Major cotton processor, Queensland Cotton, has taken a big financial hit following the $303 million purchase of Twynam Agricultural Group’s water by the Commonwealth Government.
Queensland Cotton’s $10 million-plus gin at Collarenebri, bought specifically for ginning cotton for Twynam’s big Collymongle crop, effectively became useless after last week’s sale slashed the property’s ability to grow irrigated cotton.
Thirty jobs at the northern NSW site will also go unfilled even if better cotton markets and dryland crop opportunities encourage some rain-grown plantings in the area at a future date.
According to Cotton Australia chief executive, Adam Kay, 50 gigalitres of water was taken from the Gwydir Valley – the largest cotton producing valley in Australia – equating to 50,000 cotton bales of production.
“That’s $30m in a good year,” said Mr Kay, who talked of a new, “government-induced drought”.
There is a chance, however, the Collarenebri gin could be turned into a grain receival and storage site, according to Queensland Cotton.
The future of another of the company’s gins, on the Macquarie River at Warren, could also be threatened.
Chief executive of Queensland Cotton, Richard Haire, said the Commonwealth’s water purchase was “bloody disappointing”.
“It’s a bitter pill to swallow,” he said.
The nearby Mungindi gin on the Queensland border will survive because it does not rely heavily on business from Twynam.
Before Queensland Cotton took it over, Twynam originally owned the Collarenebri gin as part of a land and infrastructure package it acquired from former cotton grower and marketer, Colly Farms.
Queensland Cotton has three NSW gins, which make up about 15 to 20 per cent of the Singaporean-owned firm’s enterprise.
But NSW Water Minister, Phil Costa, has pushed the Commonwealth to buy more water from the other States, which meant the big licence buy-up could follow Queensland Cotton to its home State.
Mr Haire said communities, such as Moree, would be the hardest hit.
“We probably spend $1 million a year in the Colly gin,” he said.
“The (Federal) Government seems to have no plan whatsoever – the purchases are just arbitrary.”
A cotton equipment supplier, Rob Dugdale, Cotton Growers Services, Wee Waa, expected two of his workers to soon be unemployed because of the “gut-shot to rural communities”.
“We reckon there was 1500ha of cotton planted by Twynam last year and they have the ability to enormously increase that,” Mr Dugdale said.
He was unsurprised to hear Twynam would not sack workers but he said the water purchase will be felt when there was rain and more people were not employed by Twynam.
Moree mayor, Katrina Humphries, who was skeptical of the government’s purchase, said her district would revert back to a dryland cropping area and rely more on wheat.
“There was a life before irrigation,” she said.
Further coverage of the impacts of the water sale in The Land this week.
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