Aussie in­vestors tri­fle with truf­fles

The Weekend Australian - Review - - Prime Space - Jo Stud­dert In­vest­ments

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.

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