MAKING Cubbie Station's massive cropping and dryland grazing operation pay for itself is likely to be far more challenging than any furore erupting from critics of the big foreign investment play.
Not only is water availability to the Lower Balonne property's 22,000-hectare irrigation area prone to extreme irregularity but many industry observers are baffled by how the numbers from its cotton earnings - even in record years - were enough to keep past debt levels in check, or cover a new owner's costs.
Cubbie, on the Queensland-NSW border, has been in voluntary administration since October 2009, with debts estimated at that time of more than $300 million.
Financial analysts conservatively estimate interest on that debt has been compounding at a premium rate of 10pc annually, which in the past three years would be equivalent to at least $30m a year.
Other costs including administration fees variously estimated at up to $1m a month according to Senator Bill Heffernan, would add to the existing debt.
On the plus side, last year the company's receivers McGrathNicol reported Cubbie's 249,000 bale crop in 2010-11 was worth more than $150m.
But after deducting typical industry production costs, the average profit from the big prices that season probably translated to a pre-interest and wages profit of around $43.5m - roughly enough to cover the year's interest bill and administrative costs, although not much more.
The most recent season's poorer returns could have averaged well shy of Cubbie's debt servicing costs and at current market indicators, returns from 2012-13 plantings may be even slimmer.
"I think a lot of people are wondering how Cubbie could reasonably have been expected to reduce a debt as big as that," said one farm financial sector analyst.
"Based on current cotton returns, it's hard to make the numbers stack up for the new owners - if they buy it.
"Cotton at less than $400/bale is a challenge for anybody."
But every property deal was different in terms of how much equity and debt was involved, the length of settlement and the tax deductibility of the costs involved, another observer noted.
It was impossible to second guess the terms of the big deal being stitched together with Cubbie, its bankers National Australia Bank and Suncorp, and prospective buyers Chinese textile company Shandong RuYi and Australian wool and grain merchant, Lempriere.
Latest Australian Cotton Comparative Analysis jointly compiled with Boyce Chartered Accountants, calculated the average cotton industry interim profit last season was $1240/ha (compared with $1919/ha in 2010-11), which would translate to a profit before interest and wages payments of just $27.2m at Cubbie in 2011-12.
Industry average profit estimates for last season were based on cotton sold at $502/bale, with production costs of around $382/bale.
Although irrigated and dryland grain crops and beef cattle earnings are also part of Cubbie's production mix and would bring in extra returns, bankers say it would be hard for other farm commodities to beat irrigated cotton returns at prices above $420/bale.
Further complicating the equation is the fluctuating water availability issue, with Senator Heffernan pointing out that 25pc of the total flow in the Lower Balonne system occurred in just four years between the 1920s and 2000s.
"I can't see how you can really manage the variability of the water - I don't think the Chinese realise how unreliable the water supply is," he said.
"A hell of a lot of money needs to be spent re-plumbing the place (Cubbie) to make irrigation more cost effective - there's up to 2.5m of annual evaporation from some of its storages."
He said the federal Treasurer Wayne Swan's claim that surplus irrigation water from Cubbie could be sold downstream after wet seasons was "ridiculous".
The current infrastructure made it impossible to release meaningful volumes of extra local flow from Cubbie's vast levee network.
Senator Heffernan, who chairs a senate inquiry into the Foreign Investment Review Board, is worried foreign government loans to Cubbie's new owners could entitle the company to huge Australian tax deductions.
He said any condition of any foreign ownership in Cubbie should be include provision of full details of sovereign loan assistance to the buyer and auditing of tax arrangements to keep taxation earnings in Australia.
He also wants the cotton crop ginned and marketed through local entities, not shipped direct to China.