ASX-listed avocado grower Alterra Limited says the future is bright, despite eastern states glut

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Cally DupeCountryman
The avocado project site.
Camera IconThe avocado project site. Credit: Alterra

The company gunning to be WA’s biggest avocado producer plans to kickstart the second stage of its mega tree-planting project after securing $4.9 million though a capital raising.

Alterra Limited — a Perth-based company listed on the Australian Securities Exchange — is poised to start planting 60,000 trees across 85ha at its Pemberton farm in spring.

It this week finalised a $5.9m capital raising, with the funds set to bankroll stage three of the Carpenters Project.

The company’s managing director, Greg Harvey, said he believed reports of a glut of the popular toast spread were not representative of the situation or the long-term outlook in WA.

Mr Harvey — who formerly headed up Andrew Forrest’s Harvey Road agriculture business until stepping down in October 2020 — said he was confident in the long-term future.

“Research points to plant-based food markets growing at a compound annual growth rate of more than 12 per cent to 2027,” he said.

“There is plenty of both anecdotal and hard evidence of the increasing popularity of plant-based diets. Whether for health or environmental reasons, it is a clear trend here to stay.”

All three major shareholders — PenAgriGroup, Sandon Capital and Emanuel Exports — committed $1m to the raising.

Alterra listed on the Australian Securities Exchange as Carbon Conscious in 2008, with a focus on originating, developing and managing assets in in-demand agricultural sectors.

The company promotes itself as developing “underutilised” agricultural assets — including land and water — with a strong bias to WA and the avocado sector.

After planting 5ha of trees at its Pemberton farm in 2020, it put in 7ha last year and plans to use the raising to bankroll the planting in 60,000 trees across 85ha this year.

It has set the ambitious target of having 100ha in the ground at the property it has a 50-year lease over by February next year, with the hopes of having 200ha complete by March 2025.

Alterra hopes to produce about 10 per cent of the State’s crop as the “single biggest” avocado orchard in WA, but the plan comes at an interesting time for industry.

Avocado growers in the Eastern States have been pleading with customers to buy more of the fruit in recent months, as a glut in supply sent prices plummeting.

WA-grown avocados were selling for as little as 99¢ last year because of a big Australian crop — WA’s crop was up 233 per cent to 8.2m trays — and weaker demand as COVID-19 dried up orders from cafes.

In the past they have fetched as much as $4.50 to $5 each, with the lower prices coinciding with increases in prices for freight, packaging and labour.

The price has since increased to sit at about $1.30 per piece of fruit, and Mr Harvey said exports were one of the industry’s big hopes.

Only 5 per cent of Australia’s production has been exported in the past — mostly to Singapore, Malaysia and Hong Kong. WA was one of two Australian States that gained access to Japan in 2018 — but coronavirus threw a spanner in the works.

“We are quite bullish about prospects into South-East Asia in particular, given the geographical advantage WA has in those markets,” Mr Harvey said.

Alterra is led by Mr Harvey and Peter Fogarty – the founder of Fogarty Wine Group, which is Margaret River’s biggest wine producer.

It last year announced that leading investment management and corporate advisory firm Pendulum Capital – led by Mr Fogarty and Mr Harvey — had been engaged to project manage the second stage of the Carpenters Project.

Well-known avocado grower Ben Norrish — formerly the general manager of Jasper Farms — was also appointed its chief operations officer.

Mr Harvey said Alterra’s low costs of production — in the bottom 15 per cent of the cost curve — would give it “good headroom” to “ride any ups and downs in the years to come”.

“We think (input increases) can be managed, given at Carpenters we have very rich soils (karri loams) there and very secure access to water,” he said.

“We are keeping costs as low as we can to compete.”

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