Farmer Bill McClumpha needs to win lottery to keep going

BILL McClumpha is not a gambling man, but in July he will enter a lottery with very high stakes.

BILL McClumpha is not a gambling man, but in July he will enter a lottery with very high stakes.

His future in farming depends on his ability to sell his water, buy some from a more reliable sources, and get more efficient.

But the task for Mr McClumpha, who grows grapevines at Red Cliff in northwestern Victoria, is anything but simple. He has been caught up in Australia's increasingly complex water trading system and fallen foul of a Victorian law that limits the amount of water that can be sold out of each irrigation district to 4 per cent a year.

Mr McClumpha offered 120 megalitres of water to the commonwealth water buyback at $2400/ML last year. The commonwealth accepted his offer.

But his irrigation district had reached its trade-out limit and he wasn't allowed to sell it.

"I can't realise it, that deal can't go ahead. I have been caught by the cap," he said.

On July 1, Mr McClumpha and all the other increasingly desperate irrigators who want to sell their water will go in a ballot to sell water out of his irrgation district.

"If you win, you can sell. If I lose the ballot that is it, the commonwealth can back out of the deal."

Mr McClumpha said he wanted to sell his Victorian water and buy more reliable water from NSW.

"My intention is to stay in farming but there are a lot of people being forced to exit and they have tendered their water. They are going to be caught. They are going to lose a massive amount of money," he said.

Mr McClumpha said the only alternative for irrigators who hit the cap was to sell their water inside their irrigation district. Local prices were around $1600 to $1700/ML. "On the 120ML deal I have got, I stand to lose $100,000 straight up."

The water year begins in July and 10 of Victoria's 18 districts have reached their caps.

South Australian Premier Mike Rann is taking the state of Victoria to court over the cap, claiming it unfairly limits the trade.

The Victorian Farmers Federation supports it, claiming it prevents too much water and wealth leaving a district too quickly. Mr McClumpha used to support the cap but said "now the situation has changed".

Since winegrape prices had fallen below the cost of production, many growers were desperate to sell their water. "The only chance of a reasonable price is the new round of commonwealth buybacks," he said.