Managed Investment Scheme's fall from grace 

The collapse of Australia’s largest listed Managed Investment Scheme (MIS), Great Southern, hot on the heels of the recent failure of Timbercorp, another high profile MIS, is set to send further ripples through the horticulture industry, and reignite the debate about the involvement of these schemes in the horticulture industry.

The move by MIS groups into non-forestry horticulture products has seen their involvement in the industry extend from nut crops (eg almonds and pecans) into more mainstream tree crops such as mangoes, citrus, stonefruit and avocadoes, and more recently, tomatoes and strawberries.

Some questions are now being raised within the industry regarding the values paid for land, the investment decisions made based on taxation advantages for investors, and the potential impact on markets for certain products resulting from the growth in the production volumes of some products.

For others, the entry by MIS entities into the fresh produce industry was a positive move promoting economies of scale, rapid expansion and rationalisation within the industry.

The failures of Great Southern and Timbercorp are raising questions regarding the growth strategies and management of the two organisations as well as more controversial issue relating to the ability of an MIS to invest in non-forestry products, and the extent of the tax concessions provided to MIS investors. The fallout from the uncertainty these collapses will create and asset sales that will result, will no doubt be felt for some time.

These two high profile falls from grace have, at the very least, brought the MIS industry into the spotlight and must result in a Federal Government review of the framework that exists for these schemes, the arguments for and against their involvement in respect of non-forestry products and the levels of tax concessions that are given to investors.