Friday 29 June 2001

After four generations, Coonawarra cattlemen go grape, The Australian, 29 June, 2001.

After four generations, Coonawarra cattlemen go grape: [1 Edition]

Stapleton, John. The Australian [Canberra, A.C.T] 29 June 2001: 36.
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THE Reschke family owns the largest privately held block of land in the Coonawarra. The irony is that although the Coonawarra region in south-east South Australia is renowned for its wine, the Reschke family has largely only run cattle.
The recent boom in Australian wine and the rising fame of the Coonawarra as the home of famed cabernet sauvignons convinced them they were missing out.
The Coonawarra Wine-Grape Project was launched in Adelaide in May. [Burke Reschke] was in Sydney this week promoting the investment.
THE Reschke family owns the largest privately held block of land in the Coonawarra. The irony is that although the Coonawarra region in south-east South Australia is renowned for its wine, the Reschke family has largely only run cattle.
The family fortunes were established when Henry Reschke settled the property, Koonara, in 1906.
His great grandson Burke Reschke, 33, is now heading a development to turn a third of the family's land into vineyards by sourcing external finance.
The family was fortunate in not just having extensive holdings, but in owning some of the better quality soils in the area.
For decades the Reschke family watched askance as many of their neighbours struggled through the long process of establishing vineyards, with varying success.
But the recent boom in Australian wine and the rising fame of the Coonawarra as the home of famed cabernet sauvignons convinced them they were missing out.
The family bought additional land in the late 1980s for around $2500 a hectare. Good quality undeveloped vineyard land in the Coonawarra is now selling in thevicinity of $25,000 a hectare.
The Coonawarra Wine-Grape Project was launched in Adelaide in May. Burke Reschke was in Sydney this week promoting the investment.
It has attracted several significant industry names. Former federal defence minister and president of the National Farmers Federation, Ian McLachlan, heads themanagement board. Former head of Elders, Richard Mollison, is chairman of the investment development board. Former chairman of Clare Valley Winemakers, Andrew Tolley, is a non-executive board member.
The project offers investors 900 investment units of 0.2 hectares of planted vines for a period of 22 years and the option of becoming shareholders in theproperty owner, Coonawarra Property Holdings.
Mr Reschke, who has been the main force behind the project, says this is the only wine investment that advisers JP Morgan have placed on their menu of managed investments, and the first to receive the backing of wine industry analysts Heritage Fine Wines.
The wine will take the Reschke family name. The family has already produced a yet-to-be-released vintage rated as being in the super premium price range. It will be launched later this year as the "market penetrator" for the brand.
The project's prospectus puts a conservative estimate on the wine's wholesale price at $12.50 a bottle, a price that will offer an internal rate of return for investors of 14.18 per cent.
"Since I was a boy the family have wanted to go into wine," says Mr Reschke. "It feels like we should have done this a long time ago, but at least we have been able to benefit from advances in wine- making technology.
"The one thing we have tried to do with this investment is make an honest investment, a completely transparent investment. Agricultural investment schemes have had a lot of bad press. Hardly any of these projects are run by people in the industry. They are by people who don't have the best interests of the industry at heart.
"With this, my family is on the ground; we've put a lot of our own money and resources on the line. And people can buy a piece of the Coonawarra for themselves."
Illustration
Caption: The hard yards:; Photo: Photo
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Fresh alert on tax deals, The Australian, 29 June, 2001.

Fresh alert on tax deals: [1 Edition]

Stapleton, John. The Australian [Canberra, A.C.T] 29 June 2001: 36.
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Last year the ATO declared that the pre-1998 schemes, which involved borrowing money to create tax deductions, were illegal. Investors were hit with tax assessments of up to $100,000.
Investors told a Senate inquiry they had been convinced to proceed because product rulings by the ATO and the corporate watchdog, the Australian Securities and Investment Commission, had "ticked off" on the prospectuses, which often were accompanied by advice from top tax barristers saying the schemes were legal.
The Senate Economics References Committee interim report into mass-marketed tax schemes tabled this week said the crisis over the schemes could have been avoided if the ATO had made an official ruling on their legitimacy much earlier.
RURAL
INVESTORS in agricultural and forestry tax-minimisation schemes should exercise extreme caution as the tax year ends, an industry expert said this week.
Agribusiness Research's managing director, Shane Kelly, said investors could end up losing far more than saved.
"Investors should not let the need to reduce tax cloud their judgment," he said.
"Making an investment at the end of the year should require the same consideration as at any other time. It should be a time for cool heads making balanced decisions. The reason for investing in a specific scheme or schemes should always be a commercial one."
The warning follows the release earlier this week of a Senate committee report that slammed the Tax Office for failing to give the public clear guidance on thelegality of the controversial schemes.
Mass-marketed tax-minimisation schemes involving agriculture have been a highly emotional issue in the past few months, with some politicians condemning the behaviour of the Australian Tax Office amid allegations of suicides and marriage breakups.
More than 65,000 people were involved in 300 schemes which included olive, timber and tea-tree farms as well as cattle- breeding programs involving $5 billion in tax deductions.
Last year the ATO declared that the pre-1998 schemes, which involved borrowing money to create tax deductions, were illegal. Investors were hit with tax assessments of up to $100,000.
Investors told a Senate inquiry they had been convinced to proceed because product rulings by the ATO and the corporate watchdog, the Australian Securities and Investment Commission, had "ticked off" on the prospectuses, which often were accompanied by advice from top tax barristers saying the schemes were legal.
The scandal has led to some scathing media coverage, with headlines such as: "Avoid tax now, face ruin later".
The Senate Economics References Committee interim report into mass-marketed tax schemes tabled this week said the crisis over the schemes could have been avoided if the ATO had made an official ruling on their legitimacy much earlier.
The committee questioned the ATO's right to impose interest and high penalty charges on taxpayers when it had failed to state its official position on theschemes until 1998.
Committee chairman Shayne Murphy said the ATO should have been alert to the growing risk to revenue that the schemes posed.
A temporary reprieve has been granted to people involved in the schemes while several test cases work their way through the courts. Insiders say at least half a dozen class actions are being discussed.
Mr Kelly said reduced inves tor confidence had seen the listed price of some forestry companies fall dramatically. Many were expecting lower profits for theyear and reduced future earnings potential.
"We have also noticed that new entrants to the market have been hit hard, particularly those promoters without access to strong financial planning and accounting distribution networks," Mr Kelly said.
Agribusiness Research suggests that some promoters are offering schemes purely because of the commissions paid, with some promoters pocketing up to 20 per cent of capital raised.
The firm recommends that investors seek projects operating in established agricultural industries, with strong management teams, solid past performance and an expert independent assessment.
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Second jobs prop up farming life, The Australian, 29 June, 2001.

Second jobs prop up farming life: [1 Edition]

Stapleton, John. The Australian [Canberra, A.C.T] 29 June 2001: 36.
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Instead, according to NSW Farmers policy adviser Mick Keogh, farmers are coping with historically lower returns by increasing their reliance on diversification and off-farm income.
"Our research shows that despite vast differences in government agricultural policies in the UK, US and Australia, all farmers have faced a difficult time during the past two decades," Mr Keogh said.
The MacPherson family, who live on their property The Prairies outside Gunnedah, are typical of many young farming families both in the diversification of their agricultural activities and their reliance on off-farm income.
RELENTLESS pressure on profitability has forced many farmers to rely on off-farm income to survive, according to the latest analysis of the family farm to be published by NSW Farmers next week.
The association's previous study of the family farm found that while farm numbers were slowly decreasing, contrary to expectations Australian farms were not getting any bigger.
Instead, according to NSW Farmers policy adviser Mick Keogh, farmers are coping with historically lower returns by increasing their reliance on diversification and off-farm income.
The trends here are similar to those in the United States and Britain, despite the heavy subsidisation of farmers in those countries.
Even for US farms with sales of up to $US500,000 ($965,000) per year, almost half of the total household income is derived from off- farm sources. Across all US farm types, 88 per cent of income is derived off-farm.
But despite the extensive assistance provided to them, US farmers have faced the same income difficulties as Australians.
UK farmers also have experienced a dramatic drop in income, particularly since the mid-1990s.
Total UK farm income is about only 70 per cent of the level it was during the late 1980s, and only 35 per cent of the level realised in the mid-1970s. In one year, the total agricultural workforce for England and Wales fell by 20,000.
As in Australia, there has been not only a rapid fall in the number of farm labourers, but an increase in the number of part- time farmers and a greater diversification into either on-farm or off-farm income sources.
A quarter of all full-time UK farms now earn most of their income off-farm.
"Our research shows that despite vast differences in government agricultural policies in the UK, US and Australia, all farmers have faced a difficult time during the past two decades," Mr Keogh said.
"The overseas tendency to rely on off-farm income is becoming more common here, with research suggesting that Australian farms on average now source up to 20 per cent of their income off-farm.
"This highlights that many farmers are involved in the industry as much for the lifestyle as for the profits that can be generated.
"It also means that land values, especially in areas close to major urban centres, increasingly will not reflect the revenue that can be generated from that land by crop or livestock production.
"If you look at farms close to urban centres, the land value is far beyond the productive capacity of the land. The demand for and the price of land close to urban centres is only likely to increase further."
The MacPherson family, who live on their property The Prairies outside Gunnedah, are typical of many young farming families both in the diversification of their agricultural activities and their reliance on off-farm income.
The property relies on a mix of cotton, wheat, sorghum and cattle, while Sian MacPherson earns the off-farm income through her own interior decorating company Potter and Fields.
Mrs MacPherson established the company after she married because she wanted to pursue her own interests and because as a family they wished to spread the risk of their combined operation.
"The operating costs of farming are getting greater and greater," Mrs MacPherson said. "People are having to look at off-farm ventures more and more."
She said they were fortunate enough to be surrounded by family and friends, so it was not difficult to leave their nine-month-old son Will when she was called out to jobs.
Mrs MacPherson said they were looking at other ways of generating income.
"Farming, and the weather patterns, are unpredictable, so it's nice to have something where you are not relying on the weather for your income."
But while it takes considerable ingenuity to successfully maintain a farming operation, the MacPhersons have no desire to change.
"People love the lifestyle," Mrs MacPherson said.
"The country has so much more to offer in terms of community and support. People really rally behind each other. No one wants to move to the city."
Illustration
Caption: Modern farmers:; Photo: PhotoThj
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Monday 25 June 2001

Struth ... Mahathir makes plain a disdain for strine, The Australian, 25 June, 2001

Struth ... Mahathir makes plain a disdain for strine: [1 Edition]

Kimina Lyall * South-East Asia correspondent, John Stapleton. The Australian [Canberra, A.C.T] 25 June 2001: 3.
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FROM acerbic to vaudeville: Mahathir Mohamad's frequent attacks on Australia have descended to the theatrical, with the Malaysian Prime Minister now giving an impromptu performance of a scene from My Fair Lady -- in an Australian accent.
Accusing Australia, along with England and the US, of forcing Chinese communities to learn English, Dr [Mahathir] repeated "the rain in Spain falls mainly in the plains" in Malay, English and then a broad Australian accent.
The Malaysian leader's remarks, which followed three days of bitter attacks on his "foreign enemies", were Dr Mahathir's intervention in a dispute that threatens to split his Government's coalition partner, the Malaysian Chinese Association.
FROM acerbic to vaudeville: Mahathir Mohamad's frequent attacks on Australia have descended to the theatrical, with the Malaysian Prime Minister now giving an impromptu performance of a scene from My Fair Lady -- in an Australian accent.
Accusing Australia, along with England and the US, of forcing Chinese communities to learn English, Dr Mahathir repeated "the rain in Spain falls mainly in the plains" in Malay, English and then a broad Australian accent.
His performance was greeted with wild applause from the 2000 delegates attending his closing speech of the United Malays National Organisation's annual congress on Saturday night.
The Australian Government refused to respond to the Malaysian Prime Minister's provocative comments.
"We don't propose to be drawn into a debate with Dr Mahathir," a spokesman for Foreign Minister Alexander Downer said in a comment that suggests the Howard Government believes the Malaysian PM's remarks were for domestic consumption.
Just days earlier, Dr Mahathir himself had urged all Malaysians to learn English, the "language of knowledge", because "there is no language belonging to a backward and poor race that can progress in this world".
But points of logic were not relevant in this performance, which did have an underlying domestic political message.
"We are saying that the Chinese in Australia, in England, should be allowed to speak their own minds, but they are oppressed people because they find that that is not very welcomed, they have to learn a foreign language," he said. "Chinese in Australia, in America, they should be allowed to have their own schools, to use their own language and everything else the Chinese in Malaysia enjoy."
Dr Mahathir's comments received no support in Sydney's Chinatown last night. Sonny Wong, 21, a science student, said: "The Chinese are better off in Australia than in most Asian countries.
"You have government benefits, and there is a lot of help for people learning English. Oppressed is completely the wrong word."
Erny Wah, 18, a student of international studies, agreed. "Some Chinese in Malaysia are now growing up only learning Malaysian and English, I think that is shocking," she said.
The Malaysian leader's remarks, which followed three days of bitter attacks on his "foreign enemies", were Dr Mahathir's intervention in a dispute that threatens to split his Government's coalition partner, the Malaysian Chinese Association.
In a volatile extraordinary general meeting yesterday, the MCA voted to continue with a decision to take over two of Malaysia's largest-selling Chinese-language newspapers.
Dr Mahathir's message to an angry Chinese community was clear: it could be worse, you could live your life sounding like anAustralian.
Report -- Page 7
And Another Thing -- Page 12
Illustration
Caption: Provocative: Picture: AFP; Photo: Photo
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Friday 22 June 2001

THE BUSH BOUNCES BACK, The Australian, 22 June, 2001.







THE BUSH BOUNCES BACK: [1 Edition]

Stapleton, John. The Australian [Canberra, A.C.T] 22 June 2001: 39.
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The ABARE report predicts a strong export performance, with total farm exports to rise 3.7 per cent to $29.8 billion next financial year following a 19 per cent rise this year. Export earnings are forecast to increase for wheat, barley, rice, beef and veal, live cattle, sugar and wine.
Strong demand for grains, especially in Asia, is forecast to lead to increased world prices, with returns to local growers assisted by theweak Australian dollar. The value of wheat exports is expected to increase by 6.6 per cent. The rundown of the infamous wool stockpile and a decline of stocks kept on farms is reflected in a 63 per cent fall in overall wool stocks; meaning that while wool prices are not predicted to rise next year the outlook for wool is far better than it has been for decades.
Chief agricultural analyst with ABARE Terry Sheales says the gross value of farm production is predicted to rise by just under 5 per cent to $34.9 billion next financial year. Despite delayed plantings due to early lack of rain across much of the NSW grain belt, total winter crop production is also forecast to increase marginally. An estimated 6 per cent increase in land planted to barley is driven in part by the delays, as barley can be successfully sown later than wheat and canola.

For rural Australia, it's the most important forecast of all. The bush doesn't ride on the sheep's back, but a dream combination of favourable weather, good commodity prices, strong exports and a low dollar. John Stapleton reports.
THIS is a forecast that's been very long in coming: a strong financial performance from the farm sector.
The release this week of the Australian Bureau of Agriculture and Resource Economics (ABARE) commodity report shows a rural economy on the rebound to good times, with high levels of production, further improvements in price and improving on-farm incomes.
And if that good news isn't enough, there's also the latest national rural market report from Elders.
To be published next week, it confirms a rise in demand for rural properties across the nation because of the combination of good weather conditions and strong prices.
The report says high demand is clearly evident in auction rooms, where buyer demand is seeing good prices achieved, and now Elders is predicting a particularly bright spring selling season.
Real estate specialist for NSW and the ACT John Peden said good rainfall in mid-June had greatly eased pressure on farmers to establish winter cropping programs.
Previously dry weather had meant many farmers were falling significantly behind in their planting, creating serious concerns that good prices were not going to be matched by good weather.
"A large proportion of NSW has benefited from the welcome falls which, together with continued improvement in commodity markets, is set to provide strong returns to most sectors of the agricultural market this year," he said.
One of the prime properties for sale is the 2,613-hectare Allendale, which comprises three adjoining properties, each with its own housing and working facilities.
The well known Allendale Merino Stud is famous for its medium wool based on the Pooginook merino stud in the Riverina.
The property is in the Tomingley district between Parkes, Dubbo and Narromine and is expected to fetch at least $1.5 million.
The three properties, known as the Tomingley aggregation after the local village, feature three sets of houses and working facilities. Allendale has been owned by the Woods family for 84 years. Eric, 80, who has lived on the property all his life, and his wife, Patty, are well known in local government and political circles. Their daughter has business commitments elsewhere.
Dennis McGrath, rural property specialist in Dubbo, says Allendale is one of the larger holdings in the central west and its size means it could be broken up.
"Allendale has been very, very conservatively stocked and farmed for generations and as such is a particularly good buy," he said. "It will suit sheep, cattle or cropping, and is a good versatile property, which is what everyone wants now."
A full-time manager at Allendale who has been there for 20 years is willing to stay.
Primac Elders in Queensland reports continuing interest in wool properties and strong demand for cattle properties.
The company's head of rural property for Victoria and the Riverina, Ian Sunderman, said there were very positive indications that thecountry was finally starting to see the effect of recovering commodity prices on rural real estate values.
"Several properties that have been on the market for up to 18 months and regarded as too dear have been sold in the autumn," he said. "We expect this trend to continue with many long-term properties listed by agents at perceived unachievable values now expected to be saleable as the market catches up."
Mr Sunderman said clearance rates in the order of 85 per cent were up 20 per cent on the same time last year.
Reports from Western Australia are also positive across all sectors.
The ABARE report predicts a strong export performance, with total farm exports to rise 3.7 per cent to $29.8 billion next financial year following a 19 per cent rise this year. Export earnings are forecast to increase for wheat, barley, rice, beef and veal, live cattle, sugar and wine.
Export earnings were strong this financial year, with wool up 34 per cent, dairy products up 33, cotton 29, beef 23, wine 19 and wheat 15.
Net cash income on farms increased by 20.1 per cent this year and is predicted to rise another 12.1 per cent this year while net value of farm production increased by 34.3 per cent this financial year and predicted to rise a further 16 per cent next year.
The already buoyant Australian saleyard indicator price for beef is forecast to rise 6 per cent while the troubled sugar industry is expected to see a 15 per cent jump in production and an even higher increase in the value of exports.
Canola prices are expected to rise by 15 per cent and farm gate prices for milk are up 11 per cent.
Strong demand for grains, especially in Asia, is forecast to lead to increased world prices, with returns to local growers assisted by theweak Australian dollar. The value of wheat exports is expected to increase by 6.6 per cent. The rundown of the infamous wool stockpile and a decline of stocks kept on farms is reflected in a 63 per cent fall in overall wool stocks; meaning that while wool prices are not predicted to rise next year the outlook for wool is far better than it has been for decades.
This is an unprecedentedly positive picture for Australia's regions; more used to the batterings of harsh interest rates, unsympathetic banks, collapsing infrastructures, droughts, floods and dismal commodity prices.
For once the country has been blessed with not just good commodity prices but good weather.
National Farmers Federation deputy director Lyall Howard said a lot of essential capital investment was now going back into properties.
"There is a lot of catchup, a couple of good years doesn't suddenly make agriculture a hugely profitable industry," he said. "It is still high risk and you get bad years. Equipment has to be replaced, fencing, road repairs, conservation work all has to be done.
"Farmers will need this income to stay competitive. We still trade into a tough and corrupted international market. But with a competitive currency and good weather conditions contributing to an optimistic outlook, there is renewed confidence in the bush. It's about time!"
NSW Farmers policy adviser Mick Keogh said the substantially improved returns were already being reflected in improved property prices, particularly on the tablelands and slopes of eastern Australia.
"Investing in a rural property is looking much better than for a long while," he said. "A third of all the turnover in small towns comes from farm spending, so the flow- through will have a very quick effect in terms on languishing country towns."
Chief agricultural analyst with ABARE Terry Sheales says the gross value of farm production is predicted to rise by just under 5 per cent to $34.9 billion next financial year. Despite delayed plantings due to early lack of rain across much of the NSW grain belt, total winter crop production is also forecast to increase marginally. An estimated 6 per cent increase in land planted to barley is driven in part by the delays, as barley can be successfully sown later than wheat and canola.
Total meat production is also forecast to rise again next year, underpinned by strong export demand, the weak exchange rate and forecast high prices. There was an estimated 23 per cent rise in the saleyard indicator price of beef cattle this year, with prices expected to rise a further 6 per cent next year.
Reduced sheep meat supplies and strong demand are also expected to contribute to higher sheep and lamb prices.
While the low currency means machinery costs will stay high, there is expected to be some easing of fuel and fertiliser prices.
Dr Sheales said the excellent combination of market and seasonal circumstances in much of the rural sector didn't happen very often. "The crop's far from being in the bin yet, it's only just in the ground and we have a long way to go to harvest. But the signs are good, not just for grain but across the board. For those of us who've been around the rural scene for a long time, it's great to see such a significant turnaround in the fortunes of farmers."
Illustration
Caption: Mainstreet: Harden,NSW; Photo: Photo
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