Investors' funds down the rabbit hole
September 27, 2010 Couriermail.com.au
TAXPAYERS have forked out more than $2 million to prop up Australia's largest rabbit farm, a struggling venture which has continually lost money and is now up for sale.
More than 30 investors, including many from Queensland, tipped in $3.2 million to back the Border Range Rabbit Farm near the northern NSW town of Kyogle five years ago. Even with strong demand for rabbit meat, the business has never turned a profit despite rosy forecasts that the money would be rolling in by now. Results from the last financial year show a pre-tax loss of nearly $197,000 despite $424,052 in "government subsidies", such as research and development tax rebates.
Not surprisingly, investors have received no return so far from their stake in Red Shed Holdings, the entity which operates the 120ha farm on the market for $5.5 million.
But the Border Range debacle has not stopped one of the farm's founders and directors, Sunshine Coast businessman Paul McVerry, from promoting a new start-up venture seeking a capital injection. EasyFood, a Melbourne-based food packaging business which includes McVerry as a director, hopes to raise $3.3 million from investors by January. About $1.2 million has already been committed.
Launched only two years ago, the company developed a process to give prepared meals a shelf-life of up to two years without refrigeration. Sunshine Coast teenager Jessica Watson ate the microwave-ready meals on her epic sailing trip around the world this year. EasyFood has also become popular with diet industry players such as Weight Watchers, OptiSlim, Bodytrim and Tony Ferguson. An EasyFood offer document has predicted its sales will grow from $28 million this financial year to $73 million by mid-2013. A conservative forecast tips pre-tax earnings will hit $1 million this year, swelling to $5.2 million in 2012.
But the document also reveals the company suffered a pre-tax loss of $116,465 in the 2009 financial year and $985,000 of the money raised will go to pay back loans from directors and shareholders. EasyFood is also receiving an unspecified amount of government research and development tax rebates.
In the section providing details about the board, McVerry is described as having "over 40 years experience as a director and senior executive in processed food and livestock businesses". While the document lists his role as chairman of Red Shed Holdings, there is no disclosure about the disastrous state of the business. Indeed, the Border Range website still claims McVerry, as managing director, has "well-focused and visionary plans" for the farm.
McVerry said last week he saw no reason to provide potential EasyFood investors with more information about the rabbit farm. "It's a totally different company, a different exercise," he said. McVerry, 65, also defended the taxpayer money spent on the rabbit farm, which he described as "a completely new industry". "We've had enormous difficulties in controlling animal health problems because nothing has ever been done like this in Australia before . . . It's an extremely difficult and onerous task and it's still continuing to happen and being funded by the directors now," McVerry said.
There is another glaring omission in the EasyFood offer document. No reference is made to McVerry's role as a director of Stockmans Australian Cafe Holdings, which operated a franchise network of eateries in the 1990s before going into voluntary administration. The business was later sold by the administrator after a deed of company arrangement failed.
Queensland Nationals MP Paul Neville savaged the conduct of McVerry and two other Stockmans directors in a 1997 speech in Parliament. But McVerry said Neville's comments were "absolutely incorrect" and reflected the view of a single aggrieved franchisee. He said the disaster ended up costing him his house and several hundred thousand dollars because of personal debt guarantees. McVerry, who now resides on a 9ha property in the Sunshine Coast hinterland, said the Stockmans episode was "irrelevant" to investors considering putting money into EasyFood.
Fast-forward to this year, and McVerry told Red Shed investors at a Brisbane meeting in April the rabbit farm required a further infusion of money as it battled diseases killing many of the 4000 does. Meeting minutes show another $200,000 would be needed to reach a break-even point and further appeals have been launched for government funding.
The minutes also reveal shareholder anger with "excessive overseas travels of the company's management". McVerry acknowledged travelling to Spain and Portugal to study rabbit farms. He said two other directors had visited Italy and France for similar reasons, justifying the cost as money "exceptionally well spent".
One
investor told The Courier-Mail he had written off the $45,000 he invested in the
hope of building up a nest egg to pay his daughter's college tuition. "We were
always supposed to be on the verge of profit. They reckon it's a going concern
but I'm not expecting any outcome. I think I've done my dough," he said. It's
not the first time that expectations have been dashed.
Back in 2005, a Red Shed application seeking federal government funding forecast a $750,000 pre-tax profit by the 2009 financial year and listed seven businesses in its expected supply chain, including Akubra Hats and Lenard's chicken franchise. But the profit expectation was wildly optimistic and proposed agreements to sell rabbit skins to Akubra and meat to Lenard's never eventuated. That was despite former Lenard's chairman Paul Bardwell serving as Red Shed chairman until early 2008 and remaining as a shareholder today.
Throughout it all, the NSW and federal governments have continued to tip in money, much of it in the form of research and development tax credits. +++++++
Red Shed first started receiving government grants in 2003 when it got $30,000 from the NSW Department of State and Regional Development. Another $322,000 followed the next year from the federal government's Department of Transport and Regional Services. By 2006, research and development tax refunds had reached $792,653 and have continued since then. Red Shed's 2009 financial year figures revealed $347,611 in "government subsidies" as accumulated losses hit $1.77 million.
EasyFood managing director Paul Grogan said he was unaware of the background story of either the rabbit farm or Stockmans. He said he was not interested in knowing the details because McVerry had done a "fantastic" job for EasyFood, which had recently seen the departure of three other board members. "Investors should not be concerned because Paul McVerry has done nothing but good for EasyFood. I've got no problem with Paul at all," he said.
Australia - Rabbit abattoir closes
14 May 2010 meattradenewsdaily.co.uk
A rabbit abattoir near Cowra is being forced to shut due to rising electricity and insurance costs. Bumbaldry Rabbits processes 60 farmed rabbits each week and supplies local restaurants. Its closure will mean there is only one abattoir licensed to process the animal in central west New South Wales.
The owner of the Hilston facility, Steve Johnson, says farmed becoming increasingly non-viable. "There is no future in farmed rabbits in Australia. There's a number of reasons for that. There's not one feed company in Australia, I'm talking meals, that process feed, there is not one in Australia that can make a pellet to feed rabbits on and then for the labour involved in it, it's just not a viable proposition," he said.
Central west restaurants will also have to find a new rabbit supplier. Local chef Simon Hawke says while there are alternative suppliers, it is great to be able to support local businesses. "We haven't really had much of an issue. We prefer to use locally obviously, because it's nicer for people to experience the local product," he said.
AU: One Rabbit Farm in Victoria Closes
June 8, 2013 published in The Australian
Glen McMeill, a rabbit farmer who used $250,000 in GIF money to commercialise his processing of wild rabbits, exceeded his jobs target by putting on 22 new people including 14 trainees. Earlier this year his business closed, of what he euphemistically called “unforseen circumstances” –a campaign by animal rights activists in which his Geelong processing plant was ransacked and expensive equipment destroyed.
Just two years earlier: Rabbits hop on to the menu on Melbourne’s top restaurants
July 3, 2011 Heraldsun.com.au excerpt
Trendy rabbit dishes have become big business for Geelong’s specialist rabbit processor, Glen McNeill, who runs an abattoir in North Shore. His output has doubled since gaining a licence eight months ago to process wild rabbits. Before then, his focus was on the farmed variety, supplied by a small but growing number of farmers looking to diversify from my more traditional areas.
His business, Quality Australian Farmed Rabbit, is strictly regulated by meat inspectors to weed out a small number of rabbits infected with calicivirus and myxomatosis, introduced by the Federal Government, to reduce rabbit numbers.
"In the slaughterhouse, one person with the courage to speak out is a battalion. One factory farmer with the courage to walk away is an army. One politician with a brain, a spine and a conscience is a lighthouse. One nation with an animal rights constitution is a force of nature." Philip Wollen
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