$56m farm buy-up hits hurdle

A proposed $56 million buy-up of a cluster of WA farms has been put on hold by the company which agreed to buy the properties as part of ambitious plans to produce and ship huge numbers of sheep for overseas markets.

The deal involved Fares Rural, once a major international force in the live export trade, buying 11 farms at Jerramungup and two at Pingrup.

It is understood farmers were paid deposits under conditional purchase contracts and signed confidentially agreements to keep the project under wraps. The farm purchases were due to settle late last year but did not proceed.

Sources close to the deal said Fares wanted to run at least 100,000 sheep on the farms in addition to growing feed barley and buying livestock from other producers. The company has a long history in live export through its chairman Danny Fakhre, but had debts of $55.7 million when receivers Ferrier Hodgson were appointed in 2003.

Its shipping, livestock and farming assets were sold off to clear debts under a deed of arrangement. Fares eventually re-emerged with interests in carbon credit trading through growing native trees on WA farms.

Fares director Mike Walter said the farm purchase offers had been highly conditional but genuine based on international demand for red meat and food security issues in the Middle East.

Mr Walter said the Perth-based company was somewhere between "believing and hoping" the deal could still come together with the backing of an overseas investor, but did not want to raise the expectations of the farmers involved.

"I have been and spoken to all of those farmers and looked them in the eye and told them what the situation is," he said.

Mr Walter said that Mr Fakhre had been in China talking to potential investors after initial interest from the Middle East, particularly Saudi Arabia, fell away in the second half of 2014.

"In the early stages it (interest) was from the Middle East and that might still end up being the case, but China has also entered the fray," he said.

"We have nothing signed but hope one of these will come off at some point. It is taking a lot longer than everyone thought."

Mr Walter, who formerly held senior positions with Elders and Rabobank, said the farm purchases were only part of the integrated supply chain project.

He said Mr Fakhre was looking for a partner in shipping and livestock trading, not just on-farm production.

Fares helped pioneer the export of live sheep and cattle from Australia and New Zealand.

It was the biggest cattle exporter and in the top three sheep exporters before hitting financial trouble in 2003 as demand in the Middle East waned.