Water pain leads to call for immediate investigation

An immediate investigation into the water market is needed to protect irrigators’ ability to farm, according to industry groups.

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Irrigators are concerned there could be a repeat of Millennium Drought water prices this year, due to the market being artificially inflated by non-landowning water investors.

The price of temporary water has reached $800 a megalitre, and producers are concerned the dry outlook for spring could see prices go into the record $1200/ML territory experienced during the early 2000s.

Almond Board of Australia chairman Neale Bennett has written to Federal Water Resources Minister David Littleproud on behalf of 12 peak horticultural bodies including Citrus Australia and Australian Grape and Wine Ltd.

The groups are calling for:

A TEMPORARY moratorium on non-water users buying allocation and carrying over water.

AN immediate Australian Securities and Investments Commission and/or Australian Competition and Consumer Commission investigation into whether current trading practice is consistent with corporations, consumer and competition law.

ENFORCED mandatory price reporting.

JUSTIFICATION for $0 trades be made mandatory on all trade registrations.

CREATION of a single Murray-Darling Basin water exchange, ready for the 2020-21 season.

ALL water brokers to be licensed and regulated by the 2020-21 season.

BROKERS to be prohibited from holding and trading water on their own accounts.

THE creation of a single Murray — Darling Basin water exchange ready for the 2020-21 season.

Mr Bennett is concerned the present ACCC inquiry into the water market will take too long to complete.

“The inquiry will take 18 months, and it will be longer before any recommendations are enacted,” he said. “We cannot wait that long because farmers will be going broke in the meantime.”

Mr Bennett said growers had fears of how high water prices would go this season.

“It’s very concerning that water is at $800/ML this early in the season,” he said.

“Back in the Millennium Drought, in the early 2000s, water hit $1200/ML and that sent a lot of people broke.”

Mr Bennett said having a “moving target” on a major input like water made it hard for farmers.

“The only two options are putting the price of your product up or to stop using water,” he said.

“The trouble is, farmers are price-takers rather than price-makers, so we haven’t got a lot of wiggle room.”

Almond grower Neale Bennett is concerned high water prices could push some businesses to the wall.

Mr Bennett said the ABA was not against water trading.

“When water was untied from the land, we believed it was to allow water to go to higher value crops, we didn’t believe it was set up to be a tradeable commodity to make a return on,” he said.

Mr Bennett, an almond grower near Mildura, Vic, said he was concerned he could see a repeat of the Millennium Drought, when people walked off the land.

“I’ve nearly finished paying for water from the last Millennium Drought, when I saw a lot of neighbours have to walk off due to their financial situation — I don’t want to see that happen again.

“We need people to remain viable, especially if the government wants to grow agriculture to a $100 billion business.

“As farmers, we’ve made significant changes to our businesses and become much more water efficient, we’re not wasting a single drop.”

Citrus Australia chief executive Nathan Hancock believes current water pries are higher than seasonal demand would dictate.

“Higher prices are making it unfeasible for growers to maintain their orchards, which contribute almost $500 million to the national economy in exports alone,” he said.

“With below average rainfall this winter, parts of the country in drought, and conditions expected to further deteriorate heading into summer, this situation needs to be resolved quickly.

“Without immediate changes to the current system, growers will face increasing pressure to their businesses, which will result in irrevocable effects for the wider community.”

South Australian Murray Irrigators chairwoman Caren Martin said water prices for growers having to enter the temporary water were pushing them to the limit.

“There’s certainly an issue with water pricing. It’s becoming cost-prohibitive to stay in business long-term,” she said.

“It feels a bit like the Millennium Drought, which was a rich man’s drought. There’s water there if you can afford to buy it, only this time there’s more institutional players.”

Brendan Sidhu, who grows almonds near Loxton, said the prospect of prices going above $1000/ML was a scary scenario.

“That would be a disaster, not only for the almond industry, but for all river communities — communities that are finally getting their head above water after some tough years,” he said.

David Arnold, pictured at his citrus farm in Waikerie, says tough decisions will need to be made due to high water prices. Picture Simon Cross

Citrus grower David Arnold, from Waikerie, said high water costs were concerning.

“Depending on the crop grown, there may be decisions made to remove unprofitable areas,” he said.

“The extra money has to come from somewhere, from the consumer paying more or cost-cutting.”

Barker MP Tony Pasin said it would a shame if high water prices swallowed up the improved returns that had been generated through the government’s work to open up export markets and drive demand for Australian produce.

“The integrity of the Murray-Darling Basin water market is paramount, as is irrigator’s confidence in it,” he said.

“The basin water market underpins regional economies within the basin. Unless the market can operate the way it fundamentally should, I fear the very lifeblood of communities along the river will become unviable.”

Mr Littleproud said any ‘unconscionable conduct’ by water traders and brokers in the Murray-Darling Basin would not be tolerated.

“I want to make sure the water market is a fair and even playing field,” he said.

“I’ve asked the ACCC to step in and use its powers of prosecution if it finds evidence Commonwealth laws have been breached.

“The delivery of the Murray-Darling Basin Plan depends on an accurate and transparent water market for everyone.”