AAP Finance

Duxton denies it is ‘hoarding water’

By AAP Newswire

An ASX-listed company that holds 75.1 million litres of water entitlements mostly across the southern Murray-Darling basin has denied allegations it is "hoarding water".

Duxton Water says it has less than one per cent of the water entitlements on issue in the regions it holds them, describing itself as a long-term investor in Australia's permanent water entitlement market.

The Australian newspaper on Monday quoted Rob McGavin, the chief executive of olive grower Boundary Bend, as expressing concern about the impact Duxton was having on the water market.

"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 told the paper.

But Duxton said it is large scale permanent crop development in the region that has changed the dynamics of the Australian water market, as well as persistent dry conditions not seen since the millennial drought from around 2001 through 2009.

In addition, the government has removed 20 to 23 per cent of all permanent water entitlements for environmental reasons, further straining the market, Duxton said.

Duxton's gross profit for the half-year ended June 30 rose 350 per cent, to $9.1 million, with the Adelaide Hills-based company noting on its website it has returned 11.2 per cent annual returns to shareholders since listing on the ASX in September 2016.

The company said on Monday that all permanent water entitlement owners in the region - mostly farmers - have experienced a strong rise in the value of their water entitlements since the start of 2018.

"Duxton Water is 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 company said.

But Mr McGavin stood by his views, saying in an email to AAP that irrigators' concerns related not to the amount of permanent water entitlements Duxton owns but the amount of allocation water entitlements it was buying.

"Anyone buying allocation water in the market who don't have a use for it are making the water shortage problem much worst for irrigators and the communities in which they operate," he wrote.

Duxton said that most of its water portfolio is leased to farmers, with the rest used to supply irrigators through forward allocation contracts and spot allocation trade.

Duxton said it supports an investigation by the Australian Competition and Consumer Commission into the Southern Murray Darling Basin water market.