Ann: Half Year Report and Appendix 4D, page-6

Water barons accused over prices

Over three years since it listed on disallowed, Duxton Water has amassed water rights worth $256m, giving it control over 74 billion litres of water entitlements, equivalent to the capacity of the Woronora Dam near Sydney.Rather than sell or lease all its annual water allocations each year, Duxton has “carried over” some water and increased its entitlements by 12.5 billion litres in the six months to June.While irrigation farmers are fearful of speaking out about Duxton, the head of the largest olive-growing enterprise in Australia, Rob McGavin, was prepared to express a view to The Australian.
“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 for allocation water,” Mr McGavin, the chief executive of Boundary Bend Ltd, said.
Duxton Water says its shareholders enjoyed a total return of nearly 30 per cent in the year to June.In the six months ended June 30, during a severe drought now officially classed as the worst ever, Duxton more than doubled its half-year profit compared with the corresponding period last year, to $2.5m.
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In a statement to The Australian, Duxton Water said it was a long-term investor in water, not a speculator. It said just over half its water entitlements were let out on long-term lease to irrigators.
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“The company will continue to actively manage its allocation holding in order to meet its obligations to its farming partners both short and long term,” it said. “Our goal is to be a long-term partner with the farming community and to make it easy for farmers to access water over shorter and longer-term periods.”
Duxton said it carried more than $8m worth of water to meet its future commitments to farmers, saying such an amount was “not material”.
It denied its activities had pushed up the price of agricultural water, saying the spike was the result of huge amounts of planting of permanent crops, the government buy-back of water entitlements for environmental flows and drought.
Earlier this year, Mr Littleproud announced that he had asked the Australian Competition & Consumer Commission to investigate the water trading market, and The Australian is aware of at least one letter to the ACCC from an agricultural business listing concerns about Duxton and other non-farm water owners. In a statement to The Australian, Mr Littleproud encouraged all water users to make a submission to the ACCC. “I want to be sure the water market isn’t being distorted,” he said, adding: “There is a lack of transparency”. “I want to make sure that family farming businesses are not locked out of the water market,” he said. “I do not want to see traders, brokers or any major market players pushing up water prices as water is a critical resource.”

Sentiment: used to have, not anymore.