Poppy producer raises $20m

10 Jan, 2014 04:45 AM
TPI hopes to contract 2000 hectares in the state and 500 hectares in Northern Territory in 2014

AN company rocking the boat among Tasmania's poppy production industry has lined up $20 million in funding from high-profile investors as it seeks to expand interstate and ­overseas.

TPI Enterprises embarked on the capital raising, which is fully underwritten by Washington H Soul Pattinson, and hopes other investors such as Ellerston Capital and fund manager Simon Marais will boost their stakes in the company to maintain exposure to the $40 billion global pain relief market.

TPI chief executive Jarrod Ritchie said the business broke even for the first time in 2013, after it was set up in 2007.

Mr Ritchie expects TPI to hit revenue of about $35 million in 2014, The Australian Financial Review reports.

Tasmania is the only place in Australia where poppies are legally grown, although trials are underway in ­Victoria and the Northern Territory.

The apple isle produces just over half of the global supply of the starter ­material used in pain relief drugs like morphine and codeine. TPI accounts for about 10 per cent of that supply, while drug giants GlaxoSmithKline and Johnson & Johnson owned­ ­Tasmanian Alkaloids supply the rest. The ­market is highly regulated – it took TPI three years to gain its licence – and that is one of the attractions, WHSP executive director Peter Robinson said.

"The fact that it's only one of nine companies globally that has a licence to produce morphine and codeine [shows] the barriers to entry are quite high," Mr Robinson said.

"We think obviously the company has a very bright future. We do believe that the demand for this product will continue to increase, particularly as the population ages across the world."

TPI has raised about $80 million so far with the help of chairman Ross Dobinson, who also chairs Acrux.

WHSP, which has invested in previous rounds and owns 20 per cent of the company, was drawn to TPI's "unique and ­patented technology which puts it in a very strong position ahead of its ­competitors," Mr Robinson said.

TPI's licence allows it to contract farmers who it supplies with seeds, agronomic advice, harvesting and transport. In its factory in rural North Tasmania that employs 70 people, TPI purifies poppy straw into a white powder known as narcotic raw material, which it exports to drug companies.

Mr Ritchie claimed TPI's processing technique was superior because it uses water as opposed to solvents to extract the concentrate.

"Our cost of goods and our environmental footprint is significantly lower," he said.

But the company has struggled to get enough straw to run its production facility to its full capacity.

Mr Ritchie said this was due to adverse weather and not enough sufficient land in Tasmania, although it is understood some farmers are reluctant to support the company. The two larger producers had 10,000 hectares under management each in 2013, compared with TPI's 4000 hectares.

The company applied to import poppy straw from Turkey to supplement its production, which was opposed by the local farmer's lobby. Now TPI has alleged misleading conduct and that it was defamed by the Tasmanian Poppy Growers Association. The group declined to comment while the action is before the courts.

In December 2013 the Victorian lower house passed legislation to allow poppy cultivation. Pending final approval TPI hopes to contract 2000 hectares in the state and 500 hectares in Northern Territory in 2014.

Mr Ritchie will also fly to Portugal in the coming weeks to set up crop trials.



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Sorry did i get it wrong..? Rankins Springs is still open..?!
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No doubt a few frosted Freddies out there who will wish they had taken a closer look at the AGC
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Matthew, I was wondering if you had followed up this story with the farmer after the whole