Olam International has catapulted itself into top rank among Australian almond producers, and third place in the world, by buying 9,800 hectares of orchard land out of administration.

The coffee-to-cashews group, in its third acquisition in three months, paid Aus$128m in cash for the Victoria land, which is expected to product nearly 27,000 tonnes of almonds in five years' time from the 8,100 hectares already planted.

The project, on which Olam forecasts spending Aus$25-30m in development costs over the next three years, will cover its costs in the first year of the deal and achieve annual pre-tax profits of about Aus$50m  when it has bedded down.

The assets were developed by Timbercrop, which went into voluntary liquidation earlier this year.

Export potential

Ashok Krishen, the head of Olam's edible nuts operations, said that the orchards would provide the group with "an accelerated entry into this market at an attractive price".

He added: "Australia's proximity to key export markets of China and India, will position us very well to capitalise on the increasing export volumes."

Singapore-based Olam, which already has cotton, dairy, grains and wool interests in Australasia, said it that it acquired rights to 40.8bn litres of permanent water as part of the deal, "hedging" the risk of supply shortages from the Murray and Goldbourn river systems used on a day-to-day basis.

Mature orchards typically require 10-12.5m litres of water a year to hit yield potential, the group added.

Growing market 

Global consumption of almonds grew by 8.3% a year from 2001-07, spurred by a perception of healthy food, increased use in bakery and confectionery products, and an "aggressive marketing push" by California, Olam said,

The US is the biggest producer, with an 85% market share, followed by Europe with 9% and Australia with 3%, USDA data show.

However, Mr Krishen said that Australia was "the fastest growing almond producer in the world and is expected to become the number two producer globally by 2015".

The main consumers are Europe, responsible for 40% of global demand, and the US, with a 29% share.

Olam's acquisition comes two weeks after it paid about US$10m for a 14% stake in NZ Farming Systems Uruguay from Sydney- based Hunter Hall Investment Management, which in August unveiled a US$45.9m loss.

Olam shares closed up Sing$0.01 at Sing$2.32 in Singapore.