One main dwelling, 3-4 bedrooms, 2 bathrooms, plus 1 outside shower/toilet. Renovated inside, needs work on outside. Has wood heaters.
Second “minor use” dwelling, 2 bedrooms and a toilet, quite usable for short-term accommodation, one half needs to be demolished and replaced. This dwelling has 2 sheds/garages attached which are used for machinery storage and some processing operations. This whole complex needs to be renovated/completed.
Machinery shed 25m x 10m.
Irrigation system extending over a large area of the property from the centrally located 2.4 ha dam.
Large amounts of machinery, all in good to reasonable condition, including 102 hp Deutz tractor, forklift, quadbike, cool room, rotary hoe, scarifier, discs, boom spray, single row and 2-row transplanters, fertilizer bander, plus a complete set of garlic producing equipment – planter, harvester, soil shaker, bulb splitter, brushing table, 2 conveyor-hoppers.
What is the opportunity?
We are open to ideas on this but have had some thoughts. Our general objectives appear to fit into the “Lease to buy” model.
We want to hand over our heirloom vegetable business to the new entrants, and to keep producing garlic for our own income for about 5 years, after which the new entrants would purchase the garlic business and all of its equipment.
The new entrants would live on property, doing their own heirloom vegetable horticulture, but also doing “day-to-day” maintenance work as directed on the garlic crop, some with Rick’s direct involvement such as preparation for planting, planting, harvesting, and processing, other aspects such as weed control and nutrition under direction. The heirloom business has a well-established market in Perth, i.e. wholesalers, restaurants and a couple of large farmer’s markets (although they were discontinued in 2020 due to the COVID crisis and not picked up again due to insufficient available workers).
The new entrants will grow their produce on any suitable part of the property under a rotating cropping plan, with our garlic production also being part of the rotation. Agreement will be reached on the rotation, because not all paddocks suit all crops. There are about 14 hectares currently cultivated; no extension of that area is envisaged while ownership lies with us.
The new entrants will be able to run their own fresh veggie honesty stall at the main entrance to the property, to sell their own produce. There is a big patch of Jerusalem artichokes which grows a significant crop each year with only minor work and chemical inputs.
The work by the new entrants on the maintenance of the garlic, mainly applying fertilizer and weed control chemicals, would offset some of the costs of being on the property and their having access to our established business and extensive knowledge. Rick will be closely involved in the direction, supervision and execution of all work relating to garlic production.
The long-term intention is to sell the property, but not for perhaps 5 years, which has to be negotiated. As stated above, the garlic crop is not part of the new entrants’ business until we exit completely, but commitment to its purchase is a condition of this proposal from its inception. This means the property and the garlic business are tied and the new entrants will be obligated to purchase that part of the business at the time of our exit. Valuation of the garlic business will be by mutually acceptable methods.
Lease To Buy Available:
If a satisfactory offer was to be made, we would consider a simple sale of the property and business, including the garlic business taking account of likely future value. The property is not for sale without the garlic business. We would include a year of “more or less” on-tap advice, based on negotiated agreement for out-of-pocket costs such as travel etc.
The new entrants will have the main house on the property to live in. It’s an average farmhouse, with power, bottled domestic gas, and rainwater supply.
Is the farm currently profitable?
The last three years have been unprofitable, mainly due to the impacts of the COVID pandemic, plus some capital purchases. Restaurants are the main users of our produce, and the pandemic caused major disruptions in that sector. Prior to that, substantial equipment purchases that were tax deductible in the year of purchase also significantly affected net income. There is currently no debt on either the property or equipment in the business.
A turnaround is considered likely this year with restaurants now operating normally, and the general economy in a better position. Increased planting, facilitated by recent equipment purchases, and improved sales through selected wholesalers, will likely see an improved income. A better view of this will be possible by the end of March 2023. There has been significant investment in garlic production in the past 8-10 years; this year’s crop appears likely to be of quite improved quality and quantity over recent years, with a good knowledge of the origins of those improvements. Pending completion of recertification under Freshcare, a sound market will be developed.
There is unlikely to be a need for significant capital expenditure, as refers to purchases of equipment etc., initially. However, the costs of “taking over a property”, with access to accommodation, acreage, infrastructure, equipment and access to knowledge that has cost enormous amounts of money and effort to acquire, all have a value, and therefore a cost to a new entrant. How a value of such things is achieved needs discussion.
We began our farming venture on a bare cattle property and have converted it into a horticulture enterprise with substantial capacity for production across a number of crops, funded by savings, off-property and on-property earnings, and a lot of hard work.
The bulk of funds required for the new entrants will be for normal cashflow items including, but not limited to, agricultural consumables, fuel, power, rent, insurances, domestic and personal costs, wages for employees, vehicles, consumables, freight, packaging and the like. Certain capital purchases such as a farm vehicle may be required, plus any crop-specific machinery if new specialist varieties are introduced, but there is not likely to be a need for large infrastructure expenditure as there was when we started out.
What markets are currently being sold to
Perth restaurants are the main market for our produce. Sales are done through 4 wholesalers in Perth, and 1 in Margaret River. There are opportunities to sell some products such as padron and shishito peppers into the eastern states. As mentioned before, there is an opportunity for farmer’s markets in Perth as well, which has produced good income in the past.
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