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BRON WOLFF
THE BOTTOM LINE Tasmanian farmers will plant about 12,000
hectares of poppies this season, less than half the 2013 harvest,
in response to U.S. efforts to restrict consumption of opioid drugs. Poppies in bloom at a
farm in TasmaniaUnited Nations conventions on drugs. Australia’s
production of poppy straw plunged to 172 tons in
2015, from 268 tons a year earlier.
Tasmanian farmers will plant about 12,000 hect-
ares of poppies this season, less than half the 2013
harvest of about 28,000 hectares, according to
Poppy Growers Tasmania Inc., a trade group that
represents about 90 percent of the state’s producers.
The decline reflects a steep drop in what processing
companies are willing to pay: The crop harvested in
January and February of this year was worth about
A$35 million ($27 million) at the farm gate, compared
with about A$100 million after the 2013 harvest.
“Growers are now looking at the price reduc-
tions and asking whether it’s a viable operation,”
says Keith Rice, chief executive officer of Poppy
Growers Tasmania, which estimates its member-
ship has fallen to about 450 from 850 in 2013. He
declined to say how much members typically receive
for their crop.
Tasmania is facing more competition: Three
states on the Australian mainland have eased restric-
tions on poppy growing in recent years. Farmers like
Williams are also having to contend with changes
along the supply chain, as two of the country’s three
licensed poppy processors have gone through own-
ership changes in recent years. GlaxoSmithKline Plc
sold its business to Sun Pharmaceutical Industries
Ltd., India’s largest drugmaker, in 2015. SK Capital
Partners LP, a New York-based private equity firm,
bought Johnson & Johnson’s Tasmanian Alkaloids
Pty Ltd. subsidiary last year. Prices were not dis-
closed in either transaction.
Sun Pharma declined to comment on plans for
its opiates business. Tasmanian Alkaloids says it’sexploring alternatives to opiates. In May it formed
a partnership with AusCann Group Holdings Ltd.,
a medicinal marijuana company from Adelaide, in
South Australia, to manufacture and distribute can-
nabis products.
The smallest Australian poppy processor,
Melbourne-based TPI Enterprises Ltd., also is inter-
ested in moving into marijuana: It was recently
granted licenses by the Department of Health for
medicinal cannabis cultivation and research. TPI isn’t
giving up on opioids, though. It recently completed
the acquisition of the opiate ingredients and tablets
business of Norway’s Vistin Pharma ASA, a deal that’s
expected to boost annual revenue to A$48.9 million
in 2018, according to analyst estimates compiled by
Bloomberg, up from A$10.5 million in 2016.
TPI Managing Director Jarrod Ritchie says that
despite the opioid backlash in the U.S., companies
like his still have room to grow. “Ninety percent of the
world’s population doesn’t get access to the cheap-
est pain relief product, which is morphine,” he says.
As they wait for a rebound in demand, Tasmania’s
poppy farmers need to focus on becoming more effi-
cient, according to Rice of Poppy Growers Tasmania.
Some growers have managed to boost their yields
to an average of about 40 kilograms of active raw
material per hectare, up from 25kg five years ago.
“It is a really, really tough marketplace out there
and it doesn’t look like it’s improving,” he says. “The
only thing at the present time to make it viable is
increasing productivity. That’s the message we’re
giving our people.” —Bruce Einhorn