context of the rapidly rising Asian middle class and their demands for clean, quality food, the industry is very well positioned.

Australia currently supplies approximately 5% of the total fresh orange global export market. Trade data released in January confirmed 2016 as another record year for Australian citrus exports. Total exports from January to December were just under 220,000 tonnes with a value of A$335M and export growth is bolstering demand and driving prices higher.

The recently implemented Free Trade Agreements (FTAs) with China, Korea and Japan reduced tariffs on Australian citrus exports to these countries with further reductions scheduled over the next decade. The FTAs have underpinned the stronger export growth and there is scope for greater growth with packing and fruit export companies experiencing strong demand and order flow.

 

 

The development of export markets, as well as the consolidation of grading, packing and exporting into centralised hubs (such as the Mildura Fruit Company) has resulted in premium prices for premium fruit.

Additional Australian supply for fresh fruit is coming on stream but at a lower rate than the growth in demand. Citrus trees take 6-8 years to reach full production and there is a 2-3 year lead-time between ordering trees and planting. Both factors are limiting near term production growth and render a positive outlook for existing producers. The Nangiloc Citrus Farm has 105 hectares of citrus plantings and our stage one expansion plans are ahead of schedule.

An investment in the citrus farm is a medium to long term investment and provides investors with the opportunity to benefit from Australia’s position as a provider of clean, quality produce and the growing demand from Asia.

Returns are forecast to be both income and capital in nature.

If you would like to receive a copy of the Information Memorandum or discuss our agricultural investment opportunities please contact James Everist or Elizabeth Blackhurst on (03) 9098 8088.