By Gerelyn Terzo, Global AgInvesting Media
Southwest Queensland’s Cubbie Station cotton farm, which is 100 percent owned by an agricultural fund managed by Macquarie Infrastructure and Real Assets, has made a deal with the Australian federal government. The cotton farm, which was established in the early 1980s, has participated in a water buyback program with the government in a deal amounting to a reported A$73.5 million, selling water entitlements as part of the Australian government’s investments in water recovery.
Cubbie Station plans to direct the proceeds from the deal back into the cotton farm and does not expect to experience any reduction in its production capacity. It is reasonable to assume that Cubbie Station still holds other water licenses.
The Aussie government operates a Murray–Darling Basin Plan, which determines the amount of water that can be removed from the rivers in the Basin each year without damaging the environment. Water buyback plays a critical role in the Murray-Darling Basin Plan as a lever for achieving the plan’s environmental objectives.
Stretching across a staggering 96,000 hectares, Cubbie Station isn’t just a farm; it’s a colossal force reshaping the landscape of the southern hemisphere. This titan of irrigated cotton sprawls across an astonishing 28 kilometers, its scale matched only by its massive capacity. With the ability to hold up to 460 gigalitres of water entitlements – enough to submerge 184,000 Olympic swimming pools – Cubbie’s influence is undeniable. But its story is as rich as its soil, woven with threads of Queensland history, a notable 2012 acquisition by Shandong Ruyi (Ruyi), and the more recent entry of Macquarie into the fray through a 2019 minority investment. At that time, the firm’s Liz O’Leary was cited by The Financial Times as stating,
“Cubbie is one of Australia’s premier agricultural assets and aligns with our investment thesis for long-term sustainable farming operations.”
In 2022, Macquarie’s ag fund acquired the remaining 51 percent of the cotton farm it didn’t already control from China’s Ruyi, buoying its stake to 100 percent. That deal occurred after a consortium spearheaded by Ruyi was required to sell its position, owing to Australian regulation. Australia has pushed back on foreign ownership of its farmland, which has been a key target for China-domiciled investors. China alongside the U.K. remains one of Australia’s largest landowners, but its ownership position has dwindled by nearly 1 million hectares in recent years due to Australia’s crackdown on foreign ownership.
The Australian government has implemented a water entitlement recovery scheme as a cornerstone of its Basin Plan to strengthen the ecological vitality of the Murray-Darling Basin’s rivers. This initiative sees the government acquiring water rights from willing participants, ranging from expansive agricultural enterprises such as Cubbie Station to independent farming families.
Last month, Queensland, Australia experienced severe flooding when nearly 20 inches of rain fell, devastating tens of thousands of cattle and sheep while destroying agriculture infrastructure. The region is no stranger to extreme conditions including drought or flooding and therefore is resilient. According to an IBISWorld market report, Australia’s cotton growing revenue was projected to grow at an annualized rate of 55 percent to $2.8 billion in the five years leading up to the 2024-2025 harvest.
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