NAB commodities wrap: Winegrape and citrus irrigators crushed by high Murray water price

Winegrape and citrus irrigators’ profits are being squeezed by a $950-a-megalitre spike in water prices.

MURRAY River water prices of $950 a megalitre are crushing winegrape profitability, with NAB’s Rural Commodities Wrap estimating it will add $180 a tonne to the average cost of production.

Even the citrus industry, which has been tapping into the lucrative Chinese market is feeling the squeeze, according to industry leaders.

Robinvale wine grape grower and former Murray Valley Winegrowers Incorporation deputy chair Phillip Englefield said exorbitant water prices had forced some growers to let their grapes go.

“And once you let them go it’s all over,” Mr Englefield said. “It’s as radical as dairy farmers selling their herds.”

Other growers are watering some patches just enough to keep them alive, he said.

NAB agribusiness economist Phin Ziebell said the high water prices represented almost 40 per cent of wine grape value, for any grower fully exposed to the temporary water market.

“A substantial chunk of farmers’ margins will be taken away by water prices,” Mr Ziebell said. He said that even if early whispers of rising grape prices played out, the improvement was unlikely to offset water costs.

Citrus Australia chairman Ben Cant said high water costs were eliminating profitability, even on the best varieties.

The NAB Rural Commodities Wrap found seasonal conditions in NSW and parts of Queensland were “moribund”, with water storages in the northern Murray-Darling Basin currently about 8 per cent of capacity.

In the southern region, storages were at 44 per cent of capacity heading into summer.

Mr Ziebell said cotton and rice growers could not plant crops at those high water prices but producers with permanent plantings — grapes, oranges or almonds — did not have that flexibility.

But water-thirsty almonds are benefiting from dry conditions that have led to “outstanding quality and flavour”, according to the Almond Board of Australia.

— with ALEXANDRA LASKIE