Essential Oils (QEOL) Tea Tree Project, which was managed by North
Queensland Tea Tree Farms Ltd and North Queensland Tea Tree Farms No
2 Ltd (NQTTF), has suffered from the over-supply of oil in the
market place and the subsequent downward spiral of the wholesale
price of tea tree oil. It became apparent during September 1999 that
for the QEOL Growers to remain in business, there needed to be an
entire re-think of the position for Growers and their relationship
with any financier that had funded them as tea tree oil producers.
The following extract from the December 1999 financials of QEOL
reflect the position that QEOL and the Growers were in:-
the end of the wet season 1999 on the Atherton Tablelands,
QEOL entered into a distilling contract with The Oil Fields Pty Ltd
potentially one of Australia’s largest producers of Tea Tree oil.
We negotiated a fee of $14.00 per cubic metre of bio-mass processed
through the facility and agreed a schedule of distilling which saw
QEOL processing to full capacity at around 350 cubic metres per day.
This was as fast as two and sometimes three harvesting contractors
could bring material to the distillery for processing. It also
required three bin haulers working ten hour shifts and a prime mover
making between 6 and 7 visits a day to the distillery delivering
material in 62 cubic metre loads. The by-product of this activity
saw a mountain of spent tea tree mulch accumulating at the
distillery growing at the rate of about 100 tonnes a day.
this was going on QEOL was also growing seedlings for The Oil Fields
and had a contract to supply 2,000,000 seedlings at $0.08c per
seedling. Seedlings were being prepared in batches of 200,000 –
300,000 at a time. QEOL extended the nursery to cater for this
activity and to grow seedlings for NQTTF farmers to plant out the
second property that was being prepared. QEOL paid a deposit for the
purchase of the second property during Easter 1999. The directors of
QEOL made a decision to leave the harvest of NQTTF farms until The
Oil Fields had finished their harvest or the first week of August,
whatever came first. This decision was taken on the basis that the
cash flow from Oil Fields was meeting our running costs and
providing a reserve of capital. Additionally, the price of oil was
under pressure because of a surplus of oil in Europe, and our buyers
were cautious about purchasing earlier in the year. The trees would
also benefit from some extra months growing before they would be
this time arrangements were made to purchase an additional tractor
with purpose built narrow wheels to enable a clearance over the
trees as they grew so that weed control and fertilizers could be
applied on demand.
Changes in State of Affairs
the end of the financial year 1999 Oil Fields reported to QEOL that
they were having trouble purchasing sufficient storage drums to
continue harvesting and distilling. We took the opportunity to do
some maintenance work on machinery that was showing signs of
over-use. After a further 3 weeks Oil Fields announced that they
were able to go back to work and we agreed to, subject to them
paying their outstanding invoices which amounted to about
$80,000.00. They advised they would attend to the outstanding
invoices soon as we started distilling again. We refused. As their
invoices were invariably for amounts of $25,000 every six days, and
they had just taken delivery of some seedlings it only took two and
half weeks to discover that QEOL was going to suffer cash-flow
problems itself if it could not help get Oil Fields back to work, to
pay their invoices and to continue to provide cash flow for QEOL.
Following the harvest of NQTTF farms the cash available from the
sale of oil is still outstanding but is expected to barely cover the
cost of production. At time of writing the future for QEOL is
uncertain as it has no cash to settle accounts other than to sell
off any assets.
The directors of
NQTTF resigned as Farm Managers during September 1999 and
recommended to the Growers that as an alternative farm manager
had come forward (Buslet Pty Ltd) the Growers should adopt Buslet as
their new Farm Manager.
Buslet's plan was
To secure an
existing tea tree plantation, preferably in the centre of the
established tea tree farming community in The Northern Rivers of
NSW, and license it for the use of Growers.
To license a
farm in Virginia currently producing hydroponic fruit and
vegetables and subsequently purchase a farm income stream to
address the repayments of the financier, Bellcap Pty Ltd.
approval from Bellcap to substitute an alternative farm income
(other than Tea Trees) to service the Grower's loan commitments.
To buy some
land in the Northern Rivers area, in partnership with an
existing plantation and develop it as an essential oils (non-tea
Buslet entered into Heads of
Agreements with all the necessary parties to put in place all four
steps of their plan. Buslet has acted as agent for Natures Gold
Co-operative Limited - who will take over the role that Buslet
started as Manager of the Growers farms. The picture on the
left shows the plantation that the
Co-op has licensed on behalf of Growers. The land that is being
purchased is in the centre foreground of the photo extending out of
frame towards the camera. The Co-operative will develop the land in
conjunction with Byron Bay
to produce a range of oils. The photo on the right shows the
elevated position of the land upon which one of the Co-operatives'
partners intends to build tourist accommodation so that guests can
stay amongst the plantation with an outlook towards the coastline.
The land that Natures
Gold Co-operative is developing for its members has reached the
stage where stock varieties have been tested and orders for
seedlings have been placed. These seedlings will go in the soils on
the new property that is appropriate for the different species
that have been selected. Plant selection has been carried out with
the emphasis on oils that are used in fragrances and flavourings in
the food and beverage area. The photo on the left shows the
nursery with John Fitzgerald of Byron Bay Essential Oils.
The photograph on the
right is taken on the property of Byron Bay Essential Oils and shows
the good growth of the tea trees. In the foreground is Gwen Lewis
who has been responsible for deliveries and despatch of the oils
together with quality control in the distillation process.
As at 28th February
2002, Buslet/Nature's Gold has received $128,000.00 in management
fees from Growers who had accepted Buslet's management services.
Cash at bank as at 28th February 2002 is $5,200.00
Activity for 2002
With 6 species of essential oil
plants being planted around Easter 2002 and a further 4 species
after Winter 2002 the new farm at Tyagarah is on track for a harvest
before Christmas 2003. The current market price for the 10 varieties
of oil that is being produced on the farm range up from $26 per kilo
for Citriodora to around $400 per kilo for Anisata. As no one can
predict what the price of any one oil will be into the future our
farm managers' plans for planting a wide variety looks to be a sound
Some of the varieties do better in
the lower parts of the property which is prone to flooding whereas
the Anisata, in particular, prefers being planted on a slope and is
clipped rather like a hedge.
The new road passing the farm is
nearing completion with traffic flowing on half of the road. Once
completed, the travel time from the Tweed Valley will be reduced to
just over an hour.
On a recent trip to
South Africa, Nature's Gold member, Keith Platt (pictured right),
visited one of the factories that process our tea tree oil into a
finished product. The factory was in a suburb of Johannesburg called
Wadeville and there a company called Burnshield (Pte) Ltd
manufactures a range of gels and blankets for home and industrial
To the left is a
photo of Burnshield's production manager with one of our drums of
The factory employs a work force
of 44 (mainly black Africans) who manufacture and package all of
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