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Cane growers battle to fight off fire sales
12 Mar 2004
Canegrowing land values are significantly down compared with five years ago, but there's little data to substantiate the view - transactions have almost ground to a halt over the past six months. Farmers, canegrowers' organisations and banks are trying to prevent fire sales. People are hanging in there as they don't want to get out at the bottom of the market, says Canegrowers in Proserpine, one of Queensland's major sugar regions.
Around Proserpine, cane farm values in the late 1990s were up to $14,000 per hectare, but government valuers reportedly now put them at about $8,500 per hectare. Around Mackay and Sarina values are lower, with recent sales of some smaller farms netting between $5,000 and $5,350/ha, excluding improvements. Herron Todd White valuer Russ Newborn said some of the properties had untended cane crops and will be converted to alternative uses, such as cattle grazing.
Canegrowers said the worst-placed are farmers who entered the industry in better times. Many are now having trouble servicing debt and some have negative equity. Gearing is crucial, Canegrowers' Ian McBean said, and that's why the industry can't afford to have fire sales on cane farms: it would affect everyone's debt-to-equity ratio. The banks are very aware of this, so growers talk to them regularly.
The Australian, 11/3/04, page 49.
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