Duxton Farms Limited reported a $9.4 million operating cash outflow in Q3 FY2026 amid extreme weather impacts and ongoing capital rotation from broadacre cropping to horticulture and apiculture.
- Extreme weather dents cotton and dried fruit yields
- Pistachio and walnut orchards progress ahead of schedule
- Sale of broadacre farms funds horticulture and apiculture growth
- Operating cash outflow of $9.4 million for the quarter
- Negotiations underway for additional financing facilities
Weather Disrupts Key Crops but Pistachio Development Accelerates
Duxton Farms Limited (ASX:DBF) has reported a challenging quarter ending 31 March 2026, with extreme heat and unseasonal rainfall disrupting cotton and dried fruit production. The cotton crop at the Forbes aggregation finished well despite increased water use due to January and February heat, with harvest set to commence in April. However, the viticulture segment at Euston and Wemen vineyards suffered from a brutal combination of heatwaves followed by severe downpours, receiving nearly a year's worth of rain in three weeks. This led to access issues and a halving of expected dried fruit revenues, as the Company battles mould, disease, and pest pressures.
In contrast, the pistachio orchard is outpacing expectations, with first commercial production now anticipated in 2029, at least 12 months ahead of schedule. Early nut clusters have been observed this season, and the planned expansion to nearly 650 hectares by 2026 would position the orchard among Australia's largest. The walnut orchard at Yarramundee is also thriving, with successful field budding and solid summer maintenance completed.
Strategic Capital Rotation from Broadacre to Higher-Value Assets
Reflecting a deliberate pivot, Duxton Farms has continued to divest broadacre cropping assets, selling the Merriment and Cowaribin properties and liquidating associated livestock. This rotation aligns with the Board's strategy to deepen exposure to horticulture, apiculture, viticulture, and Northern Australian developments. The Company is actively marketing three additional Forbes properties valued at $65.6 million, aiming to bolster its capital base for growth in these sectors. This ongoing transition is consistent with the Company’s earlier decisions to exit broadacre cropping in New South Wales, as documented in its recent Forbes cropping properties sale campaign.
In Northern Australia, wet season conditions and Cyclone Narell have limited activity but caused no property damage. Development and environmental approvals continue at the Wildman blocks, with first planting expected this year at the NTP8554 freehold. Cotton crops in the Ord region are progressing well, and cattle operations at Mountain Valley are winding down ahead of lease expiry.
Apiary Expansion and Honey Market Dynamics
Duxton Farms is strengthening its position as a major pollination services provider, securing 43,000 hives for the 2026 almond season. The Company is exploring pollination services beyond traditional crops to offset natural pollination declines, anticipating sustained pricing pressure due to industry fragmentation and varroa mite spread. Honey production has been hampered by hot, dry conditions across eastern states, prompting adjustments to hive management and the establishment of a new operational base in the Forbes/Parkes region to enhance flexibility. Meanwhile, the Company’s Fuzzy Bum branded honey is expanding its retail presence, now stocked in over 250 Australian stores, with international growth prospects under pursuit.
Financials Highlight Seasonal Cash Flow Pressures and Funding Plans
Financially, Duxton Farms reported a net operating cash outflow of $9.4 million for the quarter and $24.4 million year to date, reflecting the seasonal timing of input costs ahead of harvest receipts. Investing cash inflows of $10.8 million were driven by $11.5 million in proceeds from property sales, partially offset by capital expenditures on apple netting, Piambie development, and apiary equipment. Financing outflows of $1.7 million mainly comprised interest and fees on existing loan facilities.
The Company ended the quarter with $6 million in unused financing facilities and is negotiating an extension of banking facilities with Commonwealth Bank of Australia and National Australia Bank to manage seasonal cash flow fluctuations. Duxton Farms remains confident in its ability to continue operations and meet business objectives, supported by ongoing property sales and financing strategies. This follows the Company's earlier $9.2 million quarterly cash deficit and strategic capital management efforts.
Bottom Line?
Duxton Farms’ pivot from broadacre cropping to high-value horticulture and apiculture is underway but weather volatility and seasonal cash flow pressures will test its financial resilience in coming quarters.
Questions in the middle?
- How will Duxton Farms manage the financial impact of reduced dried fruit revenues?
- What progress will the Company make in selling the remaining Forbes properties?
- Can the accelerated pistachio and walnut developments offset challenges in other segments?