February 7, 2017

Australian Food & Fibre (AFF), one of the largest farming operators in Australia, has agreed to acquire the Koramba cotton farm near Goondiwindi, Queensland from Dean Phillips, owner of the U.S.-based HNB National Bank, and president and chairman of T&C Bancorp, in a deal reported to be valued at more than $100 million.

Acquired by Phillips in 1985, he converted the Koramba property from grazing land to irrigated cotton production, and later vertically expanded the business with the addition of four cotton gins in 1992. Totaling 14,166 hectares, the operation includes 5,400 hectares of developed flood irrigation land, 971 hectares of dryland cropland, and 7,795 hectares of grazing, irrigation and storage land, according to The Weekly Times. The sale also included water licenses for 31,105 megaliters of water and a cotton ginning operation with the capacity to process 140,000 bales per season.

The sale of the four adjacent properties that make up Koramba was originally announced in April of last year. At the time of the listing, Margaux Beauchamp, corporate finance director with BDO, the firm engaged to advise Phillips on the sale, said in a statement that Koramba’s owners were “among the Americans credited with the establishment of Australia’s modern cotton industry,” adding, “The American legacy has also established a very positive can-do industry culture that has resulted in the Australian cotton industry achieving productivity gains in excess of six percent per annum.”

AFF and Webster

AFF is the largest tenant of U.S.-based TIAA Westchester in Australia, reports Australian Financial Review. In 2016 the company posted a full-year net loss of $9.7 million, after seeing  profits of $13.3 million in 2015 – however, despite the company’s sheet, it saw a successful season, with cotton crop yields as high as 15 bales per hectare, placing the operation high in the top 20 percent of the country’s producers.

AFF also controls a 15.8 percent stake in Webster – a listed agricultural company on the ASX that has grown though acquisitions over the past 180 years to become the largest producer of walnuts, and one of the largest irrigated farming operations in the southern hemisphere with more than 35,000 hectares of cotton, corn, and cereals cropland, livestock production, and more than 200,000 megaliters of water rights.

Last year saw the company post a 158 percent increase in operating profits before tax of $14.9 million after acquiring 220,000 hectares of farmland and 150,000 megaliters of water rights between Queensland and New South Wales the year before. Despite achieving this scale, the company has been looking to expand further.

Still Looking for Cotton?

Some of the largest Australian cotton property sales to happen in recent years include the $30 million purchase of the Undabri farm in 2014 by Orient Agriculture, and the $232 million acquisition of the Cubbie Station in 2012, according to AFR.

However, one of Australia’s largest cotton producers – Eastern Australia Agriculture, has relisted its $180 million farmland portfolio for the third time after listing the portfolio in September 2013 and again in November 2014, at the behest of investors who are looking to gauge the value of the land.

The portfolio features the Kia Ora and Clyde properties in southern Queensland, which boast exposure to a mature water market, as well as significant soil and farming diversity. The property is 37,584 hectares, including 7,860 hectares of wheat planted in 2015, and 12,800 hectares of irrigated land with 252,420 ML volumetric limit per year, making it one of the largest irrigation assets in the country. Colliers International reports that the land has the potential to yield of 168,000 bales of cotton and, beyond wheat and cotton, offers opportunities to grow barley, chickpea and sorghum.

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com