Ben Hills investigates
In the biting chill of a winter’s morning in north-west Tasmania, a man with a dog stalks slowly through a grove of bare, black hazelnut trees. Every now and then the dog sniffs the ground, and the man bends down and scratches at the earth.
He is hoping against hope that this will be his lucky day, and that a few centimetres down, attached to the roots of the tree, he will find a small dark brown knob like a warty golf-ball, which is rarer than gold and almost as valuable. This is tuber melanosporum, the black truffle, worshipped by European epicures since Roman times.
So expensive it is rarely roasted and eaten whole nowadays, its pungent, composty flavour is used to liven dishes from scrambled eggs to roast chicken and pasta.
So rare that worldwide fewer than 150 tonnes a year are unearthed, the truffle is sold furtively by lucky hunters in Dordogne markets, in south-western France, at prices from $2000 a kilo to a record $35,000 (for the related Italian white truffle) reported in November 2000.
With a catastrophic decline in production that has been going on for a century due largely to the clearing of French forests of hazelnut and oak which are the hosts of the parasitic fungus scientists have been trying since the 1970s to find a way of domesticating and farming the wild truffle.
In Tasmania, they have succeeded. At least, that is what Australian investors have been told, as no fewer than three rival outfits try to cash in on what is claimed to be a technological breakthrough which allows the roots of tree seedlings to be “inoculated” with the spores of imported French truffles.
To date, lured by the magic of the mushroom, the generosity of the Australian taxation system towards farmers, and the promise of profits which (according to the New Zealand agronomist and truffle pioneer Dr Ian Hall) exceed the returns from any other kind of agriculture, including heroin poppies, many have succumbed to temptation.
At a conservative estimate, about 200 Australian investors have subscribed $3 million to schemes for growing truffles. Some have paid $21,000 a hectare to have their properties fenced, fertilised, irrigated and planted with trees seeded with truffle spores if any truffles are produced, the proceeds are split with the operating company.
Others have bought the seedlings outright, at from $20 to $60 each. More than 100 hectares have been planted in the decade since the first attempt mostly in Tasmania, but also in NSW in the Blue Mountains, the Southern Highlands, and the Orange/Bathurst and Yass/Canberra areas.
Investors were painted a rosy picture of the profits to expect, with one prospectus going as far as this: “The company has conservatively estimated yield in a well-managed trufferie [a paddock planted with truffle-infected trees] to be 60 kilograms per hectare once the trees reach maturity.” This would be worth in excess of $120,000, a return on investment of 600 per cent a year.
However, those returns have yet to materialise. In fact, although the promoters say it is early days yet, the total Australian production of truffles is barely enough to keep one restaurant, Claudes in Sydney, supplied.THE highest profile of the three organisations promoting truffle farming is Perigord Truffles of Tasmania Pty Ltd, which has inspired gushing articles in national newspapers and magazines. The company was founded in 1993 by two Tasmanians, Duncan Garvey, 43, an agricultural economist from the town of Grove, and Peter Cooper, 44, of Plenty.
They have been highly successful in attracting investment from the public, and from government. They received a five-year $250,000 grant from the Commonwealth’s Rural Industries Research and Development Corporation, after predicting that Australian truffles could become a valuable export industry, sending truffles to the Northern Hemisphere during the off-season (truffles are only harvested in winter). It has yet to happen.
Garvey and Cooper used part of the money to travel to France to investigate truffle propagation there the National Institute of Agronomic Research there has spent four decades and tens of millions of dollars trying to propagate truffles, with no impact on the declining production, which the Government describes as a “culinary catastrophe”.
When Garvey and Cooper returned to Tasmania they imported truffles from France, used the spores to inoculate the roots of seedlings, and established the first small plantation near Deloraine in 1993. Just six years later, they achieved national headlines when Perigord reported it had found the first black truffles in Australia on the property which is called Askrig and owned by Tim Terry.
The following winter more truffles were found at three sites in Tasmania and flown to Sydney. The owner of Claudes, Tim Pak Poy, an enthusiastic promoter of the venture, staged a celebration dinner at which it was claimed this was the first time fresh truffles had been served on Bastille Day (July 14).
People flocked to invest. Perigord charges $21,000 a hectare to establish a “trufferie” on your land, planting 500/600 of the seedling hazelnuts to the hectare. A prospectus sent recently by Perigord to a potential investor predicted that the harvest would begin in year five, that financial break-even would be in year 7/8, and that when the trees reached maturity in nine or 10 years, each hectare would yield an estimated 60kg, $120,000 worth. The company contracted a Sydney dog-handler to train dogs to sniff out the truffles. The deal is that Perigord organises the harvesting and marketing and splits the revenue from any truffles found with the landowner.
Garvey, Perigord’s co-chairman, says that 70 hectares in Tasmania and 20 in NSW have been planted out an investment of almost $2 million. However, last year the total “crop” was about 5kg and this winter even fewer truffles had been found by late August. Garvey says he is still “comfortable” with his prospectus prediction of 60kg a hectare, and that this figure is based on production achieved in France and New Zealand. We’ll have a closer look at that claim later.
Looking over the fence at Askrig, where those first truffles were found, Terry is not as optimistic. He says Perigord found only eight small truffles on his property the previous week, and “in the whole of Tasmania you would be struggling to get a kilo. You’ve got five dogs and their handlers walking up and down three days a week. It’s costing thousands.”
Terry is actually also a commercial rival of Perigord Truffles he’s behind the second company promoting truffle culture, Tasmanian Truffle Enterprises. Next door to Askrig he has a second property called Needlesdale, with 12 hectares planted out with seedlings he inoculated himself using truffles imported from France. Terry says: “Anybody can do it [inoculation]. It’s not a difficult process … The hard bit is growing the bloody things.”
Last year, Terry issued a prospectus seeking to lease out tenth-of-a-hectare plots of the Needlesdale plantation for $8745 each plus $1000 a year in management fees 87 investors forked out nearly $700,000, says Terry, and a second release of land is planned.
Terry is even more enthusiastic about his investors’ prospects than his rival, claiming that in New Zealand a producer had harvested 100kg a hectare, and that “this is indicative of the potential … in Australia”. The trees should be in full production in seven to eight years, says his prospectus, and after 15 years there would be a return of $78,000 on an investment of $29,000.
Taxed on his prediction that investors in Needlesdale could be harvesting 70kg of truffles a hectare by 2008-09, Terry makes this extraordinary statement: “That was written with the best of intentions two years ago, and we had to come up with figures that were palatable to us, to the Tax Office and to ASIC [the Australian Securities and Investments Commission] … We have to pull a figure out of the air and say, `Well, what’s the figure going to be?’ In a new industry where are you going to start? Do you start with five kilos?”
He says that the new prospectus will not contain the 70kg claim: “There is no way morally or ethically I would go out into the market place and do the same thing as I did 21/2 years ago.” So would he refund the investors’ money? “We haven’t had a complaint yet. We’ll worry about it when it happens.”
Terry, a farmer who admits that 10 years ago he had never heard of truffles, says: “I have not made a bloody cent out of truffles …” though he concedes he is drawing a “very small wage” from the venture.FINALLY, down at Bombala on the NSW Far South Coast, Bill and Raelene Stevenson, “disappointed with the returns from wool production”, spent $100,000 in 1999 establishing a facility to inoculate seedlings with truffle spores, using technology developed in New Zealand by Hall. They have been selling the seedlings for $60 each, although the success of this venture is doubtful since Terry has recently been advertising his seedlings in the rural press for only $10 each. However, the Stevensons are as optimistic as their rivals in promoting the “staggering returns”. “This technology has proven successful with harvests after just five years,” says their promotional material. “Yields of up to 60 kilogram per hectare could be expected from a well-managed trufferie.”
Across the Tasman in New Zealand, Hall, an acknowledged expert in truffle propagation, doubts these claims. Hall is a scientist at the Crown Research Institutes near Dunedin (the equivalent of the CSIRO) who has been researching truffle-growing since 1984, using the inoculation technique.
He says New Zealand produced its first truffles “the real McCoy”, not fakes from China in 1993 and that about 50 hectares are planted out with oak and hazelnut seedlings, mostly in half-hectare lots.
Hall believes there have been plantations in France and Italy which did produce 100kg a year. And he says that his brother Alan is the source of that claim of yields of 60kg a hectare in New Zealand. Alan Hall, who has a hobby farm near Gisborne, says that three winters ago he dug up that quantity on just half a hectare of land he had planted with inoculated seedlings only five years earlier and some were monsters, weighing more than a kilogram each. But he has no idea how many were salable, because many were badly damaged by insects, and others had rotted away by the time they were found. Furthermore, that prodigious harvest has never been approached since.
Though Alan Hall has held fungi the size of cricket balls worth $NZ3000 ($2600) each in his hands, he has decided he doesn’t want to be a truffle farmer. He uses the truffles he finds to inoculate thousands of oak and hazelnut seedlings which he sells to others for $NZ40 each, a far more reliable earner.
In the long and sorry history of exotic tax-driven agro-investment schemes from jojoba to pawlonia trees, llamas to ostriches and olives the only people to have made real money are the initial promoters who provided the breeding, or seedling stock.
Back to Ian Hall, who points out that, in spite of the claims being made in Australia, the entire New Zealand production was less than 100kg last year, a yield of not 100 or 70 but just two kilograms per planted hectare.
“I’m not saying invest in this, folks,” he warns. “It is high risk. You have to be honest and provide the investors with all the information [including], `Hey, you can finish up losing your socks here, folks.”
Pub: Sydney Morning Herald
Pub date: Saturday 28 September 2002
Section: News And Features
Sub section: News Review
Word count: 2026
Classification: Industry/Primary Industry/Crops Economy/Investment/Personal
Geographic area: Australia Tas NSW
Photos: Bruce Miller
1. Black gold … Duncan Garvey with Pickles, the truffle-hunting dog, under the chestnut trees
2. 20gram truffle, worth about $50.