Food or forest?
High prices and a shortage of land is stifling expansion in the Ord Valley and growers are pointing the finger at the sandalwood industry.
More than 40 per cent of arable land in the Ord River Irrigation Scheme has been planted with sandalwood, with the biggest player being Tropical Forestry Services (TFS).
The managed investment scheme (MIS)-style TFS has more than 3700 hectares of sandalwood and plans to plant another 1088ha by July.
But with the region often flagged as the ‘food bowl’ of the nation, growers have been left wondering why they cannot afford to buy land to grow food crops.
Christian Bloecker grows melons, chia and chickpeas on his family’s 900ha farm. He said he would be keen to expand, but land prices were far too high to make it viable.
Mr Bloecker has heard of sandalwood companies leasing land for between $1100 and $1400 a hectare, but he said most growers could only make the numbers work if the price was about half of that amount.
“As a normal mixed-cropping farmer, you can’t compete against that money,” he said.
“There are growers who have sold land as well, and you can understand why. With the money that’s on offer, you’d be silly to say no.”
However, not all growers feel the same. Robert Boshammer, who grows maize, seed sorghum, chia and pumpkins, said sandalwood had brought jobs to the region and allowed those who wanted to leave the industry to sell up.
“I couldn’t say sandalwood was pushing up prices, because there’s never been that much land available anyway,” Mr Boshammer said.
Land shortage has been one of the problems.
Landmark property State manager Glenn McTaggart said the area’s land market was relatively stable and there were few sales to speak of.
“Very little has changed in the past five years — it’s a tightly held market,” he said. “Multi-use land is somewhere between $8000 and $10,000 a hectare fully developed.”
Ord Mango Growers’ Association president Chris Robinson said MIS buyers had caused prices to increase and farmers could not afford to buy land at its current value.
But he said it was not just land values that were the issue.
“The community is moving into a different style of agricultural living. It is shifting from the family farm style to corporate MIS style,” he said.
“A few of the (sandalwood) employees are permanent, but a family business spends all its money in the community, whereas a corporate takes its profits with it.”
Agknowledge consultant Peter Cooke said the issue was more about growers getting profits from crops in such an isolated region.
“It’s simple to say here’s a cause and effect, but there are a range of economic drivers at play,” he said.
“I don’t think there have been any inhibitors to getting good horticultural land. The issue is getting profitability into the crops.”
Mr Cooke said sandalwood had filled the gap left by the demise of the area’s sugar industry four years ago.
“Horticulture and broadacre crops weren’t going to fill the gap left by sugar,” he said.
“There is nothing else to go into the ground.”
Another 8000ha of land was being developed with the help of $220 million of Royalties for Regions money, plus $195 million of Federal money for social infrastructure.
Approvals for another 6000ha of land were in the works, but Agriculture Minister Terry Redman admitted the land price issue was causing angst for the Government.
“What happened with MIS (in the past) has arguably skewed the market. That’s something we’re very conscious of,” he said.
“One of our greatest challenges is the decision as to how much we intervene as a Government and how much we let the market play out.”
Department of Agriculture and Food director general Rob Delane admitted the department had received emails outlining concerns and was working on the issue.
“There is a risk that there is a significant irrigation project developed and it’s all become sandalwood, which will be great for those involved if it’s successful,” he said.
But with TFS yet to boast a commercial harvest, growers said the jury was out on whether the venture would work.
The Ord is no stranger to failed MIS ventures. Last year, the Rewards Group, which grew red grapefruit and mangoes in the Ord, went into receivership.
After the spectacular collapse of Great Southern and Timbercorp, a sense of malaise has continued to pervade the sector.
However, Mr Bloecker said now the sandalwood was in the Ord Valley, it would be a disaster if it failed.
“As nice as it would be to have a lot less sandalwood, it’s that large now that it wouldn’t be good for the Ord Valley if it didn’t work,” he said.
TFS was contacted for comment.
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