May 11, 2017

The Public Sector Pension Investment Board (PSP Investments), one of the largest pension funds in Canada, has acquired a majority stake in Stahmann Farms Enterprises (SFE) – the largest pecan grower and processor and fourth largest macadamia processor in Australia.

Headquartered in Toowoomba, Queensland, SFE is a vertically integrated nut business that was originally established in Australia in 1971 as the Australian arm of the U.S.-based Stahmann pecan farming business located in New Mexico. Later in 2006, the Australian business became independent of its U.S. parent, and has since seen rapid growth due in large part to demand from Asian markets.

Thanks to advances in variety breeding and farm practices, higher prices and profitability, and the China Free Trade Agreement which will phase out all tariffs on Australian nuts over a period of five years, the Australian nut industry is well placed for increased production and growth.

In 2015 nuts became Australia’s most valuable horticultural export, according to the Australian Nut Industry Council, accounting for just over 50 percent of the country’s horticultural exports, reaching a value of just over $1 billion, reports AFR.

Fueling this growth in large part is Chinese demand for macadamias, which has grown from zero to 25 percent of the country’s total macadamia crop in only four years, according to the Australian Nut Industry Council.

“It’s pretty extraordinary,” Jolyon Burnett, chair of the Australian Nut Industry Council told AFR. “You’ll often hear about apple exports or citrus exports or table grape exports – and they’re doing well and the government has been encouraging those exports – but for nuts to have grown in almost a decade from almost nothing to more than 50 percent of total horticultural exports is pretty extraordinary.”

Fuel for Expansion

In October of last year it became known that the pecan and macadamia specialist was exploring strategic moves including the possible sale of a stake in the business, or the sale of the business in its entirety. AFR reported at the time that frontrunners included global pension funds; Albert Tse. former Macquarie banker and head of Wattle Hill private equity fund, which partnered with Chinese food group Qiaqia to invest in Buderim Group – one of the world’s leading ginger producers; or Westchester Group, a global agricultural investors with a well established presence in Australia’s commercial cotton, grape, and almond sectors.

The capital from the PSP Investments deal will help fund SFE’s plans to double the size of its orchards reports The Land. With 800 hectares and nearly 100,000 trees, SFE is looking to plant an additional 650 hectares of irrigated land.

“On the back of booming demand for tree nuts, future investment is expected to support regional development in new and existing locations in NSW and Queensland,” said SFE is a company statement.

The funding also will support SFE’s goals of diversifying its footprint and strengthening its processing and marketing operations to keep pace with higher nut production levels.

In addition to the company’s “Trawalla” orchards, SFE is in the process of developing three new adjacent properties, and is planning the future acquisition of more land for pecan and macadamia production out of the Moree district, and possible walnut production in a cooler region, according to Farm Online.

Under the terms of the investment, existing SFE owners Matthew Durack, Richard Gest, and Ross Burling, along with SFE Chief Financial Officer Robin Stinson, and a representative from PSP Investments, will make up membership of the new Board of Directors moving forward.

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com.