August 3, 2017

China’s Kimberly Agricultural Investment (KAI), the backer behind the Western Australian Ord Irrigation Scheme, has submitted plans to Australia’s Environmental Protection Authority (EPA) for the development of another 3,086 hectares of farmland at its Carlton Plains freehold area for the production of both annual and permanent crops including grains, cotton, citrus, mangos, and other tree crops.

The work will be part of Carlton Plains Stage 1, the first phase of development of four larger parcels of land marked for irrigated agriculture, and will include a combination of surface and pressurized irrigation infrastructure for the purpose of growing food and fiber crops.

In 2013 the government of Western Australian signed an agreement with KAI giving the company a long-term lease for more than 7,000 hectares of land, which was initially intended to produce sugar cane. Under the terms of the agreement, KAI pledged to invest $200 million to develop production agricultural holdings across the Goomig and Knox Plain regions of the Ord Valley.

However, instead of pursuing the production of sugarcane, the company cleared 600 hectares and began sowing chia in the spring of 2015 to be followed by sorghum.

“At this stage, the destination market for both [crops] is China,” Jim Engelke, general manager, KAI told ABC at the time. “Sugar is still the ultimate goal, but we’ve publicly announced that sweet sorghum will be an interim crop. “We’re currently assessing the viability of refurbishing the old sugar mill in town to crush that sweet sorghum.”

Chia and sorghum were followed by the added production of between 600 and 800 hectares of quinoa earlier this year, and an eventual goal of growing quinoa, chia, and maize on up to 3,500 hectares with plans to introduce the formerly unknown quinoa grain onto the Chinese market.

“We’ve got a lot of work to do to educate the market in China and develop for ourselves some brand recognition over there,” said Engelke. “… we feel quinoa is a similar product to rice and handled in a similar manner, so the Chinese market is going to understand that reasonably well.”

KAI also committed to investing between $4.5 million and $5 million to fund the building a new grain crushing facility in Kununurra.

Despite these advances, the $2 billion Ord Scheme, which has been viewed as a potential “food bowl” for the Chinese market, has had difficulty gaining traction.

ABC reports that a recent cost-benefit analysis report issued by the Australia Institute concluded that the project only returned 17 cents on the dollar to investors and was not meeting its job creation commitments.

However, David Menzel, chairman of the Ord Irrigation Cooperative, explained the long-term nature of such a massive undertaking saying, “There’s no doubt the Ord has been an expensive project and I think a lot of the cause of that lays at the length of time it’s taken to deliver, and there’s a huge piece of infrastructure and some additional bits and it’s never got to its design capacity.”

But for now, progress marches on. The seven day public comment period regarding the plan ended on June 30, and now the EPA must decide if an environmental impact assessment must be conducted, and if so, to what extent.

-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.