Aussie investors trifle with truffles
SMELLY, mouldy things are not what come to mind when you think profitable rural ventures or lifestyle moves, but a smelly, mouldy thing is giving some coldclimate properties a boost — and potentially a fortune.
, the black Perigord truffle, which fetches between $ 2000 and $ 3000 a kilo, seems to grow well in some cold Australian soils, and two companies — Perigord Truffles of Tasmania, and the Hazel Hill section of Watershed Premium Wines in Western Australia — have been growing truffles successfully for some years now.
So successfully, in fact, that both have set up structures to allow people to invest in truffle growing: Perigord Truffles as a leasing venture and the West Australian project as a managed investment scheme, although both stress there is no guarantee that any tree or any property will ultimately produce truffles, no matter how closely they match the perfect profile.
The effect of truffle production on property values is unknown yet, the industry being so new, but just the addition of hundreds of oak and hazelnut trees ( themselves sources of income) add an aesthetic advantage — and probably carbon credits — to any farm.
Pat Bird, the owner of Ray White Real Estate in Oberon, NSW, says there are about six truffle farms in his district and plenty of inquiries from people wanting to buy properties on which they can try to grow truffles.
‘‘ Truffles can turn a little hobby farm into a source of income,’’ Bird says. ‘‘ The idea appeals to retirees and semi- retired people wanting a rural life with an income. The places look good as well and the trees don’t need much water. It has created a new little property market in the district. I have had plenty of enquiries and have sold a couple of places specifically for the purpose in the past few months.’’
At the start of the 20th century, the world produced 1000 tonnes of black Perigord truffles a year. By 2006, that had fallen to 20 tonnes, mostly because of habitat destruction in Europe. But, in that same period, truffles developed more fans, ready to pay for the delicacy.
Help was not to hand until the early 1970s when a Frenchman came up with a way of inoculating oaks and hazelnuts with a spore that, hopefully, results in that tree producing truffles after about four years.
Max Foster at the Australian Bureau of Agricultural and Research Economics says truffles are a very interesting addition to Australia’s agricultural economics.
‘‘ What makes this industry so exciting is that it enables growers here to supply fresh truffles to the northern hemisphere in its off season.’’
Perigord Truffles of Tasmania was the first company to try the idea, choosing Tasmania in 1993 because of its similarity to the trufflegrowing districts of France.
Since then, the company has expanded and now involves between 70 and 80 farms, about 25 of those in Tasmania, and the rest in the cold districts of southern Victoria and the cold NSW districts of Blayney, Oberon, Goulburn, Marulan and the Southern Tablelands, with about 100 hectares under trees.
With 400- 500 trees to the hectare, that means the Australian landscape has 40,000 to 50,000 oaks and hazelnuts that were not there before.
Perigord Truffles’ co- founder and partner Peter Cooper says Perigord Truffles operates as a joint venture with farm owners who provide the land and infrastructure ( inoculated trees, fences and water) while Perigord Truffles provides expertise, management, harvesting and marketing, with all profits divided equally between the company and the farmer.
His partner and co- founder, Duncan Garvey, explains the leasing system they are now opening to the public.
‘‘ We are offering 6ha in half- hectare parcels for which the investor pays a one- off set- up fee of $ 15,000-$ 16,000, an annual lease fee of $ 1500 and an annual management fee of $ 2000-$ 2500.
‘‘ The farm is near Goulburn, adjacent to an already- producing farm. If all goes according to plan, the trees will be producing about 3kg in their fifth year and go on from there.’’
Trees reach full production after 12 years and keep on producing for up to 120- 150 years, ABARE’s Foster says.
In Western Australia, the story is different. The main truffle producer — Watershed Premium Wines — owns the land owner and is already producing truffles on Hazel Hill farm, adjacent to its vineyard. Hazel Hill trufferie expects to produce 400kg this year.
These farms are in the Manjimup region of the state’s southwest.
Managing director and chairman of Watershed’s associated truffle companies, Geoff Barrett, says the managed investment will offer investors units of 0.2ha, each containing 50 oak and 50 hazelnut trees.
The initial investment cost is $ 16,468.30, made up of a $ 7016 investment in a landshare company ( Truffle Property Ltd), which owns the land and $ 652 in annual rental paid to TPL ( which returns dividends for each of the 20 years of the investment’s life).
The balance, $ 8800, is the initial year’s management fee, which will fall each year, especially after the initial set- up years.
During the 20 years, 80 per cent of profits from truffle sales go to the investors, 20 per cent to the management company ( Truffle Projects Pty Ltd).
At the end of the 20 years, the investors own the land outright and all produce from it.
Of the West Australian project, Foster says: ‘‘ The data is good. The due diligence checks are through and the financial estimates are accurate.’’
Many people also privately buy inoculated trees to try out on their own places, and Garvey says dozens of people come to him wanting to buy farms that could potentially be truffle- producing.
‘‘ Many put trees in because it’s different: they can own their own truffle trees, and maybe eat their own truffles one day. It’s the folklore of it,’’ he says.
‘‘ It’s a damn ripping yarn of innovative agriculture in Australia,’’ Foster says.