Cargill unit reaps farm profits

25 May, 2015 05:50 AM
(This) calls into question the lack of investment by Australian institutions in agriculture

A HEDGE fund run by an arm of the world's largest agricultural company, Cargill, has enjoyed another strong profit from its Australian farming investment - the land and logistics company BFB Group.

The fund, Black River Asset Management, reaped the rewards of another good season, with BFB delivering a $3.3 million profit and a $4.2 million upward revaluation of property holdings for the year ending December 2014.

The $220 million BFB made headlines after snapping up the prized Billabong Station in the Eurongilly Valley, east of Wagga Wagga, NSW for about $10 million in 2012. The 1875-hectare grazing and dryland cropping property was formerly owned by David Baffsky - the chairman of Investa Wholesale Funds Management.

Accounts just released by the Australian Securities and Investments Commission show BFB now has $34 million in retained earnings and reserved asset revaluations on top of $64.57 million in share capital - the majority for which is owned by Black River. Such figures give some indication as to the very strong returns Black River has made since its investment in BFB.

For a major foreign institutional investor such as the Minneapolis-based Black River to be making strong gains year after year from Australian agriculture calls into question the lack of investment by Australian institutional investors in Australian agriculture.

BFB's result $3.3 million profit, although strong, has slipped from last year's $7.2 million profit. Labour expenses jumped by almost $1 million and farming expenses were up $1.15 million to $14 million.

The company also spent $16.5 million on property plant and equipment. The current value of its land and buildings now sits at $150.8 million.

BFB is not Black River's only Australian agricultural investment. In 2013 Black River purchased one of the largest farms within the sugar cane supply area of Mackay in north Queensland, for $10.5 million. The property, Marwood Farm, was purchased in a joint venture with Mackay Sugar called Racecourse Projects. The farm has fully irrigated contiguous cane land.

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Bushfire Blonde
25/05/2015 6:31:43 AM

This is another example for Little Aussie Battlers to stand up to their Banks and HANG IN THERE! There is always a future for Agriculture - its just that it is a bit hard to see sometimes. RaboBank does not deal in any other assets but Agriculture and they keep on keeping on year in year out.
25/05/2015 10:58:08 AM

I actually think we need to get past the 'little Aussie battler' them against us attitude. There's never been a successful industry in the world that has succeeded with a poor me attitude and tugging on the heartstrings of the community. Whilst I know it seems difficult at present with drought and other issues, we all need to keep this in mind or we will end up as peasants
Pete Rothwell
25/05/2015 11:31:27 AM

$3.3 million return on a value of $220 million is about 1.5% return. Not really that great is it.
Jock Munro
26/05/2015 8:51:57 PM

Will we ever know what Cargill are making out Australian grains? Especially since Rudd and Nelson's Liberals handed them and their fellow merchants our wheat industry on a plate. They must struggle to keep the smile off their faces. Our urban elite mug lair politicians have demeaned our nation.
27/05/2015 4:16:54 AM

Actually Pete Rothwell is making an excellent point. That takes all the sting out of the author's critical questions. However, we still have to see the outcome of current investigations by the Abbott Govt into the mode of operation of foreign owned companies in Australia using transfer pricing as a way of lowering Australian operations income for tax purposes? We all know what the foreign owned operators have been doing for years don't we.


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