ONE of Australia's oldest continually operating businesses, Webster Limited, has edged out a number of overseas interests to buy the 40,000-hectare prime Riverina cropping aggregation, "Kooba", for $116 million from Ag Reserves Australia Ltd - a company owned by the Utah-based Church of Latter-day Saints, commonly known as Mormons.
The aggregation comprises high quality row-cropping country along the Murrumbidgee River across Kooba Station, Darlington Point; "Bringagee" and "Benerembah" at Carrathool, and "Booberoi" along the Lachlan River near Euabalong, producing wheat, corn, beans and other crops, as well as grazing 3000 head of cattle.
The sale included all the aggregation's water rights.
In the same week as the Kooba aggregation purchase last month, Webster - the 2013 Australian Agribusiness Exporter of the Year - also divested itself of its Field Fresh Tasmania onion operation for $10.5 million to West Australian vegetable grower, wholesaler and exporter, Sumich (to be finalised mid-2105), which chief executive officer John Hosken said would allow management to focus its attention on what is now it's growing Riverina-based, vertically integrated walnut operation, Walnuts Australia.
To fully utilise the aggregation's land and water entitlements, Mr Hosken said the company was planning to move into row cropping, in particular cotton, which has also led to Webster entering an agreement with the Moree-based Robinson family's Australian Food and Fibre (AFF).
The agreement gives AFF an 11.2 per cent stake in Webster but also secures AFF's management and skills expertise as a large-scale cotton grower.
Mr Hosken said the Kooba Aggregation purchase followed five years of growing returns from Walnuts Australia.
"Webster has long been a diversified company - it was established in 1831 as rural merchandise company but later moved into car and truck dealerships and aquaculture - but now it will be focusing on walnuts," he said.
"We see the Kooba Aggregation as providing a land bank for future growth of not only our walnuts enterprise but it gives us an opportunity for more row cropping."
Webster Ltd is Australia's first large scale walnut producer with 2200 hectares currently under producing trees at Leeton and Tabbita in the Riverina and at Swansea in Tasmania.
Of this about 70 per cent of this area is under mature trees.
Mr Hosken said nut expansion was already underway with another 900ha of orchard area under development at Tabbita, while a $12 million processing facility at Leeton commissioned last year was already handling this season's crop - cracking and packing walnuts to sell as kernel into the domestic market - and providing increased on-site storage capacity.
"We're seeing a global trend to nut kernel consumption which promoted our investment in the new Leeton facility with a view to capturing a growing section of the import replacement market," he said.
"It also means we no longer need to send our nut in shell overseas for processing, creating more jobs locally."
Mr Hosken said Webster has already signed up one of the two major supermarket chains to replace it's imported American walnuts with Australian product in the fresh section.
While California might be the world's largest exporter of walnuts - US Department of Agriculture figures indicate it was set to produce 545,000t this year and exports about 90 per cent of the world's walnuts - Mr Hosken said Australian nuts entered the market as the US crop finished.
Webster entered the walnut industry in the mid-1990s and today produces about 7000 tonnes of nut in shell annually; this figure is forecast to reach up to 16,000t (nut in shell) within the next decade.
Walnut trees take eight years to reach mature production levels, although a first commercial crop can be harvested at year four.
"The Riverina gives us the three key factors needed for walnut production," Mr Hosken said.
"First, there is water, which is crucial for maintaining any horticultural enterprise - which takes a significant amount of investment to set up.
"In years of low water allocation we can't afford not to keep up the water to the trees, so our expansion strategy has been focused on water.
"The Riverina also gives us both the heat and chill hours to produce a successful crop."
While the signing of the China-Australia Free Trade Agreement (FTA) - which will result in tariffs on nut exports to China drop from 25 per cent to zero in the next five years - had been "exciting news" fro Webster, Mr Hosken said it had not been an influencing factor in the company's business plan.
"Webster has had expansion plans in place for some time, but the "Kooba" purchase was strategic - the company acted when an opportunity arose," he said.
"The purchase was well timed in light of the China FTA, but this was a chance to buy a once in a generation, quality asset of very high class.
"The FTA will be beneficial for us as the bulk of our walnuts are exported but we're also very focused on a growing domestic market - it is becoming exciting for us as we have increasing volumes of product available.
"We expect to be able to replace up to 50 per cent of imported product being sold in Australia in the next two to three years as yields grow.
Figures released this week by Nuts for Life reported Australian had eaten an extra 6000t of nuts in the past year, boosting domestic demand by 12 per cent.
The report shows the domestic market for tree nuts is now valued at $550 million at trade prices, up $130 million in the past financial year alone.
The Kooba Aggregation portfolio was bought by Ag Reserves in 1997 for just under $70 million from the Adelaide-based wool broking and processing firm, GH Michell and Sons.
At the time the sale was hailed as the biggest pastoral sale to that time transacted in Australia.
Michell had bought the properties in 1959 from F.W. Hughes Industries, the pastoral and industrial empire built up over half a century by the redoubtable self-made millionaire Fred William Hughes.
Kooba Station, the centre piece of the portfolio (and originally called "Cuba"), was purchased by Hughes in 1926 from the McGaw family and subsequently developed for irrigation on a vast scale.
In the 1930s, more than half the property's total area of some 56,000ha was under irrigation, supporting a thoroughbred stud and a grazing operation that saw annual shearings of up to 260,000 sheep.
Much of "Kooba", and also "Benerambah", was later resumed for closer settlement and incorporated into the Murrumbidgee Irrigation Area.
By the time of the aggregation's purchase by AgReserves in 1997, the four properties were described as carrying 30,000 sheep and 3000 head of cattle, as well as being Australia's largest producer of maize.
This time round, the Kooba Aggregation sale drew the attention of US-based Westchester Group (owned by American financial services giant TIAA-CREF), Auscott (owned by J.G. Boswell and Co, California), and the Harvard Endowment Fund.