We last featured FEA in June 2008 as our provider of choice for investors looking to invest in the tax efficient forestry sector. Since then, FEA went on to win AAG’s MIS product of the year for their 2008 (option 1) project and remains our provider of choice in 2009.

With much of the turmoil in agribusiness relating to companies established as MIS operators 1st and Foresters 2nd, we feel that FEA continue to offer one of the best opportunities for investors considering tax deductible forestry.

FEA’s relatively low debt levels and vertically integrated operation, means that unlike Great Southern and Timbercorp, they are not reliant on MIS inflows as their only means of survival. More than ever, we feel that this year’s emphasis should be on established providers that have actually produced investor returns and whether these returns have met or exceeded expectations.

All forestry investments deliver the same initial taxation benefit but not all produce the same returns.

Having distributed its final harvest for the 1993 project in June 2008, and a pre-tax return of 13.3%pa, FEA are able to demonstrate a track record, something that most Agribusiness providers have yet to provide.And with FEA’s 1994 project‘s preliminary results indicating a pre-tax return of 13% per annum, its difficult to argue that its all about the tax deduction. All forestry investments deliver the same initial taxation benefit but not all have been able to deliver the returns.We feel FEA’s history of forestry first, a proven track record and its aim to produce higher value saw wood continues to make this an attractive investment. Offering 5 investment options, FEA are able to offer investors access to this investment from as little as $3,450, with a 100% tax deduction and estimated pre tax returns of up to 14.14%pa (Adviser Edge Estimate). (08/09 tax year offer closes 26th June).

Option 1 – Eucalyptus hardwood. 13 year term with an anticipated thinning (income) in year 9. Minimum investment $3,450. FEA Estimated Return on Inv. (IRR) 11.95%pa (pre tax)* Option 2 – Eucalyptus hardwood.16 year term, anticipated thinning in year 9. Min. investment $3,450. FEA IRR 11.51%pa (pre tax)* Option 3 – Radiata pine softwood.25 year term, anticipated thinning in years 13 & 18. Min. investment $3,450. FEA IRR 7.59%pa (pre tax)* Option 4 – Khaya Mahogany.18 year term, anticipated thinning in year 11. Min. investment $3,450. FEA IRR 11.71%pa (pre tax)* Option 5 – Diversified forestry offer – A combination of options 1, 2, 3 & 4 at a discount to the total cost of the individual Woodlots. Minimum investment $23,000 plus GST. FEA IRR 11.32%pa (pre tax)*

* Estimated Return on Investment (IRR) is taken directly from FEA’s Grower Returns Projection Calculator using their standard assumptions for a 46.5% rate taxpayer. Further details including research reports and details of financing can be downloaded here