KI’s sheep herd could nearly double in the next four years as part of one company’s bold bushfire recovery strategy.
While this is good news for the island’s agriculture, the plan also heralds the loss of most of its timber industry.
Kiland, formerly Kangaroo Island Plantation Timber, managed over 85% of the island’s timber plantations before 95% of them were razed by the fires.
The company owns 18,662 ha, of which 14,200 ha is forest land, comprising approximately 11,360 ha of hardwood and 2,840 ha of softwood.
In its 2020 annual report, the company said its fair value of biological assets decreased by $109.2 million as a result of the bushfires.
“The impact of the wildfires and associated backburning operations on the KPT tree crop has caused the council to reassess the forest estate from $115.2 million (June 30, 2019) to $5.95 million “, says the report.
A year later in its 2021 report, this value was “rated at zero”.
The company reported an overall net loss for the 2020 period of $25.6 million and a loss of $28.6 million in 2021.
These large losses led to a change in strategy and the company is now considering going into agriculture.
A spokesperson for South Australia’s Department of Primary Industries and Regions said to date there has been only minimal clearing of the estate’s burnt hardwoods.
“The South African Department of Primary Industries and Regions expects this to pick up momentum in mid-2022 following the appointment of AAGIM to lead the land plantation conversion and remediation operations. agriculture,” the spokesperson said.
“Kiland harvests softwood wood burned from the fires and sells the wood in the local market.”
PUSH BACK: The bluegums are pushing back after being cleared by a private landowner in Gosse. Photo: Stan Gorton
In South Australia, the clearing of burned and unburned commercial plantations does not require government approval.
However, a change of land use to agriculture may require state and local government approval.
“The South Australian Government has shown an interest and commitment to the Kiland land conversion process and will continue to work with the company to support a good outcome for the community, environment and economy. of Kangaroo Island,” the spokesperson said.
AAG Investment Management was appointed property manager in January to remove the current tree, improve the land and manage the farming business.
AAGIM has managed the reversion of more than 100,000 ha of forest land to agricultural land over the past 11 years.
His intention is to convert the 14,000 ha on the west side of KI into pasture for a sheep meat business in hopes of farming up to 270,000 sheep.
In a presentation to investors on March 29, Kiland said the land would be developed on a suggestive schedule revealing the first 55,000 sheep will start grazing there from early next year.
By 2024, these numbers are expected to increase to 125,000 head and in 2025, around 213,000 sheep are expected to graze the land before peaking at 270,000 by 2026.
If these huge numbers are reached, KI’s sheep flock will potentially increase by almost 50%. Sanitation on the west side of the island, including timber harvesting, water supply, fencing, fertilizer application and pasture planting, is scheduled to begin in July.
The investor presentation indicates that KI’s historically high rainfall (over 750mm) and reliable climate provide attractive growing conditions for pastures with an expected average carrying capacity of 13 to 16 dry sheep equivalents per hectare.
Agrivet Business Consulting Senior Consultant Dr Graham Lean said that in a high rainfall area such as the western part of KI, the proposed DSE capacity is achievable, but this will also depend on timing.
“Fourteen and a half hours of DSE is potentially achievable, especially in this high-rainfall area,” Dr. Lean said.
“In my experience, areas of higher rainfall and longer growing seasons definitely support a higher stocking rate. Basically, I would say 16 to 18DSE is there with best practice, so 14.5DSE is feasible.”
But the consultant said he would exercise a bit of caution in such a large-scale venture, and it would also depend on the breed of sheep used in the grazing system.
“If this was a business that specialized in raising premium lambs, it would be very input intensive and there aren’t a lot of people doing it on a larger scale, let alone ‘a target of 270,000 head,’ Dr Lean said.
“Merinos would be much better able to absorb variations in feed supply, as they mainly produce wool and sheep.”
Reversion activities are expected to last four to six years and are expected to begin in July.
In its multi-operational master plan, Kiland’s transition is divided into four phases – harvesting, biomass disposal and land preparation; land improvement; development of an on-farm sheepmeat farm business; and the initial costs of establishing a sheep meat business.
In total, this process is estimated at 91 million dollars.
The ASX-listed company announced plans to raise $32.4 million through an accelerated, non-waiver 7-for-11 prorated rights offering fully subscribed at $1.10 per share on March 29. .
The institutional rights offering closed on March 30 and raised approximately $24.7 million.
Kiland published a retail rights offering for potential investors that ran from April 5 to May 2, with nearly 7 million shares issued.
The company also completed the sale of its pontoon on the island for cash proceeds of $6.2 million less fees at the end of April.
This story first ran in the inventory log, also an ACMpublication.
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