PrimeAg's sad demise

Now all he has to worry about is Fairfax Media.

With the unhappy saga of PrimeAg (PAG) now relegated to history, chairman Roger Corbett can concentrate on the once great newspaper giant as it continues to battle the onslaught of a technology that threatens its very existence.

But the PrimeAg experiment is every bit as riveting a fable about Australia and where it finds itself in the world. One of the great food producers and rural exporters we may be. But when it comes to delivering profits to rural investors, the flirtation between the corporate world and the bush is an ongoing litany of failure.

As at 11.36am this morning, PrimeAg became yet another. Its shareholders, its board and its management have thrown in towel, approving a scheme of arrangement that will see its third biggest shareholder emerge with control .

A separate deal sold four of its prime properties to a privately owned pastoral company. It followed six unhappy years of substandard returns, a share price that sank well below asset values and upheaval at board level.

Floated in 2007 with hopes of capitalising on our geographic good fortune as a food producer in the fast developing region in the world, the listing coincided with the end of a decade of extreme drought.

It was a compelling story and one snapped up by institutional investors, many of whom have been burnt before.

But the returns on rural enterprises are erratic, facing a lethal combination of climatic variability and volatile prices. As a result, stockmarkets attach a discount to the assets, raising the legitimate question as to whether rural businesses are suited to a world that demands a consistent growth in revenue and earnings.

Elders (ELD) lurches from one crisis to another. Australian Agricultural Co (AAC) similarly has endured years of poor returns. Ruralco (RHL) is among the few that can lay claim to success.

Perhaps the reliance on government support from the rural sector has been its undoing. While our miners have moved abroad and conquered the world, our rural marketing and export corporations, once set free from government ownership, were all bought by foreigners with sharper commercial instincts.