Costa Group, MAFM acquire family-owned avocado operation

Australian horticultural company Costa Group and Macquarie Agricultural Funds Management (MAFM) have entered into an agreement to purchase the orchards and packing operations of Avocado Ridge from the Carney Family.

Costa Group, which made the recent announcement, did not respond to a request for comment, but local media reports valued the deal at approximately $50 million.

MAFM will purchase the farms and Costa has entered into a 20-year lease to operate them. The deal marks the first acquisition under a recently announced arrangement between the two parties to jointly consider M&A projects.

The 300 hectares of plantings sit on 500 hectares of land located in the Childers and Kumbia region of central Queensland and add to the 100 hectares of avocado operations Costa already operates in South Australia’ Riverland region.

“This acquisition is a major first step in Costa’s strategy to vertically-integrate our avocado category,” chief executive officer Harry Debney said in the statement, adding that the deal is part of the company’s strategy to concentrate on year-round crops.

“It will add significant growing capacity to our existing plantings, and ripening and marketing functions,” he said. “Avocados will become a truly integrated fifth pillar complementing our existing core produce categories of berries, mushrooms, citrus and glasshouse tomatoes.”

Avocados from the Carney family’s operations will be used to supply the Australian market from March to September and the family will continue to be involved in the operations.  The farms grow Shepard, Carmen, Maluma and the market-leading Hass avocado varieties.

Avocado consumption in Australia has increased significantly in recent years, with domestic supermarket chain Coles reportedly seeing a 25 percent increase in demand in the last financial year alone.

New York-based private equity firm Paine & Partners invested in Costa in 2011 from its Food and Agriculture Fund III and the company completed an initial public offering on the Australian Securities Exchange last year. At the time of the IPO, Paine & Partners retained a 12 percent stake in Costa, according to a statement.

MAFM owns and operates agricultural businesses and develops farmland through funds managing over $A1 billion ($749.7 million; €706.5 million), with more than 2.8 million hectares of farmland in Australia and Brazil.