SELECT HARVESTS LIMITED — Environmental & Social Information 2007

May 13, 2007

SELECT HARVESTS

SELECT HARVESTS LIMITED SHAREHOLDER UPDATE

10 May 2007

Dear Shareholder,

The purpose of this communication is to provide an update on future orchard developments, water management strategy for the coming irrigation season, and an incident on our orchards in relation to endangered birds.

FUTURE ORCHARD DEVELOPMENTS

MIS Update

The Government announced on the 6th February 2007 that the Australian Tax Office "ATO" has reconsidered its interpretation of the current laws in relation to agribusiness Managed Investment Schemes "MIS" entered into after 30th June 2007. If this new interpretation is implemented MIS activity in new almond projects will be curtailed. Investments in MIS projects covered by an existing product ruling will not be affected by the changes.

The ATO announced, on $27th$ March 2007, transitional arrangements for agribusiness MIS. These arrangements delay by one year, until 1st July 2008, the application of the ATO reconsidered view. The ATO announcement stated "the decision follows consultation with agribusiness industry on their forward arrangements and will give industry time to adjust their financial arrangements accordingly" and "It should also allow sufficient time for our reconsidered view to be tested in the courts". The ATO is seeking industry assistance to identify a suitable case to test their new interpretation in the courts. The ATO has advised it will look to expedite the test case through the courts but no definitive timing is available. If the test case is finalized prior to $30^{\text{th}}$ June 2008 and confirms the tax office view, product rulings will not be issued past the date of the decision. The outcome of these changes is that MIS almond projects will continue in 2007 and 2008 (subject to the issuing of a product ruling prior to the determination of the test case in the ATO favour). Further MIS developments after 2008 will be dependent on the outcome of the test case.

Current Projects

SHV is currently developing approximately 11,700 acres of new almond orchards (2007 projects) of which approximately 10,000 acres relates to a MIS project, which has an existing ATO product ruling in place. We expect to develop almond orchards for a 2008 MIS almond project under the transition arrangements. The area to be developed is yet to be finalized but we anticipate it will be a minimum of 5,000 acres.

Completion of the 2007 projects will increase the area of almonds under our management by 43% to 38,500 acres. In full production this acreage will produce in excess of 45,000 tonnes of almonds annually compared with an estimated 11,800 tonnes from the 2007 harvest. We have recently commenced the construction of a $32 million facility to provide processing capacity for this future crop growth.

Future Developments

Australia is a world competitive almond grower with significant advantage in terms of crop yield and product quality, which allows it to compete effectively in global markets. Almond farming is highly mechanized and requires scale and capital to maximize efficiencies. The development of corporate farming in recent years has provided this investment and currently accounts for over 50% of Australia's orchards.

We remain of the view that almonds are an attractive long-term investment and we will continue to develop and manage new almond orchards in the future, and to provide development and management services to our existing partners as they restructure their investment products to take account of the changed environment. At the same time we are looking to target alternative investment structures and to expand our activities into other tree nut crops. We are currently investigating a number of initiatives and opportunities to facilitate our future development plans and believe an initial annual target of around 5,000 acres of new orchards to be feasible.

We have for sometime been investigating the development of almond orchards in West Australia and are now in a position to move this project forward. We are planning a stage 1 development of approximately 3,000 acres in 2008. The project and the timing of the plant out are subject to the success of a water license application.

WATER ISSUES

Water Management

In the 2007/2008 irrigation season SHV will manage approximately 38,500 acres of almond orchards (including 2007 new developments) around Robinvale in North West Victoria. This area has ideal climate and soils for high yielding almond production but low annual rainfall necessitates that the majority of the water requirements for our orchards are provided by irrigation systems, which draw water from the Murray River water system. The irrigation systems we operate are modern and efficient and incorporate sophisticated soil moisture monitors. This enables multiple low volume applications over a day, ensuring maximum plant uptake and minimal drainage through the soil. In turn this minimizes over watering, maximizes crop yield, and limits environmental impacts. Almonds are one of the highest value converters of water in respect to the gross revenue dollars produced, averaging $1,900 per megalitre over the last three years.

Water Rights

Access to Murray water in Victoria is secured by the holding of a permanent water right, which provides the entitlement to pump a specific quantity of water from the river over the irrigation season (July 1 to June 30) each year. Permanent water rights can be purchased from existing holders or alternatively irrigators can lease (temporary trade) water for a particular season from a permanent holder.

The annual water requirements of SHV managed orchards are predominantly supported by permanent Victorian water rights. For our own orchards the water rights are owned by SHV and for investor owned orchards it is the responsibility of the specific investor or project manager to ensure sufficient water licenses are available.

Water Allocation Against Entitlements

Water entitlements are subject to the availability of water in a particular season and this process is managed by the provision of annual allocations. Water availability is dependent on the level of dam storage at the beginning of the season and the timing and volume of rainfall on the catchment areas and consequent inflows to dam storage over the July to November period. Typically the season will start at a low allocation of around 10% of full entitlements and further allocations are made through the season up to full allocation of 100%. Water not used in a particular irrigation season is carried forward in dam storage as reserves. Victoria's 2006/2007 final allocation for Murray Water is 95% of full entitlement. This is the first time on record that Victorian permanent water rights in our area have not reached 100% allocation by the end of the season.

2007/2008 Irrigation Season

The 2006/2007 irrigation season experienced record low winter and spring rainfalls and inflows. This has exhausted drought reserves and at the start of the 2007/2008 season reserves in all storages will be extremely low. As a consequence it is unlikely there will be any allocation made at the commencement of the season. As a one-off drought response the Victorian government has introduced carryover provisions for the 2007/2008 irrigation season. Currently any allocated water entitlements not used in the current season fall back into the following seasons communal pool. Carry over provisions will allow entitlement holders to carry over unused 2006/2007 allocation to 2007/2008. This will allow irrigators, particularly those with vines and trees, the ability to water their trees in the event 2007/2008 commences with zero allocation. The availability of carryover water is dependent on there being sufficient river flows at the time.

Goulburn-Murray Water "GMW" the Victorian water resource manager has announced it anticipates the initial 2007/2008 allocation will be made on $15th$ August 2007 and given average inflows to that date this will be 7% of annual entitlement for the Murray system. This allocation will be progressively increased over the season based on rainfall received. Under normal weather patterns most rainfall and runoff to storage dams occurs in the August to October period and allocations generally increase most rapidly at that time of the year.

GMW has provided the following allocation outlook for the season

• $\bullet$ July 2007 0%
• Mid August 2007 assuming average inflows 7%
• October 2007 assuming average inflows 5 chances in 10 the allocation will be 52% or higher, 2 chances in 10 of 100% and 1 chance in 10 of no allocation
• February 2008 assuming average inflows 5 chances in 10 the allocation will be 100% and 1 chance in 10 that the allocation would be lower than 39%

Almond trees are dormant in July and blossom in August when the crop is set. Highest water usage occurs in the summer months of November to February (64% of annual requirements) as the crop develops.

SHV 2007/2008 Water Management Strategy

SHV Owned Orchards

Due to some orchards yet to reach maturity and full water usage, we expect to hold entitlements for approximately 120% of our 2007/2008 requirements, which will allow us to irrigate normally provided we receive at least an 80% allocation. This entitlement includes a component of 2006/2007 carryover water, which will cover our July and August requirements, and we plan to utilize the initial 2007/2008 allocation to progress the trees through blossom, crop set and early nut development through to the end of September. This will facilitate a normal irrigation / nutrition program during that period allowing normal crop development to that date. By October we expect to have a better understanding of potential season allocations and availability of temporary trade water. We have developed a number of models for the balance of the season based on various levels of water availability. Our first option, if allocations fall below 80%, will be to temporary trade any shortfall in our requirements, with the intention of protecting the crop and the future productive capacity of the trees.

Investor owned orchards

It is the responsibility of the particular investor or project manager to secure water entitlements for their orchards. We are working closely with these groups to put in place similar strategies to those outlined for SHV owned orchards.

The above strategies are based on current available information and will need to be modified if circumstances change.

Future Water Management

SHV is an efficient and environmentally conscious water manager and has adopted various improvements in technology and management techniques in recent years to improve efficiency. In the coming year we are investing in a number of irrigation management trials, adopting a number of new technologies aimed at even more efficient and lower water use.

ENDANGERED BIRDS

Select Harvests Limited and Kyndalyn Park Pty Ltd have been charged with offences under the Wildlife Act 1975 in relation to taking protected wildlife. The case is set for mention at the Robinvale Magistrates court on 22nd May 2007 and our legal advisors have requested a copy of the prosecution brief with further and better particulars.

Select Harvests Limited were advised by the Department of Sustainability and Environment "DSE" in late November 2006 of the destruction of parrots of a protected species near an almond orchard managed by the company. The company has cooperated fully with the DSE investigation into this incident and this co-operation has been formally acknowledged by the DSE.

The company regrets that this incident occurred and has informed the DSE that the employees involved were not acting under instruction from the company. The DSE was also informed that the destruction of the parrots was contrary to the policies and procedures of the company in place to protect wildlife. The DSE has been informed that, following an internal investigation by the company into the incident, two employees who were involved were dismissed for serious misconduct.

Prior to the incident the company had comprehensive policies in place to protect wildlife. Since the incident the company has undertaken a full review of all policies and procedures and developed an updated wildlife management plan, which has been presented to the DSE for approval. The company has recently appointed an Environmental Manager who has responsibility for implementing and monitoring this plan. All staff involved in wildlife management at orchards managed by the company have been re-inducted in our policies and procedures and have undertaken extensive retraining.

The company takes its environmental responsibilities seriously, has a good record in environmental management to date, and adheres to environmental plans that preserve the habitat of native species. Almond developments have had a positive environmental impact. The change in land use and the increase in food source has seen a rejuvenation of remnant native vegetation and an increase in the wildlife population, in particular bird species.

Contact:

John Bird Managing Director 03 9474 3544