ASX-listed ag investor Duxton Farms is selling off "one of the largest and most desirable... broadacre properties in New South Wales" — the $59 million Timberscombe near West Wyalong.
Accounting for more than a third of Duxton's $158m in assets, the property has been part of the portfolio for 15 years and "a stalwart of the company's winter cropping programme for past six seasons."
In a release to the ASX, the company said it was offloading the asset to diversify away from broadacre farming assets and focus on higher growth areas.
The divestment follows a loss-making year that was heavily impacted by flooding in the Murray Darling Basin. For the financial year ending in 2023, the company made a loss of over $10m. Its winter grain crop, planted in late 2022, was only 8,600 tonnes compared to 37,000 the previous season and more than 60,000 in the previous corresponding year. It was unable to plant a summer crop of cotton for the 2023 season.
In its annual report the company said it had renewed banking facilities with Commonwealth Bank including increasing term facilities from $15m to $68m but noted "a condition of this funding is that the Group have in place a plan to substatially (sic) reduce borrowings by 31 March 2024."
"Balance sheet management remains a critical area of focus for the Board, who are actively considering a number of routes towards normalising the Group’s gearing over the next few seasons after funding two consecutive years of losses," the report said.
In its annual report, Duxton Farms said the adverse operating conditions caused by the floods had convinced the company of the risks associated with geographic concentration and the "need to add breadth and scale to the portfolio."
That diversification strategy has seen it purchase the 1,185ha Piambie Farms on the Murray River in Sunraysia that is being planted with pistachios. Duxton also noted the stronger than usual returns from livestock, including cattle, sheep and wool and said that with the addition of the 141,000ha Mountain Valley Station in the Northern Territory in December last year, it would see livestock revenue increase.
The firm has plans to convert Mountain Valley to irrigated cropping with Chairman Edouard Peter attesting in the annual report preamble that, "rainfed cropping has the potential to completely change the nature of the Northern Territory’s agricultural sector", and is "one of the most intriguing opportunities available in all of Australian agriculture".
Since its listing in February 2018 at $1.58 per share, Duxton shares peaked at $1.90 in July last year but since then has been on a downward trajectory, losing 11% so far this calendar year to close at $1.44 on 28 November.