Established farming family cherry picks for future

A family farming business in the Lindis Valley, Central Otago, will diversify into horticulture for the first time in its 109-year history when investment specialist, Hortinvest, proceeds with a $15.5 million cherry project.

Lindis Peaks Station farmers Lucy Annan and Simon Maling, said the venture represented a positive change in land use for their farm and aligned with their goal to diversify their business.

The station has been in Ms Annan's family for four generations, since 1910, farming merino sheep and beef cattle. In 2015, they invested in a significant irrigation scheme to access water from the Clutha River.

"The time is right to diversify. Horticulture is water-efficient and sits well with our farming system, which now includes an irrigation scheme to access water from the Clutha River to water the crop," Ms Annan said.

"The Central Otago climate is perfect for cherry growing and research shows there's potential to develop global markets.

"The Hortinvest team has proven cherry industry experience, an obvious passion for the industry and offers the whole package, which appeals."

The project will see Lindis River Partnership acquire 80 hectares from the station's 3,500 holdings, with the potential to expand in the future.

Mr Maling said the land earmarked for the project was ideal for cherry production because of its slight elevation. The current dry-land area is being used to run merino sheep and this will continue, unaffected by the cherry project.

"Coming from a non-agricultural background, it's exciting to be an investor in this project and to have the chance to learn more about the cherry industry," Mr Maling, a former All Black, said.

Planting proceeds as investors commit

Lindis River is one of two $15.5 million projects in the Central Otago area that Hortinvest is seeking investors for. The other is at Mt Pisa, also over 80 hectares.

Hortinvest is processing initial applications for both projects following significant investor interest domestically and internationally. It will proceed with planting the first of 106,000 trees in June.

Both Lindis River and Mt Pisa projects include orchard infrastructure and packing and focus on exporting premium-quality cherries from the region globally renowned for producing New Zealand's best cherries.

Project and orchard development manager, Ross Kirk, said Hortinvest had extended its self-imposed expressions-of-interest deadline to May 31 to accommodate investors who needed more time to comply with financial regulations.

"Projects of this nature oblige all parties to adhere to Anti-Money Laundering laws. We're working with investors to finalise due diligence and assist with the application process," Mr Kirk said.

Under its vertically integrated grower-packer-shipper model, Hortinvest retains all services in-house including sourcing land, establishing and managing high-tech orchards and packhouses, and marketing and exporting produce.

"Our key point of difference is that no link in the supply chain is outsourced so we can return maximum value to investors," Mr Kirk said.

"Investors recognise cherries are a high-value product with proven markets, specifically the Chinese New Year market, which applies in various countries. There's also enormous growth potential in new markets such as India, Vietnam, Indonesia, Europe and the United States, which we have the expertise to penetrate.

"Both landowners are reinvesting in the projects for the long term and additional adjacent land is available for expansion of the current projects or future projects, including apricots in the next two years."

He said capital development for each project represented approximately 85 per cent of the total project cost.

Corporate governance outlined

"Governance of these projects will involve the establishment of limited partnerships, Mt Pisa Limited Partnership and Lindis River Limited Partnership, once the projects are fully subscribed," Mr Kirk said.

"At that point, Hortinvest will become a shareholder in each company, a general partner will be appointed to operate them and a board of directors will be appointed to represent the shareholders. Hortinvest will be contracted to develop the projects and operate the businesses."

Hortinvest offered investors various ways to have a stake in the projects, he said.

"Investors have the option to invest for the long term (seven to 10 years), come in at various intervals and take a capital gain early in the production phase or trade shares via online exchange platform, Syndex."

Investment snapshot

First harvest: 2021/2022
IRR: 20.8-25 per cent first 10 years
ROI at peak mature production: 34-59 per cent
Minimum investment: $100,000 over four years
EOI + 10 per cent: May 31
First cash call: June 30
Returns based on 12, 15 and 18 tonnes per hectare
Governance: Limited partnership
Information Memorandums are available on request
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Located in Central Otago, New Zealand, Hortinvest Ltd is the leading consultant in New Zealand's emerging and highly profitable cherry and horticulture industry. Hortinvest employs world-leading orchard management and packhouse systems to produce and export premium New Zealand cherries.

(Issued: April 25, 2019)

Issued by Aqua Public Relations on behalf of Hortinvest Ltd. For more information please contact:

Ross Kirk
Project and orchard development manager
Hortinvest
(02) 7484 5099

OR
Toni Lucke
Aqua Public Relations
+61 7 3312 2505

Email Toni>