CONTROVERSY over the impact of managed investment schemes erupted soon after they came into existence in 1998 as a result of Federal legislation.

In 1997, with growing resistance to the logging of native timber, the Federal Government, with Wilson Tuckey as Forestry Minister, announced an ambitious eucalypt plantation plan - Vision 20/20.

Under the plan, private investment would fund the timber plantings each year.

The Managed Investments Act of 1998 states that MIS "is a scheme in which people contribute money to acquire interest to benefits produced by the scheme".

With strong share market growth and a booming commodity market, investors began rushing to MIS projects, lured by the promise of upfront deductions to help ease their tax burden.

But as MIS projects proliferated, absorbing large tracts of prime farm land for forestry, so too did disquiet among farmers witnessing neighbours' properties being purchased and converted to forestry.

Companies such as Great Southern, Timbercorp and ITC (Futuris) have been at the forefront of the MIS sector.

Critics claim their forays into property markets have forced up the price of land well beyond the reach of family farmers.

Concerns have also been raised over MIS plantations' impact on catchment yields, pest control, fire hazards and the creation of timber monocultures and the resultant social impacts.

According to the Australian Agribusiness Group, investment in MIS grew from $300 million in 2002-03 to $1.02 billion in 2005-06.

In the last financial year, $1.08 billion was raised by MIS project managers across a variety of schemes - horticulture, cropping, timber and table grapes - with timber schemes receiving 65 per cent of the investment in 2007-08.

Last year the Australian Tax Office threatened to bring investment in non-forestry MIS projects to a halt with a new ruling denying investors upfront tax deductions.

Investors, affected by the looming spectre of the ruling, balked at investing in non-forestry schemes last financial year, with a 46 per cent drop in investment in wine grapes and a 4 per cent decline in horticulture, according to the AAG.

However, late last year a test case to decide on the new ruling went the way of the MIS companies, when the Federal Court ruled in favour of maintaining the status quo.