Supporting your success

ContentsHorticultural investments in northern Western Australia...................................2

Gascoyne (including Carnarvon Horticultural District)......................................4The region’s strengths – land, water and climate....................................................4Industry overview.....................................................................................................6Markets – domestic and export................................................................................8Opportunities for investments..................................................................................9

West Kimberley..............................................................................................11The region’s strengths – land and water................................................................11Industry overview...................................................................................................13Markets..................................................................................................................16Opportunities for investments................................................................................16

East Kimberley and Ord River Irrigation Area................................................19The region’s strengths – land, water, infrastructure and market access................19Industry overview...................................................................................................21Markets..................................................................................................................23Opportunities for investments................................................................................24

Other important information............................................................................26

How to progress.............................................................................................26

Disclaimer.......................................................................................................27

Horticultural investments in northern Western AustraliaWestern Australia (WA) has a strong horticultural industry stretching from the Ord River Irrigation Area in the north to temperate production areas in the far south-west.

This enables production of year-round supply of many fruit and vegetables. Industry supplies fresh fruit and vegetables, grains and fodder for domestic markets in Australia and for export internationally.

The export sector has been critical to the profitability of many of Western Australia’s horticultural industries because the relatively small population limits the domestic market. Although WA’s population is expected to reach 4 million by 2050 and the national population will grow to 36 million, Western Australia will continue to produce more food than it can consume.

More broadly, global food demand is expected to rise by 77% in monetary terms by 2050 with growth in demand for food in Asia forecast to double. Asia’s population will account for 52% of the increase in world food demand. The greatest increase will be for vegetables and fruit, and protein.

With Western Australia’s well established export focus in horticultural products, it is ideally placed to contribute to both the future food needs of Australia and to the food security needs in Asia and the Middle East.

The Western Australian Government has a clear commitment to the expansion and diversification of the Western Australian agrifood sector particularly because of Western Australia’s position in the ‘Asia Zone’.

There is commitment to not only strengthen the sustainability of food production but also to ensure the growth in demand for reliable, diverse, safe and high quality fresh foods can be satisfied.

The State Government is also working to position Western Australia as a supplier of choice in Asia and the Middle East. Efforts have focused on opening new markets, boosting export production and supporting Western Australia’s strong and profitable horticultural industry.

In addition, investments in the Gascoyne Food Bowl initiative, the Ord River Irrigation Area (Stages 1, 2 and 3) and expanding large scale irrigation in the East and West Kimberley, Pilbara and Mid West regions, have all provided very significant profitable opportunities for investment in irrigated agricultural production in the north of Western Australia (that is, north of the 26th parallel of south latitude).

These investments can be made with confidence. Not only does the north offer ample opportunities for irrigated agriculture, it also has a safe and stable environment for investments. Western Australia has a:

stable political environment well-regulated and transparent commercial environment low sovereign risk strong and growing economy

strong biosecurity system supporting a low pest and disease environment highly skilled workforce ready access to relevant research and development.

Opportunities for investment in three northern regions – Gascoyne, West Kimberley and East Kimberley are covered in this business case and their locations are shown in Figure 1.

Gascoyne (including Carnarvon Horticultural District)The region’s strengths – land, water and climate The Gascoyne is one of nine administrative regions in Western Australia and is located in the north-west. It encompasses the shires of Carnarvon, Exmouth, Shark Bay and Upper Gascoyne.

The Gascoyne enjoys about 600 kilometres (km) of Indian Ocean coastline and extends inland for about 500km with an overall area of approximately 138 000 square kilometres (km²). Carnarvon, the regional centre, is about 1000km north of Perth.

The Gascoyne region has well-established, diverse and thriving horticultural industries. These industries have benefitted from the fertile soil, good climate, seasonal advantages in both domestic and export markets, minimal pests and diseases, and industry-driven development. Horticulture is an important employer, economic driver and social component of the region.

The Carnarvon Horticultural District (see Figure 2) is situated on the lower reaches of the Gascoyne River. This is an ephemeral river that only flows following high rainfall inland at the headwaters, usually associated with cyclonic activity.

The water supply for the Carnarvon Horticultural District is from aquifers beneath and adjacent to the Gascoyne River. The intermittent river flow recharges these aquifers.

The Gascoyne climate is semi-arid and subtropical making it ideal for growing a very diverse range of tropical and subtropical fruit as well as winter vegetables. The average maximum daily temperatures range from 40°C in summer through to a mild 22°C in the winter months of June and July. There are no frosts and around 320 days of sunshine each year.

The region’s rainfall is low and averages around 200 millimetres (mm) per year. Carnarvon Horticultural District’s annual rainfall is slightly higher at 230mm. Rainfall events occur sporadically in both summer and winter. For this reason, horticultural production is based on irrigation.

All towns in the Gascoyne use groundwater for domestic, commercial and horticultural or agricultural purposes. There is no source of surface water available. Groundwater varies greatly in quality and quantity across the region, however water obtained from groundwater aquifers in and around the Gascoyne River and used in Carnarvon, is of very high quality. It requires no filtration or other pre-treatment apart from simple chlorination prior to human consumption.

The Department of Water is responsible for the water resource and the Water Corporation operates the bore field and maintains water supplies to all towns in the Gascoyne region. The Gascoyne Water Cooperative, a grower-owned entity, is responsible for supply and distribution of the irrigable water.

All towns generate their own electricity. Carnarvon is served by the only power station in regional WA that can run on diesel, gas or a combination of the two. It has a generating capacity of about 12 megawatts (MW).

A new gas-fired power station with capacity of 18MW is being commissioned to come on line by March 2014, with a further 6MW generated by wind turbines.

Industry overviewMost irrigated agriculture is along the banks of the Gascoyne River near Carnarvon. The dry subtropical climate makes Carnarvon suitable to grow a wide range of temperate, tropical and subtropical produce across the seasons.

Production is intensive on small landholdings that range in size from 2 to 40 hectares. There are between 150 and 170 plantations on an area of approximately 1500 hectares, of which 1000 to 1200 hectares are cultivated at any one time, depending on the time of year and seasonal effects. Most land has good alluvial soils ranging from light-textured red earthy sands to medium-textured red earthy loams.

Annual horticultural production is growing strongly and now exceeds A$100m. Tomatoes, bananas, grapes and melons are the most significant fruits in both volume and value while capsicums and pumpkins are the major vegetables (see Tables 1 and 2).

Table 1 Production and value of crops - Carnarvon Horticultural District*

Produce 2010Tonnes

2010 Gross value (A$)

2011 Tonnes

2011 Gross value (A$)

2012 Tonnes

2012 Gross value (A$)

Bananas 4 946 7 186 720 4 789 22 142 863 6 748 9 861 581

% of total 13% 10% 16% 31% 16% 10%

Vegetables 16 387 22 686 599 8 754 16 480 667 11 760 28 293 053

% of total 44% 31% 29% 23% 28% 27%

Tree fruits 1 101 3 746 450 1 671 3 542 562 1 500 4 719 762

% of total 3% 5% 6% 5% 4% 5%

Table grapes 1 428 14 136 77 755 5 760 088 1 329 11 375 164

% of total 4% 19% 3% 8% 3% 11%

Rockmelon, honeydew & watermelon

5 934 5 424 112 6 478 4 996 612 9 383 7 873 133

% of total 16% 8% 22% 7% 22% 8%

Tomatoes 7 830 20 526 27 7 363 19 129 46 11 786 41 904 283

% of total 21% 28% 25% 27% 28% 40%

Total 37 626 73 706 485 29 810 72 052 039 42 506 104 026 976

* Production figures are from trucking company manifests and do not include private or local sales or movements north of Carnarvon and so represent an underestimate of actual production.

Table 2 Annual production by crop 2012 - Carnarvon Horticultural District*

Fruits Production (tonnes) Value (A$)Avocado 33 139 022Banana 6 748 9 861 581Table grapes 1 329 11 375 164Grapefruit 203 251 717Mango 1 063 3 511 848Pawpaw 96 265 762All melons 9 383 7 873 133Other fruit 105 551 413Vegetables Production (tonnes) Value (A$)Basil 181 186 533Beans 451 2 887 381Capsicum 2 423 8 050 349Chillies 526 2 944 190Cucumber 449 1 512 407Eggplant 693 1 863 931Pumpkin 4 764 210 208 Butternut pumpkin 257 247 570Sweetcorn 378 614 842Tomatoes (all types) 11 786 41 904 283Zucchini 1 317 2 641 223Other vegetables 321 3 134 420

Tree cropping has diversified recently with the introduction of low-chill stone fruits (peaches, nectarines and plums) and red grapefruit in addition to the traditional mangoes, pawpaws and avocados. These newer crops take advantage of the subtropical climate and can supply the Perth market earlier than traditional production areas, thus extending their availability to consumers.

Horticultural producers on the north and south banks of the Gascoyne River are licensed to take water from below-ground aquifers for irrigation through private bores in the river bed. In addition, scheme water is available to all growers through an allocation and water trading system.

Adopting best practice water management, the region’s irrigators use micro-irrigation technology to grow large quantities of product efficiently. The Carnarvon Horticultural District is considered the best managed irrigation district in Australia.

In addition to the fruits and vegetables grown along the Gascoyne River, a number of horticultural enterprises are being developed on pastoral leases. Eighty pastoral leases in the region average around 125 000 hectares in area. Despite traditionally being a wool-producing region, the main outputs from the pastoral leases are now beef, sheep and lamb meat.

Horticultural production on pastoral leases include melons, table grapes, citrus and asparagus with some wildflowers. These are in the development phase as pastoralists and investors explore options for diversification.

The area also has a competitive advantage over other growing areas in relation to pests and diseases. Isolation provides a unique opportunity to control the common

threats to horticultural production and to remain free from any exotic pest and disease incursions.

The adoption of innovative production techniques such as shade-cropping, fertigation (fertiliser and irrigation) and open hydroponics, coupled with national water market reform and State Government investment in research and development, have all contributed to significant increases in the value of horticultural production and offer ongoing opportunities for profitable investments in irrigated agriculture with both current and new crops.

Markets – domestic and exportThe Carnarvon Horticultural District plays an important role in providing fresh fruit and vegetables within Western Australia. At present, most produce is grown for the domestic market after trucking to Perth for distribution.

The major vegetable growing season in southern Australia is the winter months of June to September. Warmer winters, coupled with reliable water supplies, have enabled the Carnarvon Horticultural District to become a major source of out-of-season fresh vegetables when southern growing areas cease production due to lower temperatures. Over winter, Carnarvon supplies about 60% of Perth’s vegetables.

At the beginning of the domestic summer fruit season a window of opportunity exists for Gascoyne-grown early ripening varieties to capture the domestic market and benefit from the high prices received.

Export markets, however, are critical to future expansion of horticulture in the Gascoyne region because the domestic market is limited by a small population base with limited capacity to dispose of significantly increased production.

There is good potential to develop existing export markets and to encourage emerging export markets. Asian consumption of many horticultural products grown in the Gascoyne is expected to undergo significant increase driven by higher disposable incomes, changing tastes and preferences, and ongoing population growth.

Carnarvon is well placed geographically to meet some of this increasing demand as it offers short air and sea freight delivery times to many Asian and Middle Eastern markets.

Developing markets for fresh and juicing fruit will provide ongoing opportunity to profitably increase production and export sales. Western Australia’s geographic position makes it ideally situated to export into Asian markets, particularly for high value summer fruits, red grapefruit and table grapes.

The Carnarvon Horticultural District also has potential to supply counter-seasonal fruit and vegetables to markets in Asia and Europe from September to May.

Opportunities for investmentsIn recognition of the very significant opportunities for increased investment in horticultural production in the Gascoyne, the State Government has a number of initiatives being planned and implemented.

It established the Gascoyne Food Bowl initiative in 2008 in response to recognition that this region is a very significant contributor to Western Australia’s production of fresh fruit and vegetables, products that are destined for sale on both domestic and export markets.

In 2012, the WA Government allocated A$45m to the Gascoyne Food Bowl initiative primarily for flood mitigation works and to develop land and water resources. This aims to enable ongoing expansion of horticultural production, including the exploration and development of the Northern bore field to further secure and increase the supply of water for irrigation.

During 2013, an aerial electromagnetic survey was used to help locate new production bores. In December 2013, 12 exploratory bores were drilled within the existing Northern bore field and one production bore established. This new bore is highly productive and producing 1.2–1.5 megalitres of water daily.

Four more bore sites were identified, of which three have since been developed into production bores yielding an additional 2.5 megalitres per day.

The State Government also aims to assist growers to adopt better farming practices focused on avoiding topsoil loss during flood events. In addition, the Department of Agriculture and Food, Western Australia (DAFWA) and the Department of Water are undertaking further assessments of the broader catchment to understand the impacts on flooding and flood mitigation strategies. 

The Gascoyne Food Bowl initiative has identified new economic development opportunities that arise from existing and new irrigation facilities. This will ensure that the region continues to be one of the state’s key fruit and vegetable growing areas and will increase export income through the realisation of potential trade and investment opportunities.

The WA Government is committed to growth in the Gascoyne and, in particular, the targeted expansion and improvement to the water supply in the Carnarvon Horticultural District. This will ensure development of 400 hectares of additional land identified as suitable for horticulture, with a further 800 hectares planned for future expansion (contingent upon water availability).

With increasing areas of suitable land, a secure water supply and strong State Government support, the Gascoyne region offers ample opportunities for new investment. Very profitable production of high-demand fruit and vegetables, both in the established Carnarvon Horticultural District and increasingly on pastoral leases throughout the region, merit close attention.

Some exciting new developments being explored in the Gascoyne region include:

onions grown for export to Dubai export opportunities for chillies and capsicums.

Work is also being undertaken to identify new crops, not historically grown on a commercial scale in Carnarvon, that include:

tropical fruits: lychee and longan temperate fruits: pomegranate ground crops: ginger and galangal.

West KimberleyThe region’s strengths – land and waterThe West Kimberley region encompasses the shires of Broome and Derby-West Kimberley and covers an area of approximately 170 000 km².

The area is sparsely populated with a population of around 25 000 (2011). The main towns of Broome and Derby are 2230 and 2383 kilometres north of Perth respectively.

The climate is characterised by distinct wet and dry seasons and has a tropical to subtropical monsoonal climate. During the wet season from October to March, tropical rains, high humidity and intermittent cyclones produce some of the highest rainfall in Australia.

The region receives about 90% of its rainfall during the wet season. The cooler and substantially less humid dry season is between April and September.

The average annual rainfall and average temperatures vary across the region and rainfall varies considerably between years depending on the level of cyclonic activity (see Table 3).

Table 3 Mean monthly climate statistics - West Kimberley region

Month Broome Airport Derby Airport Bidydanga (La Grange)

Month MeanMin (°C)

MeanMax (°C)

Rainfall

(mm)

MeanMin (°C)

MeanMax (°C)

Rainfall (mm)

Mean Min (°C)

Mean Max (°C)

Rainfall

(mm)

January 26.3 33.3 178.7 25.7 35.3 200.3 26.0 34.4 126.9

February 26.0 32.9 179.8 25.4 34.3 200.3 25.6 34.1 137.7

March 25.4 33.9 101.7 25.0 35.1 135.3 24.9 35.3 97.6

April 22.6 34.3 26.2 22.7 35.5 25.7 22.1 35.6 25.3

May 18.2 31.5 27.3 18.8 32.7 19.5 18.3 32.4 25.2

June 15.1 29.1 19.9 15.6 30.4 8.5 15.3 29.8 20.2

July 13.7 28.8 7.1 14.8 30.6 7.5 13.9 29.5 8.3

August 14.9 30.3 1.7 16.0 32.6 0.8 14.9 31.0 2.1

September 18.5 31.8 1.4 19.5 35.3 1.1 17.5 32.8 1.3

October 22.4 32.9 1.5 23.0 37.0 2.6 21.0 34.2 1.1

November 25.1 33.6 9.2 25.5 38.1 12.8 23.9 34.9 7.8

December 26.5 33.9 57.7 26.3 37.2 71.6 25.7 35.0 55.6

Total 608.2 686.5 511.2Source: Bureau of Meteorology www.bom.gov.au/climate/averages/tables/

Broome and Derby both have easy access to the Great Northern Highway, which connects Perth to Darwin and facilitates the movement of agricultural and

horticultural products grown in the West Kimberley to population centres north and south.

Broome has an international airport that can accommodate wide-bodied aircraft and offers opportunity for export of perishable high value horticultural products directly into Asian markets. With additional machinery and skilled staff, the airport may be able to accommodate freight in future.

The flight time, for example, Broome to Singapore is about 4.5 hours.

Both Broome and Derby have port facilities. Broome is the principal deep-water port servicing the West Kimberley. The port currently supports the export of livestock, offshore oil and gas exploration supply vessels, pearling, cruise liners and is the main fuel and container receival point for the region.

Since reopening in 1997, the Derby wharf has primarily been the export facility for barges exporting lead and zinc concentrates from the Cadjebut Mine at Fitzroy Crossing and for pleasure and tourist vessels visiting Derby.

The principal agricultural activity of the region has been livestock production in a pastoral system based on leasehold land. Pastoral leases are a specific type of leasehold that allow Crown land to be used for pastoral activities defined as grazing native vegetation with authorised livestock. The leases are granted under the Land Administration Act.

All pastoral leases will expire in 2015 but can be renewed subject to any conditions regarding management and development of the land. They will be granted for the same term and on substantially the same conditions as current pastoral leases.

The leases constrain the use of land and do not allow it to be used for purposes that are not pastoral. They do not permit land clearing or growing plants that are not natural to the land to be planted.

Western Australia does issue permits to allow some non-pastoral uses of land covered by pastoral leases. While this has facilitated some agricultural and horticultural land use, under current arrangements permits are generally issued for short periods of time and are not transferable.

If the pastoral lease is sold, the permit cannot be transferred to the new lessee. However, new lessees can apply for a new permit for the same activity under a ‘streamlined’ process.

Two types of permits may be issued that will facilitate diversification of pastoral land. One permits the lessee to sow and cultivate specific varieties of non-indigenous pasture on specified areas and the other allows the lessee to use specified land for crops, fodder, horticultural and other specified kinds of agricultural production.

In addition to the vast areas of land potentially available for horticulture and agriculture in the West Kimberley, there are also very significant quantities of water available for irrigation. Unlike the Ord Irrigation Scheme, the West Kimberley relies on groundwater rather than surface water. Water allocation limits are based on groundwater resources and there are no allocation limits set for surface water.

Analysis has indicated that not only is there sufficient groundwater available to meet future demand for the fruit and vegetable mix currently grown in the Broome Shire through to 2050 but about 276 gigalitres (GL) of good quality groundwater is still available for general purpose licensing, including horticulture, in the whole of the West Kimberley.

Industry overviewIn addition to pastoral activities, there is currently a relatively small, irrigated agricultural industry near Broome and Derby producing mangoes, melons, bananas and livestock fodder. Table 4 outlines the area, type and value of agricultural and horticultural production in Broome and Derby-West Kimberley.

Table 4 Area and gross value of agricultural production (2012/13) in West Kimberley

Location Area (ha)* Production type Estimated production value (A$m)

Broome Shire 527 Dryland agriculture 32.9

Broome Shire 307 Irrigated agriculture

Broome Shire 1039 Irrigated horticulture

Derby-West Kimberley and Halls Creek

8003 Dryland agriculture 9 .7

Derby-West Kimberley and Halls Creek

475 Irrigated agriculture

Derby-West Kimberley and Halls Creek

100 Irrigated horticulture

* Total potential area, but the actual productive area may vary.

The relatively small current industry is due in part to challenges associated with diversification of the agricultural production base, relating to leasehold arrangements. Although permits allow for non-pastoral investments, the conditions are restrictive. Only current leaseholders are able to apply for permits, so opportunities to raise capital are limited, which has hindered expansion.

Currently, horticultural and agricultural production in the West Kimberley is on a mixture of freehold land, leasehold land with diversification permits and in Aboriginal communities (see Tables 5 and 6).

Table 5 Sites of current agricultural and horticultural production in Broome Shire

Location No. of growers

Current area available and approved (ha)

Cropping activity Estimated cropped area 2013 (ha)

Kilto Station (lease)

1 245 Irrigated fodder 245

Kilto Station (permit)

1 500 Non-irrigated fodder 500

Country Downs Station

1 232 Non-irrigated fodder/pasture

232

Shamrock Gardens

1 300 Horticulture and fodder 220

Shelamar Horticulture

2 8295 Horticulture 360

12 mile(freehold)

13 239* Mangoes, turf, cutflowers, vegetables, herbs, shade trees, palms, mixed fruit, wine

100

Skuthorpe(freehold and lease)

3 1040*(including

undeveloped blocks)

Irrigated fodder, horticulture and turf

42

Coconut Wells(freehold)

6 140 Mangoes and limes 140

Crab Creek Waste Water Plant (Water Corporation)

1 200 Irrigated fodder 32

* Area is as supplied by shire planners. Actual productive area may vary with some areas close to Broome not in full-time horticulture.

Table 6 Sites of current agricultural and horticultural production in the Derby-West Kimberley Shire

Location No of growers

Current total area (ha)

Cropping activity Estimated cropped area 2013 (ha)

Liveringa Station (permit)

1 285(one pivot moved to freehold)

Irrigated fodder 180

Liveringa Station (freehold – former Camballin Farms area)

1 4869 Irrigated and non-irrigated fodder

95ha irrigated, estimated 2000–

3000ha non-irrigated

Debesa Station

1 30 Irrigated fodder 30

Dampier Downs Station

1 195 Non-irrigated fodder

Gogo Station (permit)

1 150 Irrigated fodder 150

Gogo Station (permit)

1 480 Non-irrigated fodder 480

Gogo Station (permit)

1 723 Non-irrigated fodder 480

Beefwood Park non-irrigated (permit)

1 590(+ 400)

Non-irrigated fodder 990

Sunny Side Farm

1 86 Turf and fodder 20

Derby outskirts 3 100* Mangoes, vegetables, herbs, shade trees,

palms, mixed production

100

** Area is as supplied by shire planners. Actual productive area may vary.

In addition to the areas listed in Tables 5 and 6, there are some activities on Aboriginal communities and outstations, although these are small, low impact enterprises and include community gardens and wild harvest and cultivation of Terminalia ferdinandiana (gubinge or Kakadu plum) and other indigenous plants.

MarketsThe production from irrigated agriculture in the West Kimberley is currently small and primarily supplies the local market. There is very significant scope for increasing the supply of fodder into the extensive pastoral livestock production enterprises. For horticultural crops, the logistics of marketing, including domestic transport, would need to be considered were the fruit and vegetables to be sent for consumption in Perth or for subsequent distribution to the other higher population centres of the South-West.

Export markets in Asia would be a very attractive destination for future expansion of horticultural production of the West Kimberley and would be facilitated by the international airport and a deep-water port in Broome.

With the expected significant future increase in Asian consumption of the types of horticultural products grown in the region, driven by higher disposable incomes, changing tastes and preferences, and ongoing population growth, the West Kimberley is ideally placed to exploit these opportunities.

Opportunities for investmentsThe development of irrigable land under pastoral permits has increased from a very low base and there is potential for considerable additional agricultural development in the West Kimberley.

In addition to the agricultural and horticultural activities around Broome and Derby, there are significant underground water resources in the La Grange sub-basins south of Broome, shown in Figure 3.

La Grange groundwater covers the western portion of the sedimentary aquifer of the Canning Basin. The aquifers continue southwards into the East Canning systems that extend into the eastern Pilbara. Two aquifers supply the La Grange groundwater, the superficial Broome Sandstone aquifer and the deeper Wallal Sandstone aquifer. Allocation limits have been determined by the uppermost aquifer as it has been assumed that the deeper aquifers are not practical to tap at this stage.

Estimates of the unallocated water resource in 2011 of approximately 35 gigalitres indicate that there is capacity to irrigate between 2900 and 8750 hectares, depending on the crop and the efficiency of water use.

These areas on the La Grange groundwater resource, with their significant amounts of unallocated water, will provide significant opportunities to develop new irrigation precincts on what are currently pastoral lands of low productivity. The areas also have the advantage of direct access to the Great Northern Highway, leading both south and north.

With on-going water security being the most likely factor limiting agricultural diversification into fodder and horticulture, La Grange is the only area of the West Kimberley with a water allocation plan and good understanding of available soil and water resources. The area’s existing horticultural and agricultural activities also demonstrate the potential for future developments.

Developments including single or multiple centre pivot irrigators on individual pastoral properties have potential to substantially increase both pastoral productivity and the agricultural and horticultural production in the region. The West Kimberley’s future will involve change from the current production mix of low intensity grazing to

dryland grazing with irrigation-based cattle finishing or feedlotting; and from fodder production to more intensive horticultural operations.

Large scale significant irrigation opportunities are very feasible especially with improvements in infrastructure that are concomitant with the continuing development of gas, mining and tourism in the region.

Current opportunities for investment in irrigated agriculture include, for example, the following current expression of interest:

Opportunity to lease, invest in land, share farming or develop a joint venture in irrigation.

Looking for an investor to assist in the development of 800ha general lease (with clearing permit) 220km south of Broome.

Suitable for irrigated agriculture and horticulture.  Located on the Great Northern Highway allowing year-round access via the

port of Broome. Ideal for the establishment of a cattle fattening enterprise (feed-lot, growing fodder).

Adjoins a pastoral lease run as a separate enterprise. Currently has large water allocation with potential to increase. Numerous existing bores with high quality, shallow water. Nearby properties currently grow sweet corn, melons, pumpkin and sorghum. On-site management is available if required.

East Kimberley and Ord River Irrigation AreaThe region’s strengths – land, water, infrastructure and market access The shire of Wyndham-East Kimberley covers an area of 117 514km² in the sparsely populated north-east corner of Western Australia, stretching from the Northern Territory border. The town of Kununurra is the regional centre, 3200 kilometres from Perth and 830 kilometres west of Darwin by road.

Kununurra has a population of about 7000 people, which is over half of the shire's permanent population. The town is expected to experience strong population growth in the next few years due largely to the three-fold expansion of the Ord River Irrigation Area and because many government departments that service the East Kimberley are based there.

Kununurra’s climate is classified as hot semi-arid with distinct wet and dry seasons. It experiences hot summers and mild to warm winters. The dry season is from May to September. Between October and December it experiences high heat and humidity levels in the build-up to the wet season. The summer monsoon period is between January and April shown in Table 7.

Table 7 Mean monthly climate statistics at Kununurra

MonthMean minimum

temperature(°C)

Mean maximum temperature

(°C)Rainfall

(mm)

January 25.1 35.9 198.6

February 24.8 34.9 210.6

March 24.2 35.5 154.7

April 21.9 35.2 30.4

May 18.8 32.7 7.0

June 15.7 30.1 3.6

July 15.2 30.5 1.6

August 15.9 32.6 0.1

September 20.0 36.5 3.0

October 23.5 38.5 23.6

November 25.2 38.9 60.8

December 25.4 37.1 136.7

Total - - 851.7Source: Bureau of Meteorology www.bom.gov.au/climate/averages/tables/

In addition to traditional Kimberley pastoral and pearling, agriculture, tourism, construction and the resource sector are the major industries and combine to provide a strong and diverse regional economy with one of the fastest growth rates in

Western Australia.

The region’s expansion is well supported by a growing service industry.

The power for Kununurra comes from the main Ord River Dam. The Ord River Dam Hydro Scheme is a privately-funded, owned and operated power system. It consists of a new 36 megawatt (MW) hydroelectric power station at Lake Argyle interconnected by lengthy 132 kilovolt (kV) transmission lines, with existing diesel fuelled power systems at the Argyle diamond mine and the Kununurra township. The hydroelectric power generation station is the largest single contributor to renewable energy generation in northern WA.

The East Kimberley is well serviced for transport. Kununurra is on the Victoria Highway which links the Great Northern Highway from Perth to Darwin. The East Kimberley Regional Airport underwent redevelopment in 2011/12 as part of the WA Government’s commitment to upgrading transport infrastructure. Heavy rainfall during the wet season can result in isolation from essential outside services and deliveries and so the airport is vital.

The nearest port is at Wyndham about 100km from Kununurra. Wyndham is the only deep-water port between Broome and Darwin and recently underwent a significant upgrade with funding of A$10m provided by the Australian Government under the East Kimberley Development Package. Exports through the port include live cattle and nickel. Imports include fuel oil, ammonium nitrate for the mining industry (in particular the Argyle Diamond Mine) and general cargo.

As a part of the East Kimberley Development Package, the Australian Government has committed A$195m to deliver social and common-use infrastructure. This will involve key investments in health, education and training, housing, transport and community infrastructure and add further to the infrastructure that supports investments in irrigated agriculture.

The key feature of the agricultural sector of the East Kimberley is the Ord River Irrigation Area (ORIA) which has been built in stages around the Ord River, a 320 kilometre long river with a catchment of over 46 100 square kilometres (km²). The Ord River dams provide irrigation to more than 117km² of farmland.

The Ord River Irrigation Area, originally known as the Ord River Irrigation Scheme (ORIS) began in the early 1960s with establishment of the town of Kununurra. The earliest plan was for a dam on the Ord River that could supplement the pastoral industry. This changed with time, so that when construction began the plan was for irrigation water to be used to grow rice and sugar. The early commercial farms, however, almost exclusively grew cotton.

Construction of the Ord River Diversion Dam started in late 1960 and it was opened in 1963. The Ord River Diversion Dam holds back Lake Kununurra. The second Ord River (Main) Dam was completed in 1972 and holds back the waters of the Ord River in Lake Argyle. Lake Argyle, which is mainland Australia's largest fresh water storage dam covering an area of 741km² has a storage capacity of 10 760 gigalitres water.

Lake Kununurra is a diversion dam, 50 kilometres downstream from Lake Argyle.

Water is released from Lake Argyle into Lake Kununurra which gravity-feeds farms in the Ord River Irrigation Area with irrigation water via the Main Channel (M1C1).

Water allocations in the East Kimberley are for the Ord River and its tributaries and there are no groundwater allocations. The Department of Water estimates that there is sufficient water to meet the demand to 2050 for the mix of fruit and vegetables currently grown. Approximately 529 gigalitres of the surface water currently available is committed for future irrigation and current hydroelectric power generation.

Industry overviewStage 1 of the Ord River Irrigation area includes about 14 000 hectares of developed and irrigated farmland on the Ivanhoe and Packsaddle Plains (see Figure 4).

This land produces a diverse range of crops including melons and cucurbits, dry culinary beans and chickpeas, mangoes, bananas, hybrid seed, irrigated pasture, leucaena, and emerging tree crops such as lemon, lime, red grapefruit, carambola, star apple and sapodilla.

Chia production is increasing and new products are being developed. The sandalwood industry is the largest landholder and seeking to gradually increase land holdings.

The value of production of broadacre and horticulture crops in the East Kimberley is about A$41m with an additional A$72m from forestry as listed in Table 8.

Table 8 Size and estimated value of production in the ORIA 2010/11 (not including Stage 2)

Participants (no. of growers)

Area (ha)* Products Estimated production value(A$m)

Multiple 3892 Agriculture and seed 15.2

Multiple 1798 Horticulture 28.9

Multiple 7652 Forestry 71.7

* Total potential area, but the actual productive area may vary.

Unlike the West Kimberley, there is very little agricultural diversification of pastoral leases in the East Kimberley. The irrigated agriculture is almost exclusively within the ORIA and surrounds.

With an investment of more than A$515m, Stage 2 of the Ord-East Kimberley Expansion Project is a key priority of the State Government’s Royalties for Regions initiative. The project aims to increase the size of ORIA to about 29 000 hectares of agricultural land.

In 2012, Kimberley Agricultural Investment (KAI) was selected as the preferred proponent to lease and develop 13 400 hectares into irrigated farmland.

KAI is a private company wholly-owned by Shanghai Zhongfu (Group) Co Limited.

Following finalisation of a Development Agreement that documents timelines, responsibilities and obligations, KAI will lease and develop the Goomig Farm area (7400ha) and progress approvals and subsequent development of the Knox Plain (6000ha). KAI proposes to invest up to A$700m in the next six years to establish a sugar industry in Kununurra, to annually produce about 4 million tonnes of cane and

500 000 tonnes of export sugar crystal. KAI’s investment will include a refinery with power co-generation and further major upgrade of the Wyndham port.

KAI has also indicated it will offer sub-leasing and share-farming partnerships with Australian growers on up to 20% of the new farmland. The proposal also allows for other horticultural and field crops to be grown in rotation with sugar cane on the new farmland.

MarketsThe East Kimberley has an important role in Australia’s domestic food supply. The melons and other cucurbit crops grown in the ORIA, take advantage of the region’s mild to warm winter to grow crops ‘out of season’ to other vegetable production areas in both WA and eastern Australia, thus supplying markets with a wider range of fresh fruit and vegetables year-round. These products are transported by road train to Brisbane, Sydney, Melbourne, Adelaide and Perth markets.

Much of the produce is exported. Destinations include New Zealand, Japan, Europe, the Middle East, North America, China and South-East Asia as shown in Table 9.

Table 9 Some examples of export destinations from the East Kimberley

Products Destinations

Chickpeas, borlotti beans, cannellini beans and dark red kidney beans New Zealand, Italy, Spain

Chia North America, Middle East, EuropeCotton China, IndiaRed grapefruit Europe, Japan and ChinaMangoes Middle East, New Zealand, EuropeHybrid seeds:

Forage sorghumSunflowerMaize

Middle East, Asia, New ZealandMiddle East Asia, New Zealand

Sugar was produced in the ORIA until the end of 2007 and trucked to Wyndham from where it was exported to a Korean-owned food manufacturing plant in Surabaya, Indonesia. With KAI’s plan for sugar production, sugar crystal will be exported through the Wyndham port.

The ORIA is also home to the largest commercial Indian sandalwood plantations in the world. Most Western Australian sandalwood is exported to South-East Asia for manufacture of incense or joss sticks and to India for oil. Taiwan and Hong Kong are the largest importers of Western Australian sandalwood.

Opportunities for investmentsThe East Kimberley region, with its vast area of land and ample divertible water, offers good opportunities for investment in horticulture.

In addition to the Ord Stage 2 developments, there is an ongoing program to identify suitable land parcels in and adjacent to Ord Stage 1. The State Government has determined that the 1700 hectares of Ord West Bank land will be sub-divided into smaller farm lots to create new opportunities for high value horticultural crops. About 1000 hectares are expected to be arable and provide for up to 25 new farms run by local producers. It is anticipated that this land will be offered for sale by tender in 2014/15.

There are also 200 hectares of land with variable soils at Darram and 250–800 hectares of levee soils on the Ord East Bank that are suitable for a range of horticultural crops. The expansion of land available for irrigated agriculture serviced by water from Lake Argyle represents a significant opportunity for growers and investors seeking to establish themselves in the region.

The irrigated developments in East Kimberley so far have focused on furrow irrigation of clay soils. This has been associated with some management problems such as restricted wet season access and reduced potential for precision fertigation.

Soil surveys have identified large areas of free draining soils in the Ord River catchment. Three areas close to Kununurra totalling approximately 7000 hectares have been identified as having sandy and loamy soils. These Cockatoo and Pago sands could offer potential expansion with significant of irrigation. These soils have draining properties that enable use of sophisticated fertigation systems could offer agronomic control levels ideal for higher value and more specialised crops. Up to 52 000 hectares of these soils have been identified, with 37 000 hectares just 60 kilometres north of the current irrigation area.

The scale, location and agronomic potential of these Cockatoo and Pago sands make them very attractive to large sovereign or corporate investors.

Estimating the production potential for and profitability of new production areas is challenging because the crop mix, rotations and synergies with other industries are currently unknown.

An estimate of the production potential using two scenarios for the new irrigation precincts is shown in Table 10. The assumption is that the estimated water resources will be fully developed over time. The analysis compares cotton, a relatively low value broadacre commodity crop, and vegetables, the highest value water use crop per megalitre. The final value will depend on the actual crop mix and farming systems that are developed.

Table 10 Area, water and potential value of production in the East Kimberley

RegionEstimated water(gigalitres

Area farmed (hectares)

Gross annual value of production (A$m) If 100% cropped to cotton

Gross annual value of production (A$m) If 100% cropped to vegetables

Ord River –river extraction 115 9 000 56 374

Ord River –Cockatoo sands

360 30 000 176 1170

The East Kimberley has very significant opportunities to invest profitably in horticulture. These opportunities include investing now in:

existing enterprises in the ORIA new land releases in and adjacent to the Ord Stage 1

or in the medium term, to invest in:

identified Cockatoo and Pago sands close to existing clay soil irrigation developments near Kununurra

clay soils at Mantinea Flats and Carlton Plains downstream from the ORIA, suitable for both broadacre and horticultural crops.

The key message for investors seeking horticultural investment opportunities is that the Kimberley has 80% of Western Australia’s total divertible water resources, with less than 1% being utilised currently.

Other important informationIt is extremely important that all applications for regulatory approvals are underpinned by a clear and concise intent to achieve full disclosure based on a properly developed project proposal. This is because regulators need full disclosure of all required information from a properly developed project for quick and efficient processing of an application.

A comprehensive, integrated development application could be used to attain concurrent development approval from Local Government, Department of Environmental Regulation (DER), Department of Transport (DoT) and Department of Water (DoW). This could result in the time required for a total approval process of three to six months.

DAFWA is skilled in assisting proponents to seek approvals and will work closely with proponents for the inception of the project.

The time period for all regulatory bodies to access a proponent’s application commences from the point at which they receive all the information required to make a decision is in an appropriate format. This time period should not be confused with the point at which the proponent makes first contact with the regulators.

Proponents from overseas also need to comply with the requirements of the Australian Government’s Foreign Investment Review Board.

How to progressInterested parties can contact:

The Executive Director, Irrigated Agriculture and Diversification, Mr Terry Hill, at the Department of Agriculture and Food, Western Australia, on international office phone number +61 (0)8 9368 3405 or by emailing terry.hill@agric.wa.gov.au.

Services provided by the Department of Agriculture and Food, Western Australia to assist investors in the agrifood sector include:

detailed information on opportunities pre-feasibility plans to assess opportunities assisting an investor to seek the government approvals required supplying contacts such as project managers, joint venture partners, financiers,

immigration specialists, accountants etc. access to relevant research and development information. information and advice on Western Australian Government natural resource

management and biosecurity legislation and regulations, and the responsibilities and obligations

information on Australian government quarantine and export regulation requirements.

DisclaimerThis business case provides indicative modelling on horticulture investment in northern Western Australia. The business case and any additional information or documents that the state of Western Australia through the Department of Agriculture and Food, Western Australia (DAFWA) may supply, are to be used only as preliminary and indicative information, to be considered and used by prospective investors in Western Australian industry in conjunction with other information and appropriate financial, legal, industry and other expert advice tailored to their individual circumstances and intentions. Prospective investors should conduct (or engage appropriate professional advisers to conduct) their own analysis and due diligence on any proposed investments, including the process for obtaining approvals. No part of this document or any additional information or documents that DAFWA may supply constitutes or should be relied on as financial, investment, legal or other advice.

The Chief Executive Officer of the Department of Agriculture and Food, Western Australia and the state of Western Australia accept no liability whatsoever by reason of negligence or otherwise arising from any use or release of material (which in this disclaimer includes this business case, any information in it or other part of it, and any other information, advice or material, oral or written, DAFWA may supply in relation to any aspect of the Western Australian horticulture industry, regulation of it or investment in it) or any error, inaccuracy or omission in the material. Although reasonable care is taken to make the material accurate, the Chief Executive Officer of the Department of Agriculture and Food, Western Australia and the state of Western Australia do not make any representations or warranties about its accuracy, reliability, completeness or suitability for any particular purpose.

Copyright © Western Australian Agriculture Authority (WAAA).  

ABN: 86 611 226 341