Climate, soils and the advantages of the South East

Irrigation Scheme (SEIS) district for agricultural production

The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

September 2012

Soils of the SEIS

• Geology of the region quite complex• Hills capped by dolerite• Slopes of sandstone/mudstone• Some areas of basalt flows • Valley floor of in-fill alluvial deposits

(ie. mixture)

The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

Soils and Topography - General

• Hills – generally stony and shallow near tops• Slopes – dolerite derived slope deposits (brown soils

in well drained positions, black cracking in imperfectly drained positions) both generally overlying sandstone or mudstone

• Lower slopes generally texture-contrast soils from sandstone/mudstone

• Valley floor – either texture-contrast with acid and/or sodic subsoils

- or clay dominated deeper soils (rarer)3The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before

making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

Typical Soil Characteristics- Basalt

• Basalt flows occur in the region but predominantly only in the Sorell region

• These are typically flat to gentle slopes unless they are formed from a plug or a dyke and then are generally too steep to cultivate

• The most common soil type on basalt is a black or very dark brown, fine structure and well drained and highly fertile

4The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

Typical Soil Characteristics - Dolerite

• Brown soils on dolerite– Moderately to well drained– Moderately to high fertility => good plant vigour– Generally well suited to horticulture especially viticulture

• Black soils on dolerite– Tend to be more imperfectly drained– Reactive clays – shrink/swell characteristics– Often high pH (>8.5) – potentially limit root growth– Cracking can lead to limited root contact/growth and

inefficient irrigation (water flow cracks and by-pass roots) – need to irrigate small amounts frequently, typically when cracks appear it is generally too late in this soil type.

The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

Typical Soil Characteristics – Texture Contrast

• Or more commonly known as “Duplex soils”– Predominantly sandy and fragile topsoils– Imperfectly drained – limited options for

improvement– Subsoils often acidic (pH <4.8) and/or sodic (ESP

>6%)– Minimal cultivation techniques are required to

maintain soil structure– Generally not suitable for intensive cultivation

unless well drained6The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before

making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

Climate – Cool Climate Production

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• Regions climate very similar to the cropping region of NW Tasmania

• Temperatures are well suited to temperate crops during the Spring, Summer and Autumn months

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Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Devonport and Cambridge Temperatures

Devonport Max Devonport Minimum Max Temp

Min Temp Opt Max Temp Opt Min Temp

Cambridge Min Cambridge Maximum

Figure 1 Devonport and Cambridge Mean Maximum and Minimum Temperatures.Maximum and Minimum temperatures are the accepted levels that most temperate crops experience stress, optimum minimum and maximum temperatures are the accepted levels for temperate crop production – UC Davis.

• Bureau of Meterology (BOM) station Devonport Airport data collected 1966-2012• BOM station Cambridge (Hobart Airport) data collected 1958-2012

The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

Rainfall of the SEIS region

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• Whilst temperatures are well suited to temperate crops, the rainfall is low compared to other cropping regions in Tasmania and mainland Australia

• This allows for more optimum management of plant water requirements through irrigation as well as lowering risk of diseases

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Mean Monthly Rainfall

Cambridge Melbourne Swan Hill Devonport

Figure 2 Mean Monthly Rainfall of the SEIS Region

• BOM station Devonport Airport data collected 1966-2012• BOM station Melbourne data collected 1913-1980• BOM station Swan Hill data collected 1884-1996• BOM station Cambridge (Hobart Airport) data collected 1958-2012

• Note whilst Swan Hill and Melbourne data sets reference are from stations now closed, they represent a longer time period than the current stations and therefore a more concise indication of long term mean monthly rainfall.

The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

Low Impact Rainfall Events

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Number of Days Greater than 25mm

Cambridge Cranbourne Swan Hill Gatton

Figure 3 Number of Days of Rainfall Greater than 25mm for Cambridge, Cranbourne, Swan Hill and Gatton.

• BOM station Cambridge (Hobart Airport) data collected 1958-2012• BOM station Cranbourne botanical gardens data collected 1990-2012• BOM station Swan Hill data collected 1996 - 2012• BOM station Gatton Research Station data collected 1968-2012

• In addition to the overall lower rainfall than many other intensive agricultural areas, when rainfall events occur they are not as severe as mainland areas

• A comparison of some major intensive agricultural areas demonstrates the mean number of rainfall events greater than 25mm demonstrates low rainfall event risk in the SE

The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

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Severe Weather Events in Tasmania – A Recent Example

• The region has a history of low impact from severe weather events

• For example major rainfall in 2010/11 season caused significant crop losses in the NE and NW areas of Tasmania, the SE of Tasmania received high rainfall but significantly less severe and not as damaging to most crops

• The SE received between 100 and 200mm compared to 600 to 1200mm in other regionsFigure 4 Example of Severe Rainfall event - Tasmanian Rainfall Totals (mm) across Tasmania 1/11/2010-20/04/2011 -

BOM

The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

11

Severe Weather Events Compared to Mainland Australia – A Recent Example

Figure 5 Example of severe weather effect in SE Australia - Murray-Darling Rainfall Totals (mm) from 1/11/2010 to 30/04/2011 - BOM

• The same weather system that caused damage to crops in NE and NW Tasmania can be seen in Figure 5.

• These severe weather events generally affect large regions of SE Australia and cause significant agricultural losses

• SE of Tasmania tends to always be at the lower end of the impact, again SE 100 to 200mm in this event, most agricultural regions where in the 400 to 800mm range

The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

Lack of Heat Events

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0

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Days over 30

Cambridge Laverton Swan Hill Bairnsdale Cranbourne

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Days over 35°C

Cambridge Swan Hill Bairnsdale Cranbourne

Figure 6 Mean Number of days over 30°C for Cambridge, Swan Hill, Bairnsdale and Cranbourne

• BOM station Cambridge (Hobart Airport) data collected 1958-2012• BOM station Swan Hill data collected 1996-2012• BOM station Bairnsdale data collect 1942-2012• BOM station Cranbourne botanical gardens data collected 1990-2012

Figure 7 Mean Number of days over 35°C for Cambridge, Swan Hill, Bairnsdale and Cranbourne

• BOM station Cambridge (Hobart Airport) data collected 1958-2012• BOM station Swan Hill data collected 1996-2012• BOM station Bairnsdale data collect 1942-2012• BOM station Cranbourne botanical gardens data collected 1990-2012

• SE Tasmania is moderated by the Tasman Sea and does not experience the severity or frequency of high temperature events that cause agricultural losses in other regions.

The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

Low Frost Frequency

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Mean Days Less than 0o C

Cambridge

Cranbourne

Swan Hill

Bairnsdale

Figure 8 Mean Number of Days per month where temperature is less than 0° at Cambridge, Cranbourne, Swan Hill and Bairnsdale

• BOM station Cambridge (Hobart Airport) data was collected 1958-2012• BOM station Swan Hill data collected 1996-2012• BOM station Bairnsdale data collect 1942-2012• BOM station Cranbourne botanical gardens data collected 1990-2012

• Similarly due to the proximity to the Tasman Sea, low temperature events are also moderated to a certain extent.

• The are not as frequent as SE Victoria but less frequent that areas on the Murray

• The crucial period for flowering perennials is generally late August through September

The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

Low Disease Potential

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Mean 9am Relative Humidity

Cambridge

Cranbourne

Swan Hill

Gatton

Figure 10 Mean Monthly 9am Relative Humidity at Cambridge, Cranbourne, Swan Hill and Gatton

• BOM station Cambridge (Hobart Airport) data collected 1958-2012• BOM station Cranbourne data collected 1990-2012• BOM station Swan Hill data collected 1996-2012• BOM station Gatton Research Station data collected 1968-2012

• High and/or prolonged periods of relative humidity increase the potential for fungal disease outbreaks and severity

• SE Tasmania has significantly lower relative humidity during than other areas of Australia

• In the case of vegetable production diseases such as Downie Mildew are not as prevalent

The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

Low Hail Risk

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Figure 11 Average Annual thunder-days across Australia - BOM

• Data for Thunder days (generators of hail events) place the SE of Tasmania at one of the lowest risk areas in Australia

The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

Summer Sunshine Hours

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Figure 12 Average daily sunshine hours in January (Summer) across Australia - BOM

• Despite the low latitude SE Tasmania still has similar sunshine hours in summer to much of SE Australia

The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

Current Agricultural Production in Region

• Annual Crops– Baby Leaf salad vegetables

• Houston’s Farms currently sole producer but contract growing has been undertaken for Harvest Fresh Cuts

– Fresh market vegetables including• Iceberg and Cos lettuce, Cauliflower, Broccoli, Spring Onions, Leeks, Asian vegetables

– Processing peas• currently all under contract to Simplot

– Alkaloid poppies• all 3 poppy companies currently contracting growers in the SE

– Vegetable seed crops• two major companies Bejo and SPS

– Turf• currently only StrathAyr

– Wide range of broad acre crops • including – lucerne, field peas, grass seeds, canola seed, linseed

17The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

Current Agricultural Production in Region

• Perennial Crops– Cherries and Apricots

• A number of operators in the region from small scale to 90+ ha developments

– Wine grapes• Many well known and award winning vineyards and wineries

– Olives• Again a number of groves ranging in size, some including extraction

facilities

– Walnuts• One large area in the Coal Valley

– Berry fruit• Small areas of production as well as tourist outlets and pick your own

18The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

Potential Opportunities

• Hazelnuts• Pomegrante• Expansion of berry fruits: Raspberry and

Strawberry• Strawberry runner production• Herbs – fresh, culinary and essential oils• Expansion of seed production for a range of crops

– Linseed, flax, other oils seeds

• Industrial Hemp

19The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

SE Tasmania in Summary- Ideal Cool Climate Production Region

• Highly suited to temperate crops• Low risk from severe weather events

– Low heat events in summer– Low frost risk for autumn– Low hail risk, both frequency and size– Rainfall events low impact

• Range of fertile soil types and aspects• Range of agricultural expertise and support• Skilled resource base

20The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

For further information

Contact Macquarie Franklin: P 03 6427 5300 | F 03 6427 0876 | E info@macfrank.com.au | W www.macquariefranklin.com.au

Dr Lee Petersonlpeterson@macfrank.com.au

The information contained in this presentation is for general information purposes only and should not be taken as specific advice of any kind. Before making an investment decision, investors should take into account their individual needs and requirements and seek independent advice

Macquarie Franklin specialises in economic studies and business and resource management including feasibility studies, irrigation and water development, land capability and mapping, natural resource management, training and extension, and technical agricultural consulting.