RFM Almond Fund 2006

Fund Overview
Fund Assets
Performance & Financial Information

 

Fund Overview

The aim of the RFM Almond Fund 2006 (AF06) is to provide investors (“Growers”) with the opportunity to operate an almond growing business capable of generating competitive risk-adjusted returns. The business attracts tax deductions supported by ATO Product Rulings PR 2006/24 and PR 2006/25.

AF06 Growers participate in the business of growing and selling almonds for the world market. Each Grower is licensed to occupy and farm one or more Groves each consisting of an area of 0.25 hectares (ha). Each Grove is planted with approximately 70 almond trees and has sufficient water entitlements delivered via a modern irrigation system to cultivate and farm the trees. Grower returns are dependent upon the performance of their almond growing business. Returns are generated from the almond sale proceeds, less the annual operating and management costs including the lease of land and operational infrastructure. The AF06 terminates on 30 June 2026 with no further obligations to the Growers.

As Responsible Entity, RFM is responsible for orchard operations, maintenance, harvesting, pre-processing and delivery. RFM also manages all accounting and administrative functions of the AF06.

The AF06 is closed to new investment.

Almond Industry

The Australian almond industry has the advantage of counter-seasonal production, ideal climatic conditions and the benefits of extensive research and development. Australia currently produces around 35,000 tonnes of Almonds per year, a figure expected to double by 2013.

  • Global almond demand is expected to increase by around 10% in 2009/10 to 869,799 tonnes.
  • Flavour and health benefits continue to propel almond popularity.
  • Indian, Middle Eastern and Chinese consumption is rising, with key market regions growing by over 20% in 2008/09.1
  • 80% of the Indian population is vegetarian and are increasingly using almonds as a protein source.2
  • Total shipments of Almonds in 2007/08 hit record levels at around 1.26 billion pounds (571,536 tonnes).3
  • The growth of the dominant almond producing area, California, is limited by water availability. Production from this area is not anticipated to increase significantly.
  • The consistent high quality of Australian Almonds as well as production through the northern hemisphere ‘off-season’ improves global market penetration and pricing.

1 Almond Board of California – 2008 Almond Almanac.
2 RaboBank Almond Market Report – 27 April 2009.
3 Almond Board of California – 2008 Almond Almanac.

Figure 1: Global Almond Demand Versus Supply

The price achieved by AF06 depends on a range of factors, including the size of the Californian crop, worldwide supply and demand and exchange rate fluctuations.

RFM Technical Consultant Andrew Lacey, predicts medium term prices between $6 and $7 per kilo indicating that the potential to exceed that level will be driven primarily by exchange rates, but also by declining US production.

The price per kilogram achieved for the RFM AF06 2009 harvest was $5.25.

The Price Management Plan

In order to reduce price volatility, RFM developed a unique Price Management Plan ("PMP") to provide price support for Growers for up to the first ten years of AF06. RFM will pay the Growers up to $3.50 per kilogram on top of the sale price, if the sale price received is less than $8.20 per kilogram.

Any payment to the Growers as result of the PMP will be made after the final price per kilogram for the harvest is determined by Almondco. For the 2009 harvest, this payment to Growers is expected to be in June 2010.

Yield

The first harvest was conducted successfully in early 2009 although wind damage to the trees in December 2008 reduced the 2009 yields. Approximately 30% of the AF06 orchard was damaged by windstorms with 50% of these trees expected to return to normal production by 2010.

The forecasted yield for the 2010 harvest is 0.9 tonnes per hectare or 225 kilograms per Grove. The forecasted yield is below levels outlined in the PDS due to the December 2008 wind event mentioned previously.

Modern mature almond orchards using industry best practice are consistently achieving 3.5 tonnes of almond kernel per hectare. The RFM AF06 almond trees are all are expected to reach mature yields by 2014.

For up to date farm information please refer to the most recent newsletter.

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Fund Assets

The number of units on issue for the Almond Fund 2006 at 30 June 2009 was 1,063.

The total number of Growers was 215.

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Performance & Financial Information

No performance data yet available.

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Key Documents