November 11, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

Rural Funds Management (RFM), manager for the ASX-listed Rural Funds Group (RFF), an owner of a diversified portfolio of high-quality Australian agricultural assets, has been on a tear, rapidly acquiring multiple assets spanning cattle, cropping, and macadamia production. 

Activity such as this is good to see after a challenging and distracting period for the asset manager. In February 2020, the Supreme Court of New South Wales found in favor of the publicly-traded agricultural investor against U.S.-based activist short seller Bonitas Research, finding that claims made by Bonitas against Rural Funds were misleading and false. 

The decision handed down by Judge David Hammerschlag against Bonitas was damning and clear. Finding that Mr. Weichert and Bonitas violated sections 1041E, 1041F and 1041H of the Corporations Act, as well as section 12DA(1) of the ASIC Act, Judge Hammerschlag stated:

“Commencing at 9:23am on 6 August 2019, Bonitas and Wiechert engaged upon a concerted course of making statements and disseminating information scathingly critical of RFM and RFF.”

“They accused RFM and RFF of dishonesty and of being a fraud. Their plain intention was to drive down the price of units for commercial gain.

“Statements which they made and information which they disseminated were false in material particulars and materially misleading. I am satisfied that they knew or ought reasonably to have known that the statements and information were false in material particulars or were materially misleading. They did not care that they were false.”

Now RFM is back to the business of agriculture, buying up high-profile farming assets, and is actively expanding into macadamias, a permanent crop with promising potential.

RFF first entered the macadamia industry in 2016, and has been managing properties ever since. A key strategic goal as part of the group’s next phase of investment activity will be driven by a commitment of $500 million to fund a concerted expansion into this sector.

In August 2020 RFM announced it had agreed to acquire 5,409 hectares (13, 366 acres) of sugar cane farms in Queensland from MSF Sugar Pty Ltd. for A$81.1 million (US$58.44 million). 

The deal included the associated plant and equipment, along with 8,060 megaliters of water entitlements, with the opportunity to acquire additional water rights in the future.

At the time, RFM stated that it intended to undertake a conversion on the land, shifting production to approximately 2,200 hectares (5,436 acres) of macadamia orchards, with a significant portion of the balance of the land being used for cropping.

The company has stated that it has also acquired three cattle stations (the Rockhampton aggregation) in Central Queensland with frontage on the Fitzroy River in FY2020, with expectations that macadamia planting will begin on some of these assets, and possibly RFM’s Comanche property, as soon as autumn 2021.

All combined, these assets were amassed to form a foundation providing the natural resources needed to support the future development of a macadamia portfolio totaling as much as 5,000 hectares (12,355 acres), and reflecting an investment of approximately $500 million (US$358.7 million).

In its latest move, RFM has snapped up a collection of cattle, cropping, and macadamia assets in central and southeast Queensland for a reported total of A$110 million (US$80.6 million).

To generate immediate income while these projects are under development, RFM has acquired Beerwah and Bauple – two mature macadamia orchards totaling 475 hectares from Costi Farms for A$63.1 million (US$46.2 million), which includes shares in Marquis Macadamias – a processing and marketing company, expected to close in December 2021. 

In the short-term, RFM intends to manage these properties on behalf of RFF and to undertake orchard upgrades that will improve the marketability of the assets for potential lessees.

In separate deals, RFM also has agreed to acquire The Pocket – a 1,917-hectare cattle property with 5,364 megaliters of water allocations (adjacent to RFM’s 7,600-hectare Comanche property) that was part of the recently sold THF Portfolio of cattle and irrigated fodder properties.

And finally, there’s Baamba Plains – a 4,130-hectare cropping property north of Rolleston in Queensland, that together with The Pocket has 20,733 megaliters of underutilized water entitlements which RFM plans to leverage to improve productivity before seeking out interested lessees.

– Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Oilseed & Grain News. She can be reached at lkiernan-stone@globalaginvesting.com.