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AACL Grain Co-Production 2012 Project

Overview:

Following the closure of the offer period on 10 June, the board of the Responsible Entity, AACL Funds Management Limited, has decided not to proceed with the 2012 Grain Co-Production Project and thus all application funds will be returned to applicants. The Custodian will return application funds to nominated bank accounts during the week commencing 11 June.

Grain Co-Production (GCP) is an innovative investment opportunity that brings together professional grain farmers and investors. Professional farmers provide the land, equipment, inputs and expertise in order to manage and harvest the investor’s crop. Via GCP, AACL is Australia’s largest grain production enterprise. Since 2005 AACL has contracted more than 1.2m tonnes of grain and invested close to $250m.

Term
The 2012 Grain Co-Production Project (the Project) will run for 5 consecutive seasons commencing in 2012 and completing with the conclusion of the 2016 season.

Objective
On behalf of investors, the Project will contract farmers to grow wheat in multiple locations across the Australian grain-belt. Wheat grown by all contracted farmers will be pooled to form the Project Pool. Each investor will receive a distribution from the Project Pool according to their investment proportion.

Marketing of the Wheat
AACL will arrange the marketing and sale of the crop each season. It is expected that all wheat from a season will be sold by the end of April following harvest and income distributed by June 30 following harvest. AACL has entered into an agreement with Glencore Grain to market the grain. Glencore, one of the largest grain trading companies in the world, will provide various services including the price and foreign exchange risk management. Glencore have over 830 staff based in 25 international offices, who are involved in grain marketing.

Applications
The offer closes on 10th June 2012.

 

Cash Rebate 4.00%
Closing Date CLOSED
Minimum Investment $22,800 (ex GST)
Term of Project Approx. 5 years
ATO Product Ruling 2012/1
Product Disclosure Statement
Application Forms
Adviser Edge Research
 
 
 
 
 
Investor Summary
Investor Calculator (Excel 2007)
Investor Calculator (Excel 2003)
Investment Size
The Project consists of units called Co-Production Units (CPUs). Each CPU costs $4,180 (inc GST) and is an area of land expected to produce $5,714 in value. The minimum investment is 6 CPU’s.

Taxation
The ATO has issued Product Ruling PR2012/1 for the project. The product ruling confirms that all fees incurred by investors including the initial investment, will be 100% deductible in the year in which they are incurred.

Returns
An independent review of the Project by leading agricultural corporate advisor Latitude 232, forecasts returns of 9% - 10% pa based on the 2012 GCP model, historic GCP yields and daily published grain pricing. Results of the modelling are shown in the table below. Actual returns over the Project life are expected to vary as each of the 5 seasons results will be affected by various factors including production outcomes and changes in world prices for wheat.

GCP Project Results Based on 2012 Model

Year Investor IRR
1998-2002 12.86%
1999-2003 13.13%
2000-2004 12.29%
2001-2005 10.67%
2002-2006 9.20%
2003-2007 12.57%
2004-2008 8.33%
2005-2009 9.03%
2006-2010 6.64%
Mean 9.91%
Median 10.36%

The Manager
The Responsible Entity for the Project is AACL Funds Management Limited (AACLFM), a company with extensive funds management experience who holds an Australian Financial Services License 254421. AACLFM will appoint AACL Pty Ltd as the Project Manager to undertake the sourcing and monitoring of contract farmers as well as the grain marketing through its agreements with Glencore. The 2012 Project will be the eighth (8th) offered by AACLFM.

Size
The Project is targeting to raise up to $50m to grow approximately 450,000 tonnes of wheat. It is expected 150 – 200 farmers will be contracted to grow the crop on behalf of investors.

Risks
The Project is exposed to agricultural risks inherent in growing wheat and thus returns cannot be guaranteed.