As Select Harvests wraps up "one of the most challenging" almond harvests the company has ever encountered and navigates a global price slump, new chairman, Travis Dillon, takes the helm comfortably confident about the company's prospects.
Select's $2 million net profit after tax for the half year to March 31 reflected the impact of one of the wettest harvests on record which is only now finishing, about a month later than intended.
While profit was higher than the $1.3m result posted a year earlier, it was well down on the $20m recorded in the first half of 2018-19, and below initial expectations, given the increasing volumes Select has been harvesting and processing in recent years.
Global prices for industrial grade value-added nuts have fallen to 10-year lows from recent modest highs of $US3.50 a pound last September to between $US2.50 and $2/pound in May.
Global supply chains continue to be fragmented by freight logistics bottlenecks, which in turn have disrupted buying activity and forced US sellers to discount their prices to generate quick cash flow.
California produces 80 per cent of the world's almond crop.
"We're exposed to a lot of global dynamics, particularly at the moment, but there's plenty of demand emerging on our doorstep, too, said Mr Dillon, best known as former managing director of the Ruralco farm services group.
Ruralco was swallowed up by rival Landmark in a $470m deal which formed Nutrien Ag Solutions in late 2019, leaving Mr Dillon to move to several new roles on agribusiness boards.
He has been a Select Harvests director since last November, and also chairs the board of South Australian kingfish farmer, Clean Seas Seafood, and Queensland-based biological stockfeed and soil ingredients company, Terragen Holdings.
Also the deputy chairman of Lifeline, and on CSIRO's agriculture and food division advisory board, Mr Dillon replaces Michael Iwaniw, who oversaw the business more than tripling its asset base during his 11 years as Select's chairman.
"This company has a very sound asset base and has grown exponentially in recent years - there's a lot to be confident about," Mr Dillon said.
"Almonds are seen as a superfood and a key ingredient in healthy lifestyles.
"Demand has been consistently increasing, particularly on the back of the emerging middle class market in Asia."
He said Select Harvests - Australia's second largest almond grower and the biggest integrated production, processing and marketing outfit - was achieving top tier yields from its orchards and using best in class drip irrigation and crop monitoring technologies to help manage water needs and weather risks.
Unfortunately, however, persistent rain during this year's autumn harvest and a remarkably cool summer were weather risks its 9260 hectares of trees could not escape.
While growing conditions were generally good and soil moisture levels above average, saving 30pc on watering costs last season, managing director, Paul Thompson, said the wetter, cooler finish hurt the in-shell nut quality.
Harvest was dragged out by showery interruptions and costs increased because of drying requirements.
Adding to the company's frustrations were substantial increases in freight expenses which buyers were incorporating into their buying prices.
A big inventory of unsold lower grade US almond products was also stuck in storage and on ports after consecutive years of big Californian crops left a stockpile of product which was slow to sell as the pandemic raged.
Select reported a 19pc fall in revenue to $68.7m for the half-year and continuing operations earnings before interest, taxes, depreciation and amortisation up 19pc to $17.7m.
However, while lower global prices and the damp, delayed harvest had negatively impacted earnings, Mr Thompson said demand was returning to pre-COVID-19 conditions and inventories were returning to a more balanced position.
"At current prices almonds are an attractive option with many alternative commodity prices increasing dramatically because of supply issues," he said.
Select Harvests expects to finish this season with almost 30,000 tonnes of harvested crop, or about five per cent more than last year.
It forecast an average fair value Australian selling price at $6.64 a kilogram, which compared with last year's pandemic squeezed $6/kg, but still some way off matching the $8.60 achieved in 2019.
Select, which has orchards based around Griffith, Hillston and Euston in south western NSW, in the SA Riverland at Loxton and Paringa and along the Murray River around Swan Hill, Robinvale, and Lake Cullulleraine in northern Victoria.
Aside from exporting about 10,000t of nut in shell, and selling 20,000t of kernel, Select produces 60,000t of stockfeed, 10,000t of husks and hulls for to power its Carina West processing plant and returns 30,000t of compost to its trees.
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Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
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