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SA investment firm denies "water hoarding" during record drought

Business

SA-based investment firm Duxton Water has denied allegations it is “hoarding” water at the expense of struggling farmers during this year’s punishing drought.

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A report in The Australian yesterday said investors were “hoarding billions of litres of water, ratcheting up the cost and cruelling food growers who claim they face a massive artificial price spike that is crippling agriculture” – and that the “greatest concern” was listed company Duxton Water Ltd, based in Stirling.

According to the report, horticultural industry representatives had written to Water Resources Minister David Littleproud, complaining that non-farmer water investors such as Duxton were responsible for forcing up the price of water from a long-term average of $135 per megalitre to $800 per megalitre.

Duxton Water said it refuted the claims in a statement released to the Australian Stock Exchange this morning.

The firm, which trades under the motto “proudly supporting Australian irrigators and farmers”, blamed dry conditions and environmental flows for “supply strain” on the market.

The company also told investors large-scale permanent crop development across the Southern Murray Darling Basin had changed the dynamic of the Australian water market.

“Duxton Water refutes any claim it is hoarding water,” the statement says.

“… 63 per cent of our total water portfolio, by value, is leased with the inclusion of our general and low security water entitlements.

“Water entitlement not currently leased are used to supply irrigators through other water supply offering (sic) such as forward allocation contracts and spot allocation trade.”

The company said it was “by no means the largest private holder of permanent water entitlements, with there being a number of farming entities both public and private with permanent holdings that dwarf and far surpass Duxton Water’s exposure”.

The first seven months of this year were the driest ever recorded for the southern half of Australia, according to the Bureau of Meteorology.

Yesterday’s report in The Australian quotes Rob McGavin, co-founder of the company that produces olive oil brand Cobram Estate, as saying non-farmer water traders and brokers were “driving Maseratis” at a time when farmers are going broke.

“My concern about Duxton is the amount of allocation water they have reportedly purchased over the last 18 months compared to their annual consumptive use or need and the material impact this could be having on the price all irrigators are having to pay,” he is reported to say.

In Duxton Water’s half-year report, released in June, the company argues that: “irrigators across the country have been the biggest beneficiary of increasing water entitlement values, owning the vast majority of the consumptive pool of permanent water entitlements on issue in the (Southern Murray Darling Basin) region”.

Last month, the Morrison Government commissioned the Australian Competition and Consumer Commission to investigate water trading, following farmers’ complaints that investors were driving up prices.

Duxton Water said in its statement this morning that it welcomes further investigation by the ACCC.

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