SCALE of operations and investment timing is critical to achieving success in irrigated agricultural schemes, the man helping develop the second stage of the Ord River irrigated agriculture precinct told the Etheridge Economic Development Forum.
“We impressed in the media at the time that to make this thing work we need scale,” Jim Engelke, general manager of Kimberley Agricultural Investments (KAI), a Chinese owned company said.
“It’s difficult to come into an area like here and Kununurra and set up a small farm and make it work, particularly in the sort of activities we are involved in like grain.
“Scale drives further investment like processing infrastructure. You could be a standalone cotton farmer in this region but I suspect you couldn’t get your cotton to a gin cost effectively.
“We face the same problem in Kununurra. We have a very low infrastructure base in terms of logistics and ports and no processing infrastructure. Investment timing is critical, it’s not patient money. I haven’t met a patient businessman yet.”
Mr Engelke was keynote speaker at the forum which had earlier in the day heard from the Gilbert River Agricultural Precinct group about its plans for irrigated agriculture. The group comprises properties from Greenhills to Strathmore.
KAI, owned by Chinese businessman Wu Pui Ngai, won the right to establish a farming operation on Goomig and Knox Plain in 2012, with farming starting last year.
Mr Engelke said land tenure, environmental approvals and water were all challenges in developing irrigated agriculture but must be overcome.
“We have a freehold option over the Knox Plain (land) and I have heard a lot of stories around the north why people aren’t happy with lease,” Mr Engelke said.
“Any irrigated land in this country is generally freehold. The Ord stage one is freehold.
“When you lease your exit is constricted to someone who wants to buy a lease which is not commercially sensible.”
Mr Engelke said KAI had invested heavily in Indigenous engagement.
“We’ve put a lot of work into Indigenous engagement,” he said. “I suggest you get to know them – if you are going to have a negotiation with anyone it’s much better to know them and understand what their ambitions are.
“That’s also true of government agencies. While they may be frustrating its nicer to be on good terms and be able to have a disagreement but the next day get on with business.”
Mr Engelke, who has a background in farming, outlined the challenges that the operation has faced.
He said during negotiations, KAI started “working in good faith to develop country”.
“This was a very bold move from an investor point of view as there was no land tenure and no security - it was pretty much on trust,” Mr Engelke said.
The operation is currently growing grains including chia and quinoa.
“Grain was the first stepping stone and only thing we could hang our hat on,” Mr Engelke said. “There are medium term options which include a sweet sorghum.
“Cotton is a possibility in our part of the world but not well suited as here because our season is a bit short. In the long term if we get scale we can get ourselves to a sugar industry but it needs to pay for itself.
“Sugar and cotton and grain would be the perfect mix because you can move in and out of sugar and cotton and supplement that with high value grains so you don’t oversupply the market.” Mr Engelke said a Chinese backer was a benefit, but it did not open doors to Chinese ports.
He said large-scale irrigated agriculture was achievable.
“It can be done,” he said. “It takes a fair bit of assistance and resilience which I suspect you people have plenty of. If you keep at it I suspect you will get there.”
