An ASX-listed agricultural company has leased a cattle station in Central Arnhem Land in the Northern Territory, with plans to trial dryland cotton on the property.
Duxton Farms has signed a five-year lease on the 141,000-hectare Mountain Valley Station — 540 kilometres south-east of Darwin — and purchased 2,700 head of cattle, as well as plant and equipment on the property.
A subsidiary of asset management firm Duxton Capital, the company owns nine properties comprising 24,000 hectares across New South Wales' Central West and Victoria's Swan Hill regions.
Duxton Farms grows a range of summer and winter crops on its NSW and Victorian properties including cotton, maize, wheat, and sorghum, as well as running cattle and sheep.
In an update to the ASX, the company announced it had leased Mountain Valley out of the need for "geographic diversification" of its agricultural portfolio.
"The board holds the view that the Northern Territory's land and water resources are fundamentally misprised relative to their productive potential," the ASX statement said.
Duxton to trial rain-fed cotton
Central Arnhem Land is mostly savanna woodland with little cleared land or cropping on the small number of pastoral properties in the region.
Duxton Farms plans to develop a broadacre cropping program at Mountain Valley Station with the hope of eventually growing cotton.
"The company will look to expand the station's cattle program by converting grazing land to dryland cropping land to grow fodder crops such as millet, lucerne, and sorghum, which will underpin an increased carrying capacity," Duxton's ASX announcement said.
"In the longer term, however, the board's strategy is to unlock significant value in the region's rainwater resources by trialling the cultivation of rain-fed cotton in the Northern Territory."
A spokesperson for Duxton Farms said it was too early to say how big the cotton trials would be, but it would "likely start in the tens and hundreds of hectares, and moving up from there, depending on the project's agronomic success".
"Cotton in the Northern Territory will likely never be as reliable or as high-quality as cotton grown in traditional areas in Australia, but the board believes it represents a better value proposition relative to the potential return on capital employed," the spokesperson said.
Some environmental groups have criticised the emerging cotton industry in the Northern Territory, claiming the crop will lead to more land clearing and water use.
Last week, the federal environment department confirmed it was investigating potentially unlawful land clearing by Northern Territory farmers looking to grow cotton.
Duxton Farms said it would focus on rain-fed cotton and "work with the natural environment" in its development at Mountain Valley.
"The company is focused on capturing and harnessing resources, which are abundant, rather than extracting and exploiting resources that are not," a Duxton spokesperson said.
"Growing cotton in the Northern Territory should be regarded as part of a transfer in Australia's agricultural industries of thirsty crops from areas currently under water stress to those with renewable water resources."
Duxton Farms will have to apply for a permit to clear land before any cotton is planted.
Northern Territory cotton farmers are expected to have planted around 15,000 hectares of the crop this season.
Mountain Valley owned by Duxton shareholders
Mountain Valley Station is owned by two of Duxton Farms' largest shareholders — the company's chairman Ed Peter and Richard Magides.
According to the company, Mr Peter assisted with initial research and analysis on the Mountain Valley lease but recused himself from deliberations by the independent directors.
Mr Magides is also a minority shareholder in another company with Northern Territory interests — miner Energy Resources Australia (ERA).
In October, Mirarr traditional owners criticised Mr Magides and other minority shareholders in ERA for supporting a suggestion that further uranium mining could occur in Kakadu National Park.
