Australia: Costa Group buys avocado farm in Far North Queensland
Australia's largest integrated fresh fruit and vegetable company Costa Group (ASX: CGC) is slicing its way into a new avocado production area through the announced acquisition of Lankester Avocado orchards and packing operations today (July 5).
The new farm is in the Atherton area, about a 16-hour drive north of the Avocado Ridge orchards Costa purchased in Childers in December.
"This strategic acquisition is another step in executing our strategy to build avocados into our fifth vertically integrated core produce pillar," Costa Group CEO Harry Debney said in a release.
"Our production and supply period will now span from February to August, bringing us closer to achieving 52 week supply and our ultimate goal to be the number one grower, packer and marketer of avocados."
Lankester has total plantings of 130 hectares across three farms with the season running from February through to June, while Costa plans an additional 60 hectares of plantings over the next 12 months.
The operation also undertakes packing and marketing activities for third-party growers.
"With the current circa 370 hectares of avocados Costa has in central Queensland and the South Australia Riverland, this acquisition will bring the Company's total plantings to circa 500 hectares and allow us to continue to build our production scale," Debney said.
The acquisition has been done in conjunction with Macquarie Agricultural Funds Management (MAFM), under which MAFM purchases the farms and leases them to Costa to operate them for 20 years.
The Lankester family will remain with the business to perform key management and operational roles.
"The Lankester family have been in the Atherton region for many years and they have built their business into one that has a strong market presence with opportunity for future growth, which Costa found to be an attractive proposition when considering our next avocado investment," Debney said.
The acquisition is expected to be completed by July, 2017, and the price was not disclosed at the request of the parties involved.
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