BlogLog-Bourke Visit 24th to 26th September,2012

Drove out to Bourke on Sunday/Monday. When first with Clyde I used to do it in a long half day-driving too fast, before we got flash and bought an aircraft. This time went to Mudgee on Sunday evening and got to Bourke about 2:30PM on Monday via Dunedoo, Mendooran, Gilgandra, Warren and Nyngan. My visit had three purposes:-

• to a assist with a documentary film that some of my friends from the Lower Lakes are making which may feature Toorale. 
• to attend Geoff Wise's farewell from the Shire GM position,and
• to give evidence to the NSW Legislative Council Committee which is inquiring into the gazetting and management of National Parks-again Toorale. (All recorded in Hansard)

Had a thoroughly enjoyable time. Called to see my agent friend Trevor Wilson in Warren and got an update on former Clyde stations and staff. Refueling at Nyngan, fortuitously and coincidentally ran into Ken Jury, the driving force behind the film, and the film crew. He accompanied Gail and me for the drive from Nyngan to Bourke. We hardly drew breath on what can be a long somewhat depressing drive. I was very encouraged by the line being taken with the film. On arrival in Bourke I gave the film crew a briefing on Toorale with the aid of a map and some digital photos I had put together.

Much enjoyed the farewell to Geoff and Anne Wise at Kidman Camp on Monday night. I have much admired the way Geoff and Anne have thrown themselves into the Bourke community in the five years they have been there. Geoff, a veterinarian by training, was previously a senior NSW public servant including Western Lands Commissioner. He was also a very valuable member of my Darling Matilda Way Sustainable Region Committee. He is very knowledgeable on water issues, and whilst we didn't always agree when he had to administer Government policy, we have always been friends and then also strong allies from the time he went to Bourke.

On Tuesday morning my friend John Oldfield (79) of Belalie Station flew us over Toorale with a cameraman filming out a side window in the back of the aircraft and me, wired for sound, doing a commentary on the place, particularly the McCaughey water spreading scheme. Country looks great, but I just hate the neglect and waste.

On Tuesday afternoon I did an interview for the film in the lovely garden at the Riverside Motel before giving my evidence to the Parliamentary Committee at the Bourke Bowling Club. This finished in time for me to join a Board Meeting  (by telephone) of the Tandou Board to sign off on the Annual accounts.

Drove back to Sydney via Dubbo and Merriwa on Wednesday. Called on Gail's nephew, David Dugan who runs the Joe Jones Agency at Trangie. Arrived just on "smoko" and had an enjoyable discussion on water issues with David's impressive team over a cup of coffee.
At Dubbo we had a very enjoyable lunch with old Bourke friends John and Norine Lack. Gail and Norine were school girls at Bourke together in the 1950's-Norine's father Ern Brook was the Head Buyer for Tancreds when their Bourke Abattoirs was  the most important sheep and cattle meatworks in Western NSW. 

Some relevant photos. And more.

Water Storages Full to the Brim-Weekly Times Article, 17th September,2012

AUSTRALIA'S key water storages are full to overflowing for the first time in 16 years.

River officials on the weekend declared the Murray Darling Basin storages 100 per cent full.

Storage levels increased by 108 gigalitres in the past week and is now 8555 GL, 100 per cent of capacity.

The last time it reached this level was October 1996.

Active storage has reached 100 per cent despite Lake Victoria, Hume and Dartmouth dams being slightly below full supply.

This is all because of the high surcharge level in Menindee Lakes, which are more than 110 per cent full, with the addition of extra storages.

Storage levels at Dartmouth Dam increased by 35 GL to 3687 GL (96 per cent capacity).

At Hume Reservoir, inflows averaged about 16,000 ML/day and have remained fairly steady in recent days.

Release from Hume has been reduced in order to steer the storage level towards full supply.

The rain outlook is relatively dry for catchments upstream of Hume, however if further rain is forecast over the coming weeks, the release could again be increased to create "extra airspace'' ahead of any rise in inflows that may result.

Storage in Hume Reservoir is 2934 GL (98 per cent capacity), an increase of 23 GL.

I commented:-
We continue to read in the mainstream media of the "ailing Murray Darling Basin" and measures to "save our rivers". Will the various commentators now acknowledge that in terms of water availability the MDB has never been in better shape. As the Mayor of Hay said recently "the MDB Plan is a solution looking for a problem!"

Cubbie

A switched on agricultural commentator has written the following commentary on the proposed Cubbie Station sale. I agree with it.

Editorial
The decision by the Treasurer and the Federal Government to allow a consortium from China, Japan
and Australia to jointly bid for the Cubbie Group, has prompted widespread discussion and debate.

The Foreign Investment Review Board, which advises the Government on these matters, has
obviously concluded that the national interest has not been undermined by this particular consortium’s intentions.

There will be many who agree with this conclusion, and probably an equal number that disagree.
Unfortunately, some of the debate has been tinged with xenophobia, and may have ignored
relevant facts in relation to Cubbie’s current debt dilemma, which preceded these events.

Cubbie was first developed for irrigation from grazing country around 1983. Under various forms of
ownership, it has developed 93,329 hectares comprising 22,256 ha or furrow irrigation and water
storage capacity of 538,800 megalitres, with potential to irrigate a further 11,000 ha.

Development expanded rapidly in the 1990s, when the cultivated area exceeded 40 kilometres
wide and the property and its water storages became visible from satellite imagery mapping the
area from Brisbane to Adelaide.

So successful was this development, that from its humble grazing beginnings, Cubbie was
subsequently able to harvest water, wheat, cotton, corn, chickpeas, barley, sunflower and sorghum
in huge volumes.

Dogged by a series of drought years (7-8), by 2008 Cubbie was in dire straits. In November 2008,
Suncorp and the NAB, its major lenders, engaged McGrathNicol to investigate and report on the
financial position of Cubbie, and monitor its attempts to repay its debts.

Prompted by drought-induced low production and rising debts, Cubbie was first offered publicly for
sale in August 2009, when expressions of interest were sought, and/or a capital injection. Nothing
satisfactory was forthcoming.

In October 2009, Cubbie was placed in voluntary administration (under McGrathNicol) from which
it did not emerge until July 2010 when McGrathNicol, were appointed Deed Administrators.

This meant that liquidation could be avoided and restructuring strategies and opportunities could
be pursued.

In October 2009, inter-company loans within the 11 companies in the Cubbie Group had reached
$320 million, owed mainly to Suncorp and the NAB. The administrators placed credit limits on staff
for expenditure, with a maximum limit of $20,000.

In July 2010, following significant seasonal improvements and water availability, and the banks’
decision to bankroll the 2010-11 crop, this credit limit was expanded to $100,000, which meant five
designated employees could collectively outlay up to $500,000.

At that time, Cubbie was said to have enough water to plant 21,158 ha of cotton with potential
to produce 222,100 bales worth in excess of $126 million. Although no official data is publicly
available, the total value is rumoured to have exceeded this estimate by around 10 per cent.

This background shows that Cubbie has been on financial notice, and in trouble with its lenders, for
at least four years, during which time no acceptable buyer of first or last resort was found.

Had it not been for the goodwill provided by its lenders, Cubbie would have been subject to
foreclosure by its lenders, and would be either sitting in their bad debts portfolios, or off-loaded at
a significant loss, most likely in much smaller, more financially digestible portions.

Consequently, an offer to purchase the entire entity should be welcomed, rather than condemned,
particularly given the uncertainty created by the current controversy over the Murray-Darling Basin
Plan, and its unknown impact on Cubbie’s future.

It would certainly have been preferable for the potential buyer to be of Australian origin, but with
none willing to take up equity on commercial terms, the only alternatives are a foreign buyer; a fire
sale by the two major lenders; or ongoing financial support from Suncorp and the NAB.

Given current trends in cotton prices, rising energy and other input costs, and Cubbie’s current debt
levels, the first two options are most likely the only ones still seriously in play.

What is intriguing though is this: If three consortium members, none of whom are cotton growers
or investors in cotton production, can see future potential in Cubbie (at a price), why cannot an
experienced, professional Australian-dominated cotton conglomerate see the same potential?

In all fairness, Australian companies and consortiums have had an equal opportunity to purchase
Cubbie, and have failed to get past the front gate. And it is, after all, the prerogative of the owner
to take the best price. Very few farmers have a history of accepting lower bids.

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