HIGH-income earners will invest more than $100 million in almonds this financial year to slash their tax bills.
The nut is set to be the hottest tax-deductible investment of 2006 with the amount of money pumped into projects tipped to surge more than 60 per cent. Agribusiness analyst Adviser Edge Investment Research expects investments in the industry to top $100 million this year, up from about $60 million last year.
Shane Kelly, the group's managing director, said growth was being driven by demand from investors who needed to offset capital gains tax bills from the booming share market.
Also, global prices for almonds had improved dramatically, he said.
The biggest almond project will be run by Timbercorp, an $800 million agribusiness company based in Melbourne. It plans to raise $60 million, compared with $33 million in 2004-05.
"This year will be significantly larger, almost double," Timbercorp deputy CEO Sol Rabinowicz said.
Timbercorp's almond operations are near Robinvale in north-western Victoria. Its 2005-06 projects will add about 2200ha of plantings to the orchard, already the second-largest in the world.
Mr Rabinowicz said the amount investors would pay for lots in the project was calculated on a global almond price of $7.15 per kilogram. Units in last year's project were based on $7/kg.
However, the international price of almonds has risen sharply recently. It is now about $10/kg though has been as high as $13/kg thanks to increased consumer demand in the US where the nut's health benefits have been promoted heavily.
Still, Mr Rabinowicz said: "Just because the price is very high now doesn't mean we will exploit that fact. We tend to take a long-term view on pricing."
This is only reasonable, given that the almond trees offered in the 2005-06 project will only begin yielding nuts from 2009.
Adviser Edge's Mr Kelly said the amount of money poured into the agribusiness investment sector would probably rise by 15-20 per cent this financial year.
In 2004-05, investors sank about $1 billion into such schemes, double the previous year.
"We won't see the same magnitude of increase this financial year," Mr Kelly said. "But there's probably still some pent-up demand."
Timbercorp's $11 million mango project was fully subscribed within hours of opening in May.
Mr Rabinowicz said he wasn't sure that would happen again this year.
The agribusiness investment industry's resurgence follows a crackdown by the Australian Taxation Office which severely tarnished the sector's reputation.
But with unscrupulous operators weeded out, survivors are enjoying a more amicable relationship with the ATO.
One in six projects were knocked back for tax deductibility in 2004-05, compared with nearly half failing in 2002-03.
"I certainly can't describe the ATO as a friend of the industry," Mr Rabinowicz said. "But since they introduced the prod ruling system, they have pretty much taken out all of the poor operators.
"There is certainly a better standard of project in the marketplace now. That, in turn, is giving investors more confidence."
TIM Price at posting:
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