The state government and local farmers are pressing ahead with planning for a $30 million cotton gin in WA’s north despite a recent PwC study finding Katherine in the Northern Territory was a better location.
The state government and local farmers are pressing ahead with planning for a $30 million cotton gin in WA’s north despite a recent PwC study finding Katherine in the Northern Territory was a better location.
The PwC study, commissioned by the NT Farmers Association, evaluated five sites for a cotton gin, which is a necessary step toward having a viable cotton industry in Australia’s north.
“After detailed analysis of transport efficiencies, taking into account road and rail availability, and where the majority of cotton production will be beyond 2024, Katherine was considered the most optimal location to build Northern Australia’s first cotton gin,” the report concluded.
It said Kununurra, which is 850 kilometres by road to the port at Darwin, was limited by its relatively remote location and lack of direct access to export hubs.
However, local industry sources have disputed the PwC analysis, saying it does not properly reflect the industry’s economics.
Agriculture and food minister Alannah MacTiernan, who announced on Friday a $100,000 grant to the Ord River District Co-operative to develop a business model for a cotton gin at Kununurra, was dismissive.
“It is not surprising that a report commissioned by the Northern Territory Farmers Association would pick a Northern Territory location for a new cotton gin,” she told Business News.
The $100,000 grant, which will be matched by the co-op, followed the signing of a joint agreement with China-backed Kimberley Agricultural Investment (KAI) and local Aboriginal group MG Corporation for establishing a cotton processing facility in Kununurra.
The memorandum of understanding, signed by the three parties in May, sets the framework for a co-owned, industry-led facility.
Thirteen local farmers and industry stakeholders responded to a recent expression of interest calling for others to join the project.
The increased focus on establishing a gin comes after four years of successful growing trials in and around the Ord River irrigation area using a genetically modified cotton variety known as Bollgard 3.
“The positive results of these trials have given local growers a level of confidence that a commercial cotton industry in the region is viable and sustainable,” the co-op said in a statement.
The WA trials have expanded to about 1,000 hectares this year across more than half a dozen farms, with the picked cotton transported 3,500km by truck to Dalby in Queensland for processing.
Similar trials are underway in the NT, with most using dryland farming, which has a much lower yield compared to irrigated farms in WA.
Building a gin is expected to cost about $30 million.
For this to be commercially viable, it would require about 100,000 bales of cotton per year, which equates to 10,000 hectares of irrigated planting – or 30,000ha of dryland planting.
Industry sources say the higher yield on the Ord’s irrigated farms means much more cotton is likely to be grown near Kununurra.
Crucially, the ginning process separates the cotton lint from the cotton seeds and trash.
The cotton lint has about one-third the bulk, and one half the weight of picked cotton.
WA growers believe it makes more sense to transport the lint from Kununurra to the port at Darwin and back-fill the trucks with raw cotton picked around Katherine.
If raw cotton was transported from Kununurra to a ginnery at Katherine, the trucking cost would be much higher and there would be no backfill opportunity.
The cotton seeds would be used as feed for the cattle industry.
Ms MacTiernan said the WA government has been working with Ord farmers over the past 12 months and was making good progress.
“The expansion of the Ord River irrigation area was about creating sufficient scale of agriculture in the Ord to enable an agricultural industry with downstream processing to become viable,” she said.
“The vision of cotton and corn production for overseas markets and into local cattle production can be realised with the establishment of a cotton gin in Kununurra.”
The funding announcement comes one week after the Ord Irrigation Co-operative had a big court victory over the WA government, which had tried to slash the water allocation for Ord farmers by one third.
As Business News reported last week, the State Administrative Tribunal rejected the government’s plan after finding the Ord was set for major changes.
“It is reasonable to forecast, among other things, that cotton will become the dominant crop in the region over the next 10 years following large-scale successful cotton trials conducted by KAI,” the ruling stated.
The Ord Irrigation Co-operative was established in 1996 to supply about 60 farmers in stage 1 of the Ord River irrigation area, which covers about 15,000ha.
The Ord East Kimberley expansion project, developed at a cost of about $500 million, is designed to bring another 30,000ha under cultivation, though only about one-third has been developed so far.
KAI plans to develop up to 25,000ha in the region.
