NAMOI Valley cotton producers have expressed concern there will be less local competition for cottonseed in their area following Cargill’s announcement it will shut down its Narrabri cottonseed crushing plant at the end of November.
Cargill Australia corporate affairs manager Peter McBride said the plant would be closed for the foreseeable future, saying it had been unprofitable for a number of years due to a number of factors, such as energy prices and the changing usage pattern of cottonseed in Australia.
Around 25 people were employed at the plant.
“Over time the cottonseed market has changed significantly as whole cottonseed it is now a highly valued feed product for both the domestic and international livestock markets,” Mr McBride said.
He said international consumers of cottonseed had found alternatives in other oilseed crops, such as canola, that had similar performance as oil, meal and hull that made the economies of crushing cotton seed, with its lower oil extraction rate, hard to manage.
Jeff Hamblin, chairman of the Lower Namoi Cotton Growers’ Association, said the closure was a concern for cotton producers in north-west NSW.
“It is a bit of a strange one and it certainly could have ramifications for us.”
“Cottoseed is no longer just an afterthought, at over $300 a tonne it can form anything up to 20 per cent of your per hectare income and cover the processing costs so it is definitely important,” Mr Hamblin said.
“Given the hype over cotton seed oil as a healthier frying oil I am surprised there is a difficulty finding a home for it.”
He said he thought much of the cotton seed in his area would now be containerised and exported, so long as there were no issues selling into markets such as China, but said the plant closure would have an impact on the local economy.
“25 jobs in a town the size of Narrabri will have an impact.”
Mr McBride said the plant will run out of seed mid October 2018 due to a reduction in affordable cottonseed supply due to ongoing drought in NSW, with the likely closure date of plant is end of November.
At this stage he said the plant would be put into mothballs, rather than permanent closed or sold, but added it would be unlikely the plant would reopen any time soon unless there was a dramatic change in the market.
While the majority of positions at the plant will be made redundant as a result of the ceasing of operations he said the company hoped, where possible, to offer redeployment options.
Mr McBride emphasized Cargill’s other crushing facilities, the canola crushing plants at Newcastle and Footscray will continue to operate as normal and that Cargill remained committed to its grain and oilseed business in Australia.
“We will continue to buy grain and oilseeds through our AWB / Grainflow network to support its domestic and international customers,” he said.