farms to increase efficiencies of labour, machinery and management skills. Sell & lease back Sell some land to an investor, lease back the land and with the released capital (from the sale), expand the farming business by leasing more land and purchasing additional stock to build up the sheep flock. Olam Almonds Australia Pty Ltd sold and leased back land from group of investment funds (2013). Grass Patch farmer sold leased back from Westchester, a US pension fund (2014). Equity investment Investor(s) contribute equity to the farm business. A proportion of profit is distributed to investor(s) as dividend. Investor may choose to purchase more land to increase the size of the enterprise. Farmer manages the enterprise for a fee and receives profit distribution. Equity partnerships across NZ dairy industry. Physical involvement may range from equity interest only (‘investor’), equity interest and active involvement (‘managing partner) or ‘manager’, whose employment is separate from shareholding. Leasing over summer/autumn Sheep producers lease stubble, moderately saline or marginal cropping land from crop producers as alternative options for feed over summer and autumn at a lower cost to grain feed. WA farmers sowing saltbush, tall wheatgrass and other grasses as a feed source in marginal cropping areas. Contract lamb production An investor, which could also be a processor, broker or end user, establishes breeding stock to a high standard that meets specifications of high value customers. The investor owns the breeding stock and puts them on the lamb producer’s property. Producer looks after the sheep and grows out the lambs to specifications. Investor pays producer a fee that covers land, labour and feed costs plus a margin. Allied Beef, QLD & NSW Pork industry in WA Joint ventures (JV) A joint venture can allow individuals to combine resources but retain ownership to create larger operations. The lambs are divided at an agreed ratio (based on cost contributions) and sold separately by the respective parties. Balance sheet and earnings of each JV partner are kept separate for taxation and ownership purposes. Liveringa Stations Beef Pty Ltd, a JV held 50/50 by the Hancock Prospecting Group and Dowford Investments (parent of Milne Agrigroup)
livestock coordinators. expenses as generated through the company designed reporting system. 5 Mort & Co supervises cattle market conditions to stay abreast of the market. No data 6 As the cattle approach targeted feeding period they are inspected to ascertain ideal marketing options (if the cattle have not been forward sold). No data 7 Mort & Co negotiates sale of cattle and presents the grazier with alternative sale options (if desired). No data 8 Cattle delivered to the processor. No data 9 Net proceeds are advanced to grazier. Feedlot and carcass performance is provided to grazier as are recommendations for future cattle supply & feeding.
business and agree to supply lambs on a long term basis. A sales and marketing team is employed to develop a marketing strategy and seek out premium markets. Create a market environment that fosters the development of marketers/brokers Sheep producers have the option to sell lambs directly to an overseas customer or a marketing company that specialises in marketing WA lamb and seeking out premium markets or high paying customers. The New Zealand Merino Company Limited (NZM) is an integrated sales, marketing, and innovation company in NZ, with growers as shareholders. NZM transacts ~85% of all Merino wool grown in NZ with two-thirds through direct supply contracts, some of which extend up to five years. Franchising A business establishes a breeding line and production process to produce high quality lamb to meet a specific premium market. Farmers contract to raise and grow out lambs to set specifications. Prices are contracted in with processor. Business invests in marketing to receive premium price. Blade Farming (UK) works closely with farmers to help them rear and finish cattle to a consistent and high specification for high value markets. Farmers sign forward price commitments backed by the abattoir they supply and pay Blade a franchise fee as the cattle are slaughtered. Dedicated supply chains from paddock to plate Involves the partnership of businesses along the whole supply chain so they all are motivated to work together to operate a highly efficient and profitable chain. Foods, one of New Zealand's largest red meat exporters, has formed producer groups that are dedicated to supplying and working with its customers, for example Waitrose. Section 3 – potential investor structures/investment models This section highlights some structures on how capital could be sourced, pooled and invested across the supply chain to grow the sheep industry in Western Australia. Examples include: Setting up a research and development (R&D) company that invests in genetics, technology or processing to increase productivity and also benefits from R&D tax concessions. Giving Australians the option to elect to invest superannuation into an agricultural or regional development fund. Funds can then be invested in sheep enterprises that can provide a commercial return.