PRIME ag land in the South East of SA and western Vic has come full circle, with some harvested blue gum land being converted back to grazing and cropping.
In the early 2000s, land prices soared as investors sought tax benefits investing in Managed Investment Schemes to plant blue gums.
An estimated 360,000 hectares in the Green Triangle region is under trees, mainly softwood and hardwood.
Some of these blue gum blocks have been harvested and are being bought at significant discounts to other land in the area.
Colliers International predicts as much as 20,000ha could be available for sale in the next couple of years, as timber companies look to consolidate their plantations closer to port for the second rotation, and remove lower-yielding blocks.
Colliers rural and agribusiness associate director Jesse Manuel says it is possible some large aggregations outside the 150-kilometre radius of Portland, Vic, and smaller isolated parcels will be available.
Interest has been strong in harvested plantations from farmers and investors looking to revert the land back to grazing and cropping due to the lower price entry levels compared to developed country and also the opportunity to acquire significant-sized parcels in tightly-held areas.
“Single holdings of more than 2000ha rarely become available in some of these areas,” Mr Manuel said.
“But we expect to see more opportunities in the coming years for parties seeking economies of scale in well-regarded agricultural regions.
“Producers can buy the harvested land and improve it when they have the capital. For others it is about getting scale and a good footprint in a reliable rainfall region.”
Colliers has sold 70 forestry and ex-forestry properties in the past 2.5 years, including one large portfolio of 20,000ha.
Colliers rural and agribusiness senior valuer John Harrison says there have been instances where ex-blue gum forestry plantations have been acquired by farmers at as little as half the price of non-planted properties within similar districts.
But the discount depends on the site, location and whether the property fulfills a strategic requirement for the buyer, he said.
Mr Harrison said paddock conversion could be costly, up to $1500/ha.
Landmark Harcourts SA real estate sales specialist Simon McIntyre says there has been keen interest in blue gum parcels including 385ha Pitts and Tregoweth near Lucindale, which was marketed through expressions of interest.
In the past 18 months, Landmark Harcourts has sold six of seven properties in this sector, with each attracting interest locally and from Vic.
“Offerings in the Furner district as well at Glencoe, Wattle Range and Wandillo have all brought varying degrees of value, which is aligned to local grazing values less costs to remediate,” he said.
“It is clearly a numbers process and with some tax advantages in doing this work and the rainfall reliability that goes with this region, we expect demand to continue as alternative opportunities to purchase reliable grazing land.”
Mr McIntyre said a number of sales had included small areas of coppice, as wood chip prices have increased.
But Green Triangle Regional Plantation committee chairman Darren Shelden estimates 80 per cent to 85pc of the estate will remain forestry.
“We are seeing record volumes exported across Australia and Portland is the number one export port,” he said.
“There is a study being done at the port about investing in further infrastructure – that doesn’t happen without future confidence.
“The exchange rate has had a big bearing on higher prices but we are also seeing positive demand from China and Japan.”
Mr Shelden says there will be cases of leases between forestry companies and landowners not being renewed and in the SE, the overallocation of some water management areas under the Lower Limestone Coast Water Allocation Plan will dictate a conversion from blue gums.
REDEVELOPMENT OPPORTUNITIES ON OFFER IN SOUTH
PENOLA contractor Peter McCourt is getting great satisfaction seeing harvested blue gum plantations returned to farming land.
In October last year, he started Ag-Reclaim with parents Michael and Helen after using their 298-kilowatt dozer-style stump grinding machine to revert back 285 hectares of land near Beachport.
“The forestry lease on land we owned was not renewed and we ended up with a forest and issues with water licensing,” he said.
“Once we had nearly finished, I thought if we were doing it others might want to as well. There is a lot of good farming land which has been under trees.”
Since then he has been redeveloping land in the SE and western Vic.
The machine on tracks has a direct drive to a drum spinning at 400rpm, which grinds the stump to either ground level or 150 millimetres below the surface.
He sees great potential for stump grinding and mulching and is offering investors and agribusinesses a full service, from finding the land for sale and managing the whole conversion process to just stump grinding.
“The further you get away from port and if the trees weren’t growing that well, it becomes very viable to do it,” he said.
“It’s about buying at the right price so you have enough of a buffer to pay for the redevelopment and unforeseen costs, which people don’t think about.
“For investors it is a brilliant opportunity to buy something and set it up exactly the way you want it.”
Mr McCourt says the contracting costs of preparing a soft seed bed for planting, including stump grinding, stick raking and levelling with a Kelly chain are about $500-$600/ha.
Earlier this month Ag-Reclaim bought a second stump grinding machine – an 894kW tow-behind trailer.
It will cut the time taken from 1-2 hours/ha to less than 1hr/ha.