Rain won’t stop crop failure and fruit and vegetable price rises

Despite recent rains, many farmers are expected to be driven out of some crops, with the cost of fruit and vegetables to rise.

The Australian Bureau of Agricultural and Resource Economics and Sciences said with most of the recent rains having fallen east of the Great Dividing Range, not much had made it into the storages of the basin. Picture: AAP

High irrigation water prices in the Murray-Darling Basin are likely to continue for years despite recent rains, with many farmers expected to be driven out of some crops and the cost of fruit and vegetables to rise.

Senior CSIRO hydrologist Francis Chiew said it would take years for larger storages in the basin to fill up after prolonged drought, meaning irrigation farmers might continue to receive low or no water allocations, and the spot market would stay high. “Storages are low, allocations are low, the price goes up,” he said.

While small storages would fill up quickly when good rains ­arrived, Dr Chiew said the big storages would not: “With multi-year storages, because you have drought for two or three years, it takes almost as long to fill up again.”

Dr Chiew said looking forward, the science suggested over time the water situation in the Murray-Darling Basin would fluctuate but deteriorate overall: “If you have a look at the historical records, and at the climate change trend, we are getting more below-average years than above-average years.”

The Australian Bureau of Agricultural and Resource Economics and Sciences said with most of the recent rains having fallen east of the Great Dividing Range, not much had made it into the storages of the basin, and irrigation water prices would remain elevated.

“Under the current ABARES medium-term climate scenario, water entitlement prices in the southern Murray-Darling Basin are expected to remain high into 2022–23,” ABARES said. “This is expected to limit or postpone horticultural expansion.

“Lower production of fruit and vegetables is expected to lead to higher wholesale prices of fresh produce in 2019–20.”

Last week, the Murray-Darling Basin Authority reported that despite a slight increase in near-empty storages in the north from the rains, overall basin storages were at 27 per cent of capacity, the same as a month ago and down from 43 per cent a year ago.

Water prices in some irrigation zones on the Murray River have risen seven-fold over the course of a year, with some farmers abandoning crops because of the cost of water to grow them.

In its agricultural outlook report released on Tuesday, ­ABARES said “in 2020, high water prices are expected to continue to lead horticultural growers to consider the returns they can make from irrigating crops relative to the returns from selling water ­allocations.

Irrigation is expected to be maintained on crops with rising prices or high water use efficiency, such as almonds, citrus, stone fruit, potatoes, tomatoes and table grapes.”

ABARES said horticultural growers were expected to continue irrigating their perennial crops to preserve the production capacity of their bushes, trees and vines, but crops such as asparagus, beans, berries, sweet corn and melons had lower water use efficiency and farmers were expected to grow less of them.

“Supplies of fruit such as apples and pears may also decline as orchard growers adjust tree structures to reduce water use,” ABARES said in its report.