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COVID-19 is continually driving down both price and demand for cotton worldwide.
This coupled with the effects of ongoing drought in Australia has caused many cotton farmers to rethink their current business decisions as the northern cotton industry is becoming increasingly attractive to interstate farmers.
The newest reports into the industry suggest that northern cotton farmers will be vital to achieving Australia’s maximum export potential given its climatic advantages in enhancing reliability.
At KG2 we have over 900 cotton growers in our farmer database whom we engage in ongoing market research mainly regarding irrigation use and management.
It is evident that many Southern producers struggle to maintain a reliable water supply due to highly fluctuating rainfall from year to year.
This very reason is why many of these producers have been planting in the Ord region in Western Australia and the Northern Territory.
Whilst its true that Australian Cotton Farming growers are the most productive on the planet – with yields double that of the world average yield; there are still many challenges that threaten to derail the industry and its need to expand to the North.
Not only is water availability a key issue that has been motioned by farmers in our regular talks, but so is the availability of ginning facilities.
Currently, the closest cotton gin to the Ord region is more than 3,500 kilometres away in Queensland which makes for extensive transport costs and decreases viability.
The state government has recently awarded the Ord River District Co-operative a $100,000 grant for a feasibility study into the development of a cotton gin in Kununurra.
Furthermore, it’s likely that the by-products created by a local cotton processor could be a fantastic asset for the northern cattle industry.
In fact, cotton seed is believed by many northern growers to be more valuable for the economy than the fibre itself.
Fundamentally it is the lower land and water costs, coupled with the high water availability and potential for irrigation development that is drawing cotton farmers north.
There is still the challenge of building a social licence with consumers by changing perceptions on water use and environmental sustainability.
Cotton used to be an extremely high pesticide use crop, however this has changed over recent years, hence why it is so vital that cotton be seen as a clean and green crop if it is to withstand the challenges of delegating production to the Northern half of Australia.
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