Australia's oldest company and biggest landholder, Australian Agricultural Company, has made a bold play to grow cotton on the entire 15,000ha of land to be leased under the WA Government's Ord River expansion next month.

The leading beef producer has been pushing aggressively to diversify its cattle-dependent operations to soften recent blows from a higher exchange rate and troubles in the live cattle trade.

Sources close to the $500 million WA and Federal-Government funded project confirmed AACo was one of three remaining proponents in the running for a 25-year-plus lease on the taxpayer-owned Ord land.

Its proposal is to grow cotton, according to the sources, with a private Chinese bidder planning to grow sugar and another Australian-backed venture proposing to plant sandalwood.

Sandalwood producer TFS, the dominant grower in Ord Stage 1, is understood not to be bidding, with growers in Kununurra questioning the suitability of the land marked for expansion to grow the scented wood used in incense.

AACo boss David Farley could not be contacted last night, although he has history in the industry as the former managing director of Colly Cotton and a former chief executive of US cotton-growing co-operative, Calcot.

The development comes as Nationals Leader Brendon Grylls was yesterday forced to mount a fresh defence of the $500 million project, after its "food bowl" status was undermined by revelations the first crops would not be traditional foodstuffs.

Mr Grylls said that the expansion, which will double the Ord's irrigated land to 28,000ha, was simply the starting point for a project that could eventually push into the Northern Territory and cover more than 100,000ha.

"This is the first opportunity taken for many years to expand agriculture in the north of the State . . . and is a project of national and international significance," he said. "This is infrastructure that will last for hundreds and hundreds of years. We didn't pay off C.Y. O'Connor's pipeline to Kalgoorlie in the first few years but we are pretty glad it got built."

Mr Grylls said future expansions would likely include food crops, but he would not dictate what private producers would grow, and in any event sugar was edible and cotton seed oil was a part of the feedstock industry, replacing grain.

The project had also delivered substantial benefits in indigenous employment, he said, and was a small investment compared to works including the $1.6 billion Perth-to-Mandurah rail line.

Last week senior Government officials said the State would lose about $100 million on leasing the land, as it had cost more than $300 million to develop compared with its original $220 million budget.

Shadow agriculture spokesman Paul Papalia said taxpayers were right to be concerned about the return on their massive investment, given the much-touted food bowl idea had "disappeared".

The West Australian

Popular videos

Compare & Save

Our Picks

Compare & Save

Follow Us

More from The West