Lake Argyle and the lessons from Murray Darling and Ord River

A massive freshwater sea in the nation’s far north shows the potential – and peril – of investing in new irrigation developments in Australia.

National Party MPs love talking up the prospects of building more dams across Northern Australia’s rivers to drive development.

But irrigators from the Ord River Scheme to Murray Darling Basin argue squeezing more value out of the water captured in existing storages makes far more sense.

In the heart of Western Australia’s Kimberley, more than 10.7 million megalitres sits in the Ord River Scheme’s Lake Argyle, the vast man-made reservoir built in 1972.

Yet barely 250,000 megalitres is released from what is the nation’s largest freshwater storage each year to irrigate 20,000 hectares of crops.

Lake Argyle, WA, stores more than 10.7 million megalitres, but irrigates just 20,000 hectares. Picture: Fleur Bainger

Contrast that with the 1.8 million hectares under irrigation in the Murray Darling Basin, which grows about $10 billion of agricultural produce each year.

Ord River region councillor and local irrigators co-operative board member David Menzel admits the scheme – once considered a bold plan to boost agricultural production in the untapped north – has failed to take off, with producers battling DDT-resistant cotton bowl worm infestations in the 1970s and struggling to grow rice and more recently sugar cane.

He said the region’s remoteness meant it had to produce a commodity crop that could be processed locally, cultivated and harvested mechanically to minimise labour costs, easily shipped out of Darwin and delivered regional benefits.

That crop is cotton. But after last century’s failure, Menzel and the region’s other irrigators have made sure this time around they tread with caution.

Locals have spent the past five years trialling 1500 hectares of the genetically modified Bollgard3 variety, securing the funds to build a cotton gin at Kununurra, with Territorians building another across the border near Katherine, plus gaining the backing of some major investors.

Chinese-owned Kimberley Agricultural Investment is preparing for cotton’s rebirth, having developed 7400 hectares within the Ord’s stage-two Goomig Farmlands development, with rights to take up another 5000 hectares.

Other farmers in the Ord’s original stage-one development, who up until now have relied on sandalwood and maize to earn a living, are also gearing up to grow the global crop.

Across the border in the Territory, 60,000 hectares has been identified for development, but Menzel says not all that land will be under irrigation.

Part of the Ord River Irrigation Scheme near Kununurra in the Kimberley. Picture: Stuart McEvoy

Developing the Ord’s irrigation industry will take time and may still trip up unwary investors.

Select Harvests managing director Paul Thompson knows all too well the perils of trying to develop new irrigation country in remoter regions of Australia.

The almond company poured $60 million into establishing 1700 hectares of orchards in Western Australia’s Carnamah and Coorow Shires in 2010, but was eventually forced to sell the lot for $9.5m, after suffering major blowouts in power and drilling costs, as they tried to access groundwater and compete for labour with the mining industry.

“From a horticultural perspective there’s a level of labour and skills you require, and it’s just not readily available in the north,” Thompson says. “In WA we had that issue, where you’re competing with mining salaries that are mind-blowing.”

Select Harvests has, like most horticultural irrigation developers, turned its attention instead to the southern Murray Darling Basin.

Rather than sinking capital into purchasing water entitlements, developers have opted to lease or buy up to two-thirds of their needs, leveraging the basin’s sophisticated water markets. Almond growers have also been able to buy cheaper cropping country close to the Murray or Murrumbidgee rivers over the past decade, building and operating their own pumps and pipes to water their new plantings.

US firm Hancock, Canadian pension fund PSP Investments, Aroona Farms, Select Harvests and goFARM have dominated growth in nut plantings across the southern basin, with the Almond Board estimating the industry will peak at 50,000 hectares under the current wave of developments, consuming 600,000 to 700,000 megalitres at maturity.

Spraying cotton crops. Picture: Yuri kouzmin

It’s not just nuts that are driving growth, with new plantings of citrus, table grapes and other high-value horticulture, which are driving up water prices and soaking up the supplies of lower-value uses.

Across Victoria, NSW and South Australia, the Southern Murray Darling Basin’s horticulture boom is on track to pump 1.5 million megalitres of water out of the river system within five years, with Aither consultants estimating it will drive up the average allocation water price to $380 a megalitre, beyond the reach of most dairy farmers.

A Goulburn Valley dairy farmer must pour a megalitre of water on to a paddock to grow enough grass for the herd to produce 100 kilograms of milk solids, worth about $700.

Contrast that with a table-grape grower at Robinvale or at Red Cliffs, who can produce $21,000-worth of crimson grapes for export with the same megalitre and it soon becomes evident where water is headed in coming years.

Cotton in the field.

But as industry analysts argue, the shift to horticulture is not without problems and doesn’t mean the demise of what they call “opportunistic crops”, such as summer-grown rice, cotton and maize and the watering of winter cereals to boost yields. Most of the development has occurred below the Murray River’s Barmah choke, increasing the risk that the Murray Darling Basin Authority’s river operators may not be able to deliver enough water though the narrow, shallow pinch-point in the future to meet peaks in summer demand.

Murray Irrigation Limited chairman Phillip Snowden, who operates above the choke, says his southern Riverina region was not built on permanent plantings, but on an irrigation system that could rapidly respond to Australia’s variable climate, growing rice and other summer crops in times of plenty and winding right back during droughts.

Even the cotton industry has realised the value of the Basin’s south.

Cotton Australia chief executive Michael Murray says “most of the growth since 2008 has been in southern NSW, predominantly in the Murrumbidgee and to a lesser extent the Murray”.

“It’s a combination of varieties being more suitable”, the construction of three cotton gins in the south and “the result of water market reform”. Just like other summer crops, cotton growers respond to water availability by rapidly expanding their plantings, evidenced by the fact they harvested 590,000 bales in 2020, about 2.7 million this year and are forecast to gin 4.5 million next season.

Of the 2.7m harvested this year, about 800,000 bales came out of southern Queensland, with NSW yielding 1.7 million bales, of which a quarter came from the south.

Back in Northern Australia, just 60,000 bales were produced.