RM Williams Agricultural Holdings, the private carbon farming and cattle company run by former News Ltd chief Ken Cowley has been placed into receivership.
The company, which owns large areas of land used for carbon sequestration and cattle production in Queensland and the Northern Territory, appointed insolvency firm PPB Advisory as administrators last week, AAP reported this afternoon.
Mr Cowley, the Sydney-based company's chairman, is also the chief shareholder.
PPB Advisory receiver Stephen Parbery said the administrators were "working closely and collaboratively with the board of RM Williams Agricultural Holdings to conduct a review of the business."
Major creditor Westpac is believed to be owed about $60 million.
RMWAH was formed in 2009 as a “business based on strategic investments and partnerships to grow the Australian agricultural industry in an intelligent, commercial and environmentally responsible manner,” including the emerging opportunities created in the Federal Government’s Carbon Farming Initiative.
The CFI offset scheme was designed to allow farmers and land managers to earn carbon credits by storing carbon or reducing greenhouse gas emissions on the land. Credits could then be sold to people and businesses wishing to offset their emissions. Legislation to underpin the CFI was passed by Federal Parliament in August 2011.
In July 2011, RMWAH purchased the 517,000ha Henbury Station in Central Australia for a carbon offset project, with assistance from the Australian Government’s Caring for our Country Program.
The $13 million price, including $9.1m of Government funds, was considered way over the odds for the property, based on grazing land value at the time.
“The emergence of the Australian CFI has provided the structural framework for the Henbury project while partnering with the Australian Government has given the project high visibility and ensured that organisations such as CSIRO, the environment departments of the NT and Australian Government, and NGOs have seen the project as a potential template for similar initiatives,” RMWAH said at the time.
Henbury become a protected area and part of Australia’s National Reserve System with a conservation covenant registered on the title. In doing so, RMWAH planned to cease all cattle grazing (later reversed) and pledged to “actively manage the former pastoral property to control fire, water, weeds and feral animals to support the regeneration of native vegetation. This will in turn see RMWAH generate biodiverse carbon credits, with this income used to fund Henbury’s long-term conservation, thus establishing a new model for carbon farming and biodiversity conservation in the rangelands,” the company said.
RMWAH bought its first property asset, La Belle/Welltree southwest of Darwin in October 2008, for a reported $72.5 million, also considered extremely expensive, at the time.
The company also owns smaller land assets including Mirage Plains, near Cunnamulla bought for about $20 million, and the Inglewood Farms organic poultry business on the NSW/Qld border.
The receivership does not affect the well-known RM Williams fashion and boot retailer, which Mr Cowley also owns in partnership with fashion house, Louis Vuitton.
"These entities will continue to trade on a business as usual basis," PPB Advisory said in a statement.
Last year, Qantas announced that it planned to purchase up to 1.5 million carbon credits from RMWAH’s Henbury Station project over the next five years.
Project becomes ‘curiouser and curiouser’
Under an opinion piece published last July titled “Henbury Station carbon farming initiative gets curiouser and curiouser,” Australian Farm Institute’s Mick Keogh said the Qantas announcement added to the mystery surrounding the project and exactly how it would work.
“Based on the comments made by a Qantas spokesperson, the volume of credits purchased will depend on the number of Qantas passengers who voluntarily opt to offset the emissions associated with their travel – so it will not actually be Qantas that is purchasing the credits but their passengers,” Mr Keogh said.
Qantas at that time charged passengers $9.22/tonne of emissions offset, so this deal had the potential to be worth almost $2.8 million per year (presuming Qantas did not take a cut of the $9.22 for 'administrative' costs) for the Henbury project.
“However, there is currently no Carbon Farming Initiative (CFI) methodology that is applicable to the Henbury project,” Mr Keogh said at the time.
“Information provided by the government suggests that the credits will be generated from additional carbon sequestered in soils and vegetation as a consequence of the removal of the cattle from the land.”
“The Australian Government has a conflict of interest in relation to the development of a CFI methodology for this, because it reportedly funded $9 million of the $13 million purchase price of Henbury Station. In any event, even if a methodology is approved, it seems the carbon offsets created can only be recognised in the voluntary carbon market, and not the mandatory market that commenced on July 1, 2012,” he said.
Even more curious was the fact that the announcement about the Government funding for the Henbury Project indicated that the land had been added to the national reserve system: “Henbury will now be protected forever as part of Australia’s National Reserve System – our most secure way of protecting native habitat," it said at the time.
Under Kyoto Protocol emission accounting rules, carbon sequestration occurring in conservation areas is not counted as part of a nation’s emission inventory.
“So if Henbury Station is now part of the national reserve system, it presumably cannot be used to generate carbon credits – although whether this applies in the case of the voluntary carbon market is not completely clear,” Mr Keogh said.
“If national parks can be used to generate carbon credits, then there is a great opportunity waiting the Government to take advantage of Australia's 100 million hectares of national parks to make some serious money. And any landholders who have extensive areas of land with native vegetation on that land and that previously thought it was useless might now be able to sell their livestock and make some real money by not farming.”
Henbury project chief executive, David Pearse, left the business under a cloud late last year, followed by an announcement by RMWAH soon afterwards that it was going to completely restructure its carbon conservation project model.
While locals cattle industry stakeholders were opposed to the Henbury project as a ‘monumental bushfire risk’, conservationists held high hopes that the carbon market project could become a template for similar activity elsewhere.